I am extremely positive about the Government’s initiative to develop shared-equity and rent-to-own options of home ownership for first time buyers and those on low to modest incomes.
Few details are available as to the Government’s intentions and, as always, the impact and value of such schemes will be in the detail and in the level of its availability.
However, at its heart, this kind of intervention is exactly what is required to assist those with a less-established wealth base, or who have modest incomes, to get into the market.
A few years back I was invited by Parliamentary Services to address a cross party group of politicians as to my views on the housing market - where it was heading and potential ways to make it easier for people to get a foothold in the market.
As many who are now well entrenched in home ownership know, it’s getting on that first step of the ownership ladder which is so important.
Among the ideas I shared with politicians at that time was rent-to-own schemes and shared equity. I also talked of the benefit of developing a more mature rental market – one that was economically fair to landlords and tenants, which encouraged longer tenancies than the classical one-year roll over agreements we currently have, recognised the major investment landlords have made in property and the need for them to be able to protect that asset.
Whatever the form of rent-to-own and shared equity options eventually tabled by Government, they will undoubtedly have their fair share of critics, teething issues and they may create the odd inequality issue.
Nor will they be a solve-all for everyone. But they will make a difference for many and open up home ownership to a greater number of people.
On that basis they have my support.
This country has long had a history of the State assisting its people into housing through schemes such as State housing and rent subsidies.
And for past generations there was the ability to capitalise child benefits and the Housing Corporation operated a low mortgage interest rates scheme.
Each has played a role and were relevant to the economic conditions prevailing at that time.
What is now required is support relevant to the decade between 2020 and 2030.
Ultimately, many who get into home ownership via this type of support route will end up like those of previous generations who, while their first step into home ownership was by way of a State sponsored scheme, have become long-term property owners, enjoying the very real benefits that come from stable home tenure and wealth accumulation.
Getting into a first home has never been easy. For the vast majority it requires (or required) commitment to careful financial management over many years, foregoing many other attractive lifestyle pursuits and taking on what, at the time, appears a mountain of debt.
The New Zealand of 2019 is substantially different to yesteryear. In terms of housing, many people now prefer to rent, they want the greater mobility the world offers them, have different views about work/lifestyle balance and what are ‘must haves’ in their lives.
The next step Government needs to take after getting the first time, modest income home ownership issue back on track is that of establishing a mature rental market.
About a third of households in this country rely on the private sector for accommodation, and that percentage is unlikely to change rapidly.
For tenants, some of the bigger issues they face is security of occupation, stability of rent levels and liveable conditions.
For landlords, the bigger issues include security of rent payments, protection of their asset and long-term financial return.
Too often when the debate about the conflicting needs of tenants/landlords arise it declines into a bad landlord/bad tenant wrangle.
We need to first focus on the needs of good tenants/good landlords.
And having established that as the base, deal with the small minority that fall into the bad landlord/bad tenant categories.