One of the best things about the Greens plan to cap rent increases at 3% annually is that it spreads around some of the pain of the Reserve Bank’s brutal response to inflation. To date, the Reserve Bank‘s actions in relentlessly jacking up interest rates has targeted vulnerable groups – the young, the poor, the middle income earners with mortgages, the people in rental accommodation – who continue to bear almost all the pain of the Reserve Bank’s approach.
Those relentless interest rate rises have virtually invited banks, supermarkets and landlords – who comprise monopolies, neo-cartels and those with a stranglehold on the supply of life’s essentials – to pass on the pain to people who can bring little or no power to bear in the market. Meanwhile, the wealthy and the mortgage-free have simply gone on their merry spending ways and their overseas trips, regardless.
The assumption, as many commentators have pointed out, is that the key drivers of inflation are all situated on the demand side of the economy. That’s why, as inflation persists, the Reserve Bank has been signaling its readiness to escalate its “solutions” by (a) creating a recession, (b) driving up unemployment and (c) further reducing the spending power of people already on the breadline.
So far, only the Greens have seen how futile and socially damaging the Reserve Bank’s worldview really is. The pandemic, the Ukraine war, energy prices, accommodation shortages, the enduring supply chain problems and – crucially – the abuses that continue to flow from market concentration (and pure greed) have enabled the market incumbents to jack up their prices, unimpeded.
By proposing to cap annual rent increases at 3%, the Greens are – among other things – sending an overdue message to the Reserve Bank. Namely: If you want to keep on punishing the public with high interest rates, some of the pain you are inflicting is going to have to fall (from now on) on the landlords who have invested for capital gains in the need that their fellow citizens have for keeping a roof over their heads.
It needs to be made no longer acceptable – socially, economically and morally – for all the pain from the cost of living crisis to be felt mainly by the least wealthy, least asset-rich members of society. Yes, the 3% cap is below the current rate of inflation. That’s the point. Landlords too, finally need to feel some of the pain of the recent decisions the Bank has made about monetary policy. Shelter is not merely a profit opportunity.
Is the Greens proposal perfect? No. Rather than assume, as Greens co-leader Maram Davidson has – that there no landlords who haven’t raised their rent in the past three years, the proposal should enable landlords who can prove they have not done so, to be rewarded -arguably, by storing up the recent increases, so long as they do not exceed 9% over three years. Alternatively, the maximum allowable rent increase could be set at the lowest quartile rate of average rent increases in that neighbourhood over the most recent three month period. This would be fair to the relatively few landlords who have not raised their rent during Covid, and during the cost of living crisis. Anecdotally, I know such people exist.
Politically, such a gesture would have taken some of the steam out of the facile ACT Party claim that this is an anti-landlords policy. Spare me. It is a pro-renter policy, for the 50% of New Zealanders who live in rental accommodation because buying a house has been made unaffordable, due to (a) New Zealand’s historical lack of a capital gains tax to deter property speculation and (b) because of the centre-right’s ideological aversion to the very idea of the state being engaged in building houses.
Footnote One: Obviously, there would be a need to police the 3% annual rent increase cap. This problem is easily over-stated. Renters, after all, will immediately notice any transgressions. Renters could be encouraged to dob in erring landlords, who should face stiff penalties for breaking the cap. If landlords then tried to take revenge on their tenants, that’s where the serious policing would occur. Any evictions within 24 months of a cap violation should be forbidden, as part of the penalty regime.
Footnote Two: Allegedly, the Greens policy would result in less maintenance being done on a rental property than is being done currently. Really? Let’s put to one side the terrible landlords for whom maintenance is a joke. Clearly, for the rest… This argument assumes that most landlords treat the upkeep of their properties as a cost they can simply unload onto their tenants. To change that toxic mindset, we have to create a social climate where being a landlord means absorbing costs like maintenance (and interest rate hikes) as part of the normal cost of choosing to be in this line of business. It should not be assumed that tenants are under an obligation to keep their landlords living high on the hog, in the manner accustomed. Again, the rent increase cap sends a healthy signal. You rent it out? You bear the cost of keeping it up to scratch, and in liveable condition.
Newsflash: Renters continue to be treated as disposable by the ACT Party. One more example of ACT’s exclusive fixation on what is good for the top 5% of earners. Yet they have the gall to describe Labour as a party of out-of-touch elitists.
Footnote Three: On that point, the Greens have now drawn a line in the sand at this election. What are the other parties proposing to do for renters? We already know that in order to encourage property speculation, a National/ACT government has promised landlords to bring back a big, fat tax break on the interest bill they currently pay on their multiple properties. The centre-right will also bring back the ability of landlords to evict tenants, without bothering their heads with having to provide a reason.
Obvious conclusion: unless they’re a masochist, no one who rents should even think about voting for National, or ACT. For all the rhetoric about the need to heal the divisions in society, the centre-right parties continue to write off the poor, the young, Maori, women voters, and the half of the population that rent the home in which they live.
Vampire Love
While not normally a fan of power ballads, have to say this new “Vampire” single by Olivia Rodrigo is a good exception within that god-forsaken genre.
Talking of other genres… feeble little horse do have some obvious forebears. Think Jesus and Mary Chain to Dinosaur Jnr for starters. But there’s a wry sense of humour that carries over from the band’s name into a “don’t know how come we’re up here doing this” performance stance that is pretty endearing. Plus, the song structures are really good. I still like “Dog Song 2” from the Hayday album, but “Tin Man” from the new album is also a keeper: