Greens adopt rent-to-buy home ownership policy

The Green Party has waded into the affordable housing debate with an ambitious plan to help low-income earners into houses.

Its Home for Life package comes two months after Labour launched its own KiwiBuild policy which would see 100,000 low-cost homes built over a decade in areas such as Auckland, Tauranga, Wellington, Nelson, Christchurch and Queenstown.

But Green Party co-leader Metiria Turei (pictured) wants to go further and says under Labour’s policy most Kiwi families would be unable to service the commercial mortgage or be able to raise the required deposit.

The Greens are proposing a shared-equity housing ownership model.

Here's how it would work:

• Up to 100,000 homes would be built, in conjunction with Labour’s KiwiBuild policy. The exact balance between progressive ownership and KiwiBuild would be subject to “negotiations post-election”.
• Each home would cost $300,000.
• The houses would be built by the government (in conjunction with local government, iwi and the community sector).
• Residents would be able to leverage the sovereign interest rate of 3.5%.
• They would make a basic weekly repayment to cover the cost of the investment and would be able to make additional payments which would purchase equity in the property until they own the home outright.
• No deposit would be needed.
• Residents’ equity investment would be paid out if they move out before they own the home.

Ms Turei says the party’s figures suggest a weekly repayment of $200, an equity payment of $100 and insurance and rates costs of $50 per week.

People could end up paying $100 less than traditional weekly mortgage repayments to the bank, she says.

The party’s information is unclear about exactly how many homes it wants to build or the total cost.

“It’s unavoidable that the building of a decent number of affordable homes requires a large investment," Ms Turei says.

"Building 1000 homes averaging $300,000, for example, would cost $300 million. But there’s a large amount of unallocated money in future budgets – $700 million to $900 million a year of capital allowance – that can be used for building these affordable homes.”

So based on the Green’s calculations, using the additional $900 million would buy them an extra 3000 homes.

The party says it will be releasing more detailed costings closer to the election.

“There are hundreds of thousands of Kiwi families who are spending their lives paying rent to a landlord, rather than building up wealth and an asset of their own," Ms Turei says.

Changes to tenancy laws sought

Ms Turei also wants changes made to tenancy laws, including a new warrant of fitness for rentals and a secure tenancy policy.

This would mean rental properties need to meet a basic set of criteria which centres around insulation standards and weather-tightness.

The secure tenancy policy would ensure rental increases are limited to once a year and would give tenants the automatic right to renew a fixed term lease as it expires.

“This would encourage a more long-term approach to landlord-tenant relationships and redress the power imbalance that often exists.

“Security of tenure will allow tenants to request landlords fix problems such as maintenance issues without fear that it will lead to their tenancy not being renewed,” Ms Turei says.

bcunningham@nbr.co.nz