As a property investor, am I contributing to inequality?

As an owner of a rental property I have an ethical dilemma. We’ve heard a lot about ethical investment. It’s great to see the growing number of fundholders taking a stand against profiting from weapons, tobacco or fossil fuels. Practising ethical investment is a choice to not profit at others’ expense.

As we watch the housing crisis unfold, we need to start acknowledging that property investment is also causing real harm. There is a significant group of people who own multiple investment properties and a growing group of people locked out.

According to CoreLogic, 39 per cent of property purchases in the last quarter of 2020 were made by ‘multiple property owners’.

People buying their second or 25th properties are able to outbid first-home buyers.

For Ma¯ ori this is not anything new – being locked out of land ownership and the associated wealth creation has impacted on Ma¯ ori since colonisation.

We know one of our big challenges is increasing inequality. Whether or not people are able to own a home is a big part of the inequality story. Owning property helps families build wealth and gives us stability and a long-term connection to a local community. This builds financial and social capital.

In my work for a community NGO, I’m exposed to the negative impact of increasing inequality and the housing crisis. In my private life, I own my family house and two rental properties.

Eighteen years ago, we thought buying a rental property would force us to save and we weren’t confident superannuation would be around when we aged. With four children, long-term savings was important. While we were financially stretched then, we are in a different position now. The housing market has significantly lifted our wealth with us doing very little.

Am I part of the problem I’m working to fix?

My ethical dilemma is compounded by the absence of leadership from governments in redistributing wealth. I’m talking about a form of ‘‘wealth transfer’’. As we tackle the global challenges we are going to need collective action on many areas – distributing wealth is one of them.

I contrast my dilemma as an owner of a rental property versus paying PAYE.

PAYE is progressive and automatic. I don’t need to do anything, and I value the benefits it brings our society. However, none of the wealth I get from my rental properties gets redistributed automatically.

I can understand the temptation to buy more rental properties. Owning property grows savings and is relatively secure with strong backing from government, which doesn’t want house prices to fall. The cycle of disadvantage is fed by the cycle of advantage. I’ve found myself in the cycle of advantage, and now my dilemma is what to do. I’m aware of the arguments to justify buying rentals. I have heard them from friends and used them myself.

■ ‘‘I am a good landlord’’ – I am providing good quality housing and am a fair landlord.

■ ‘‘I work hard’’ – How much is ‘‘hard work’’ or how much is leverage of existing wealth?

■ ‘‘I will give to charity’’ – Given a choice between receiving charity and being able to improve the position through your own efforts, which would you choose?

■ ‘‘I am only one person playing in a big system?’’ – The big issues – climate change, racial inequality, wealth inequality – require all of us to play our part. We are the sum of the individual choices we make.

Am I saying that people should never hold a property as an investment? I don’t think so. But you can see I am uncertain – as the housing market continues to rise and inequality increases my position is less clear.

I am clear that I value collective solutions to large problems. I value political leadership to ensure a level playing field that redistributes wealth. My hunch is that this calls for more of a fundamental system change than tinkering.

This void in leadership can’t excuse my non-action. It is over to those of us who are property investors to make our own ethical choice – how much we need and what harm we may be contributing to.

This requires recognition of the link between property investment and increasing inequality, a link that isn’t being spoken about enough.

Those people already practising ethical investment in the sharemarket have chosen to contribute to a more positive future. I, for one, need to reflect on how my investment in the housing market aligns with my ethical values.

I encourage this reflection and discussion by people who like me benefit from the cycle of advantage.