By Clive Mackenzie, CEO, Kiwi Property 

It’s an unavoidable truth that New Zealand has been straining under the weight of a housing crisis for a few years now. Global issues like the COVID-19 pandemic, recession, wars and more have put huge pressure on the housing market, both here and overseas, causing regular fluctuations.

This year, pressures on the housing market have come to a head, with record high prices across New Zealand. The median price to buy a house in New Zealand is now just short of a million dollars ($924,734 at the last QV House Price Index), while the national median rental price sits at $650 a week (Trade Me Rental Price Index). With these skyrocketing prices and extra lifestyle costs, there is a growing number of Kiwis finding home ownership unattainable.

Currently, around half of all Aucklanders over the age of 15 live in rental accommodation. That number is set to increase to 60 per cent over the next 20 years. These trends and statistics tell us that renting is the future, but what’s currently on offer isn’t enough to satisfy the market needs.

Until now, renting has been perceived as the second‑class option to buying a house. It stems from a history of instability and uncertainty – frequent moves due to leases ending, landlords’ life decisions affecting renters, increases in the cost of rent, pets not being allowed, and the feeling of temporary accommodation.

The role that build-to-rent plays

A new type of accommodation designed and built specifically for the needs of long-term renters – called build-to-rent (BTR) – has the potential to play an important role in New Zealand’s housing equation. BTR builds are usually multi-unit residential buildings for long-term rentals, not for individual sale. It’s a concept that is common in Europe, the United States and Australia.

These properties are designed for the needs of renters, and the concept of individual landlords is removed. With one landlord across the board, concrete tenancy agreements, and the flexibility of renting, tenants have stability and access to well-managed, high-quality homes in well-connected locations with a range of services and amenities. They can put down roots, be part of a community, and create homes for themselves and their families – all the things they want to do, without the pressure of funding a mortgage.

BTR developments often include amenities such as gyms, recreational spaces and lounges. They provide higher-quality homes with the security that they will last a longer term, and tenants are often allowed to bring pets and decorate the apartments to suit their desires.

Making commercial sense

BTR is a great option for tenants, and it also makes commercial sense for many investors and property developers. The coalition government recently announced several policies designed to accelerate the growth of BTR properties, such as revising the Overseas Investment Act to make it easier to attract capital from international investors. These amendments are a great first step, but there is more to do to put BTR on a level playing field with other types of commercial property.

Enabling depreciation and/or goods and services tax to be claimed on BTR accommodation would help unlock the sector, and support the construction of thousands of new homes.

Given the nascent nature of New Zealand’s BTR sector, the current tax take on BTR is extremely small, so the out‑of‑pocket cost to the government of taking these steps would be negligible.

Housing supply is not just about houses available for sale, although that has been positioned as a key issue. There is also a real supply and demand imbalance between quality rentals and potential tenants, with BTR a practical solution to addressing this challenge for those seeking rental accommodation.

Embracing the opportunity

Most Kiwis seek good-quality homes, with guaranteed security, a sense of certainty and permanence, an undisrupted future and a place to build community. For many people looking for accommodation, renting is their first choice. Therefore, we have to change the mentality that renting is inferior to buying a home. If home ownership is out of reach, and traditional renting is wrought with extra worries, then it’s about time for New Zealand to flip the switch.

As a nation, BTR offers an attractive and modern way of giving more New Zealanders access to warm, dry, and healthy homes. BTR offers residents, no matter their age or stage, the wellbeing benefits of well-constructed housing, long-term security of their housing situation, the companionship of their pets, and the ability to connect with neighbours on a level playing field.

Ultimately, Kiwis shouldn’t have to surrender the safety and sanctuary that a quality home can offer because they do not own the dwelling. Introducing solutions like BTR simply makes sense to help alleviate the housing pains that New Zealand is facing, and will continue to face, if we do not embrace and adopt innovative new ways of living.