How Build to Rent Can Transform New Zealand's Housing Crisis

New Ground Living community manager, Wakaangi Rongonui at Moroki in Glen Innes.

In the pursuit of a more equitable and inclusive future for Aotearoa New Zealand, it's essential to acknowledge the fundamental human right to a decent home, as recognised in multiple international treaties.

The scarcity and unaffordability of quality housing serves as a dark backdrop to the lives of everyday Kiwis around the country. The gap between the dream of a decent rental home with security of tenure, let alone homeownership, has widened, forcing some into precarious rental situations and even homelessness.

For those who choose to rent, the lack of affordable options and provision of security and dignity leave people and their families vulnerable to frequent moves, stress and uncertainty about their future.

As it stands, the traditional model of individual home ownership simply isn't sustainable or inclusive enough to meet the needs of our diverse and growing communities, and the state of our rental housing market further exacerbates inequalities.

“We need a range of solutions to address the problems entrenched in our housing market, head-on.”

Build to rent is a compelling one, providing high-quality, affordable housing that prioritises long-term tenancy and community stability. The New Zealand Property Council advocates that build to rent developments provide tenants with high-quality, convenient living without the permanency and costs associated with buying; investors get stable rental revenues without the hassle of frequently managing new leases.

Since 2014, in our work through New Ground we’ve been actively involved in fostering institutional build to rent housing in Aotearoa New Zealand, focusing on the development of modern rental properties with an emphasis on security for tenants. Our efforts to date, however, have been constrained by limitations of the Overseas Investment Act (OIA) and associated lack of access to the capital needed to fund the large-scale opportunities that exist in our market.

That’s why we believe the Government’s intention to introduce legislation that allows overseas investment in build to rent developments in New Zealand is a necessary change and marks a positive milestone for Kiwis. The move represents not just an opportunity for economic growth, but a lever to help address some of the pressing social challenges driven by our housing crisis.

It also more closely aligns us with places around the world where policy and legislation have facilitated thriving build to rent industries, and valuable lessons for our own sector can be gleaned. 

The UK in 2012 implemented initiatives to provide financial incentives and guarantees to encourage institutional investors, including those from overseas, to invest in purpose-built rental housing developments. Changes to planning regulations and tax incentives further incentivised investment, spurring the growth of communities with long-term tenancies and modern amenities.

In Australia in the mid- to late-2010s, the New South Wales government implemented planning reforms and financial incentives to encourage investment, including that from overseas, in their build to rent sector, and address broader housing affordability and supply issues.

In Germany, a tradition of rental housing combined with government regulations supporting tenant rights has fostered a thriving build to rent sector focused on affordability and sustainability, while Canada has seen the rise of build to rent developments in response to population growth and housing affordability challenges.

New Ground Living resident Ivana at home at Moroki .

Here in our own backyard, we have witnessed firsthand the transformative power of this modern approach to rental housing. Testimonials from tenants who have moved into the Moroki build to rent development we recently completed for Hāpai Housing in Glen Innes, Auckland, underscore the far reaching impact of well-designed, sustainable and secure rental properties on quality of life, while also highlighting how hard they are to come by in this country.

“By opening the door to overseas investment in build to rent developments, our hope is that we will unlock additional capital to do just this, and fuel the expansion of the sector. ”

The much-needed funding will enable us to create vibrant, thriving communities that enhance the quality of life for residents and contribute positively to the fabric of our towns and cities.

Further change is, however, needed. On that front, I trust that Minister of Housing, Chris Bishop, will also honour the commitment National campaigned on and alter the Income Tax Act to ensure that build to rent developments are eligible for the same depreciation deductions as other commercial buildings. Ensuring this is a crucial step towards creating a level playing field for investors and incentivising further investment in this vital space.

With the right legislation, policies and partnerships, we have the opportunity to redefine the future of housing in Aotearoa New Zealand and protect our peoples’ right to a decent home. By embracing overseas investment in build to rent , we can build stronger, more resilient communities that benefit all New Zealanders and achieve more equitable outcomes.

About New Ground

New Ground is an investment manager specialising in investments that generate financial returns alongside social and environmental impact. NZ’s first specialist institutional build to rent provider, they have been developing and managing modern rental developments with security of tenure since 2014.