Associate Housing Minister Poto Williams floats rent control as cost of living bites
The national median rent jumped $40 a week in 2021 to $560 in December, meaning renters are now shelling out $2,000 more a year in rent, according to the latest figures from Trade Me.
Documents released in March last year showed the government was considering capping rents to prevent landlords passing on rising costs after the controversial decision to scrap tax deductions on interest charges for rental properties .
Property investors have threatened to raise rents to offset rising costs. But Prime Minister Jacinda Ardern backed the policy because investors made up the largest share of buyers in the housing market and she wanted to help first-time home buyers.
The documents reveal how the government considered temporarily capping rents to counter the negative consequences of the policy. But international data showed that landlords would “simply raise rents as soon as rent control ends”.
What causes inflation?
Big government spending has been questioned. About $60 billion has been borrowed to pay for the COVID-19 response, and Finance Minister Grant Robertson is planning another $6 billion in new spending for the 2022 budget.
According to economic commentator Bernard Hickey, homeowners and businesses are $900 billion richer since the onset of COVID-19 and government interventions, while the poorest are now $400 million in debt thanks to the wage deflation and rising rents faster than incomes.
Economists agree that stimulus-spurred consumer purchases are a reason for inflation. But it is not that simple. COVID-19 has also disrupted supply chains around the world, and when too much money is available to buy too few goods and services, demand outstrips supply, driving up prices.
The Greens continue to push for a wealth tax – an idea Ardern rejected ahead of the election. The Greens have also advocated for rent controls, among other policies such as a suitability mandate for rental housing, to make life easier for tenants.