Ghost homes gamble: Why are so many houses empty?
Amid a housing crisis, one in 20 homes is unoccupied, and that’s a deliberate choice by many of the owners, to the frustration of generation rent. Geraden Cann reports.
Ashley Welsh has experienced a worsening rental crisis on Waiheke since he moved to the island in 2012, and for the past five years he has watched with mounting frustration as a property in the centre of the island sat empty.
The ‘‘ghost home’’ on Jellicoe Parade looked ready to rent when he first noticed it, carpeted rooms viewable through windows, devoid of furniture. A contractor still cuts the lawns, but now those windows are boarded up, and Welsh said it was frustrating to see it underutilised when residents were struggling to find rentals and paying high rents.
‘‘Driving past a property that’s right in the centre of the island, the location is amazing, that’s been empty for five years, it’s a bit frustrating,’’ he said.
Ghost homes have become a focus of attention as the housing crisis continues, and now a Government-funded project has released a report that explores how many ghost homes there are, how long they remain empty for, why owners keep them empty, and how the Government can encourage owners to rent them out. Key findings included that about 10% of those owners kept them empty intentionally, and a little over a quarter had been empty for at least a year.
The Government allocated $500,000 towards testing initiatives to encourage owners to fill their empty properties, and the Empty Homes Project run by community organisation Wise
Group was among the first steps.
The Empty Homes Report included the results of a survey of 772 owners. About 35% said their properties were empty because they were holiday homes, just over 8% kept them empty for person use (often as a second home), 23% were empty for renovations and repairs, and about 17% were vacant rentals, sometimes due to non-compliance with Healthy Homes Standards.
The remaining 6% were empty for ‘‘other reasons’’, which often meant they were awaiting sale.
The survey showed most respondents considered their empty homes in ‘‘ready for occupation’’ condition.
Drawing on 2018 Census data, the report suggests there were nearly 95,000 empty dwellings across Aotearoa – just over 5% of total housing supply.
Auckland had the highest number at 17,130, followed by
Thames Coromandel at 8349, Christchurch 6732, Taupo¯ 3582, and Queenstown-Lakes 3105.
Most owners said they were not willing to become landlords, with some saying it was not financially viable. Others had concerns about protecting their investment and how tenants might damage the property.
The report also referenced negative perceptions and attitudes towards landlords as a barrier, saying they felt vilified and targeted by recent law changes, which included changes to the Residential Tenancies Act that increased tenants’ rights.
Respondents also predicted there would be fewer homes available for long-term rental and more homes would sit empty, although the report noted higher costs and interest rates would probably create financial strain on some investors, incentivising them to rent out their properties.
The report listed tax methods used abroad to encourage owners to rent empty homes out.
In Vancouver, owners were taxed based on the assessed value of the ghost home that was not rented out for at least six months of the year, with owners required to submit a declaration each year.
The tax rate started at 1% between 2017 and 2019, and rose to 3% in 2021.
In the UK, councils may charge additional tax up to double the normal rate if the home has been empty for two years or more, but there were many exceptions.
Wise Group did not investigate how similar policies could be introduced in New Zealand, or how effective they might be, stating incentive-based measures were more appropriate.
The carrot-based approach was criticised by one of the commenters in the report.
He Kā inga Oranga Housing and Health Research Programme co-director Nevil Pierse warned in the report internationally it had proven hard to incentivise owners to fill their homes when ‘‘limited sticks’’ were available.
‘It’s important to consider tax because at the end of the day most motivations for people are financial.’ RENTERS UNITED PRESIDENT GEORDIE ROGERS
Wise Group trialled methods of incentivising owners of eight empty Hamilton properties to add them to the rental pool. Through interactions with the owners and tenants, four of the homes were tenanted, one was prevented from becoming empty, and one that was undergoing renovation was tenanted after the trial.
Work to fill the final two failed. The trial led to a number of recommendations as to how a national organisation could be formed to do the same, and how the Government should start tackling the ghost homes issue.
These included agreeing on a definition of an empty home to be any private residence that has been unoccupied for at least 90 days, is not the permanent place of abode of the homeowner, and is not actively for sale. It also recommended identifying and monitoring the number of empty homes that met the definition, which could be done by looking at utility usage data (such as water and electricity usage).
An empty homes programme was suggested that would monitor data to identify ghost homes, conduct outreach to the owners, build relationships with employers and organisations to establish a ready stream of tenants, and potentially screen and vet them.
Despite the report only focusing on carrots, owners still did not favour any of the proposals, which revolved around helping to source and vet potential tenants.
Renters United president Geordie Rogers said the report showed turning ghost homes into rentals would not solve the crisis, given most were used as holiday or second homes, and the Government’s main focus should be on building more state homes and ensuring councils complied with new housing intensification laws.
Rogers said projects should also look at tax, despite it being politically difficult.
Welsh has never been in the position to own a home and a second property on Waiheke. But he says having experienced the rental crisis first-hand, he believes he would put any second home he had into the rental pool.