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Brian Dawson: Getting real about renting

by Brian Dawson
To some, what the city council is doing around housing may lack the sexiness of a snappy title (Let’s Get Wellington … Housed?), billions of dollars pegged to delivery or the high drama of the battle for Shelly Bay, but I am proud of the inroads that we as a council have made into housing this triennium.

I took over the Housing Portfolio in 2017, and in the two years since then we have made some serious progress in a number of areas, working collaboratively as a council and with officers.

We are well down the line on upgrading our social housing stock – a task made much harder by the 2016 earthquake and the inherited challenges around City Housing. We chose to partner with Housing New Zealand around the Arlington sites, and as a result we have made it not only possible, but inevitable, that the overall number of social housing units in Wellington will substantially grow over the next few years, including at least two newly redeveloped sites of our own.

The 2018-19 year saw a record number of building consents issued and a steady growth in the uptake of our $5000 rates rebate for new home builds.

We launched the Planning for Growth process, which means the beginnings of a much-needed District Plan review, with the ultimate goal of leading to the new settings and rules needed to, bluntly, build more houses.

This year, we also made the decision to cover the development contributions on Dwell Housing Trust’s new Kilbirnie site. This signals, I hope, a new policy that will encourage and assist Community Housing Providers to play their vital part in increasing supply.

However, it is our Apartment Conversion scheme that has just begun to address the most urgent crisis in Wellington housing – renting . A study done at the end of last year by economist and rental expert Shamubeel Eaqub definitively shows the rapid rise in Wellington rents alongside a corresponding flattening in supply of rentals. Put simply, this means people want to rent in the capital, and there simply aren’t enough rentals – and looking forward, there won’t be enough rentals, unless we make a serious intervention in the rental market.

One of the key points of Shamubeel’s paper is the distinction it makes between the rental market and the housing (to buy) market. The nuance here is important: to put it quite plainly, simply building more houses all around Wellington and selling them to buyers won’t have a significant impact on the rental market. Instead, our intervention needs to be precise and intentional with the goal of providing more rentals.

We have begun doing exactly that through our apartment conversion scheme. I am proud that we have started something that no other council in New Zealand has attempted before. The scheme had unanimous support around the council table and that shows a level of courage and determination to meet renting as an issue head on.

At the same time, getting the scheme going has been a slow and frustrating process, despite the concept being relatively simple: a private developer has an existing office building which they convert into good quality, warm, safe, dry apartments, after which council takes the risk out of this process by taking a long-term head lease out on the entire building – thereby guaranteeing an ongoing revenue stream – and covers its costs by renting the apartments out.

The challenge comes in getting the numbers right so that the developer makes some profit (which is after all the incentive for the developer to take part in the scheme), council / ratepayers break even and tenants pay a fair rent.

Getting this formula right has taken a lot of effort and goodwill and I was very happy to hear Alex Cassels confirm at last Wednesday’s renters’ forum that the methods and formulae he and his father have developed around the concept will be made freely available to others who are interested in getting involved, including his competitors.

The upshot of all this is that from around April next year new apartments will begin to come into the Wellington market, managed by the council, at rents that are set based on covering costs and knowing what the target group can afford, rather than just the open get-as-much-as-you-can market. That’s called making a difference and intervening in the one part of the Wellington housing scene that needs it the most.

But we can do more. That’s what Getting Real about Renting was about. I wanted to host this forum about a year ago but I needed the right people in the room. We needed to hear from those most impacted by the rental crisis and those with ideas about how to address it. I needed that because I don’t have all the answers. Council doesn’t have all the answers. No one person, group or organisation has all the answers. That much I’m certain of.

There is more that the council can do, but it’s going to take the will to do it and the acknowledgement that renting is its own conversation with its own challenges and needs to be approached specifically and as a combined effort with everyone in the room.

Clr Brian Dawson, the WCC Housing Portfolio Leader, is running for the Wellington City Council for the Lambton Ward on the Labour Ticket. On September 4th he convened ‘Getting Real About Renting’- a public meeting to discuss the Wellington rental situation which was attended by approximately 100 people.

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3 comments:

  1. Concerned Wellingtonian, 11. September 2019, 6:48

    Why did you vote for the ghastly development at Shelly Bay? Is your housing at any cost to ratepayers ($40,000,000 for the road along the coast!!!??) and the environment?

     
  2. greenwelly, 11. September 2019, 13:54

    “The 2018-19 year saw a record number of building consents issued and a steady growth in the uptake of our $5000 rates rebate for new home builds.”

    Do you have the number of rates rebates granted for 2018-19?

    The council does not appear to have published it … Although it published the 2017-18 numbers (49) within 3 weeks of it being closed off in June 2018.
    https://wellington.govt.nz/your-council/news/2018/07/rates-rebate

     
  3. Henry Filth, 11. September 2019, 21:40

    New Zealand isn’t very good at rental housing. The way that things are heading in the housing affordability stakes, there’s going to have to be a major change. Who can manage that change? Private landlords seem unlikely to be able to do so. Which leaves government – be it local, regional, or central.
    May as well start the ball rolling sooner rather than later.