The Berlin Housing Referendum and the Rise of Corporate Landlordism in New Zealand: Is ‘Build-to-Rent’ a Trapdoor to Greater Corporate Ownership?

A week ago a majority in Berlin voted to turn over 200,000 private rental properties owned by corporate landlords into public housing. 

The focus in the campaign was on the damage done by corporate landlordism in the city. The leading campaign group was called Deutsche Wohnen & Co Enteignen. This means ‘expropriate Deutsche Wohnen & Co’ – one of the major corporate landlords in the city.

In Aotearoa New Zealand public debates have not focused so squarely on corporate or institutional landlords. The Property Council, amongst others, has tended to use the phrase “mum and dad landlords” to shape public perception of landlords and to suggest they share the same interests as everyone else.

Data is thin on the ground, or difficult to access, on the extent of company ownership of housing in New Zealand. 

But that does not mean corporate landlordism is irrelevant in New Zealand. 

One idea, ‘build-to-rent’, has been touted as a solution to New Zealand’s housing crisis. It’s been much-hyped by real estate firms like JLL and the Property Council. 

The core model of build-to-rent is for corporate landlords, with specialist management, to own housing developments that are constructed for renters. Make no mistake: build-to-rent is a step towards expanding corporate landlordism. 

In the attempt to create buzz around build-to-rent – just look at the new development promoted at Sylvia Park and LynnMall this week by ‘Kiwi Property’, followed up by a press release published by ‘Property and Build’ two days ago – there’s been very little discussion about the risks of expanding corporate landlordism. But build-to-rent could well be a trapdoor to all of the problems of corporate landlordism.

Bringing corporate and institutional landlords into the rental market to build new houses is not some novel innovation internationally. In 2015, an article in The Independent (‘The birth of a new age of corporate landlordism?’) reported excitedly on the surge of investor money going into the private rental market in the UK. A 2019 piece in The Atlantic highlighted the rise of institutional investors in the rental market in the US since the global financial crisis. Greater corporate ownership has not been a game-changer for those countries’ housing markets, even if it may be difficult to draw conclusions about cause-and-effect.

Not every corporate or institutional landlord plan overseas was described in the same way, as ‘build-to-rent’. But the core model has been common elsewhere: use corporate funding to build housing for renters at profit, with money paid out in dividends to investors. 

There are four well-documented problems with corporate ownership of housing, which have fed into the surging anger in places like Berlin: more evictions, worse quality, lower accountability, and reduced transparency.

First, multiple studies – including from the Federal Reserve Bank of Atlanta – show corporate landlords are more likely to evict tenants. This undermines housing security, which should be the overriding goal in housing policy, at a time of heightened anxiety around people’s housing prospects.

Second, evidence (controlling for other factors) shows that company ownership of property is more likely to reduce investment in the housing stock, thereby creating more “unintended costs for consumers and the public”. This should be especially concerning, given widespread concern about the quality of New Zealand’s housing.

Third, an investigative study of recent lawsuits against corporate landlords in the US reports that corporate landlords are less, not more, accountable to tenants. Corporate landlords “established centralized call centers to handle tenant communication” to ensure efficiencies. These corporate landlords, like Blackstone, also merged and got bigger, so that by 2017 two players controlled 60% of the market. Responsibilities (including to make repairs) were pushed onto tenants.

Fourth, analysis in the United Kingdom shows that company property ownership – especially offshore company property ownership – has been associated with corruption, money laundering, and tax avoidance. Some of these concerns may not apply in New Zealand because of our different legal arrangements. But it remains the case that commercial housing ownership, if encouraged, may be a way to undercut tax transparency – at a time when New Zealand desperately needs revenue to fund under-resourced public services. 

It is also important to note that corporate landlordism has been especially associated with private equity funding in the United States – a short-term model of financing that often damages jobs and supply chains. Despite increased concern about private equity in the US and the UK, there has been less public debate about private equity in New Zealand, despite the private equity play on the All Blacks this year and private equity control of New Zealand buses. Expanding corporate landlordism is a way to plug housing further into the grid of the finance sector. In the US, the involvement of private equity funders in particular has raised concerns about rents being increased over time when properties are managed by corporate landlords, and about whether homes will be accessible when the priority is shareholder dividends.

Alongside these well-documented consequences of corporate landlordism, expanding the role of institutional investors in housing is likely to have some less easily measurable – but no less concerning – effects. Increasing the role of corporate landlords risks reinforcing the idea of housing as a commodity, an object in the marketplace to be flipped and traded, rather than as a basic human right. As tenant advocate and writer Alexander Ferrer notes, corporate ownership of housing also “magnifies the imbalance of power in the relationship between landlord and tenant.” This is clearly a backwards step, given the significant imbalance of power between landlords and renters in Aotearoa currently, despite the excellent work of Renters United, the Manawatū Tenants Union and others.

There’s also an important wider perspective to take. As Jenée Tibshraeny has pointed out, “the housing market is increasingly the New Zealand economy”: bank lending has increased its proportion of lending over time towards housing, away from agriculture and other productive business. This is not a positive development. It makes the New Zealand economy less resilient in the event of a bursting of the housing bubble. It leads to little job creation or boosted productivity. It contributes to a model of rentier capitalism recently described by Brett Christophers where some New Zealanders get richer simply by sitting on assets, at the expense of others, and with no meaningful expansion of skills or New Zealand’s expert base. 

Against that backdrop of a housing-centred economy, is it really a good idea to expand corporate investment into housing? The focus should be on diversifying the economy, through a more hands-on industrial policy (building on some good steps taken by the Government through its Industry Transformation Plans). This could include setting up a National Investment Bank and a Ministry of Green Works, as well as taking a more coordinated approach to state-owned enterprises.

This is not, to be clear, a call for an analysis that divides ‘good’ and ‘bad’ landlords. It is a call for a different view to be taken on housing policy in New Zealand: one that is alert to vested interests, the links between housing and finance, and the need to move away from viewing housing as a commodity.

There is a view sometimes expressed in some circles of housing debates in this country that we just need to ‘build more houses’: we simply need ‘supply at any cost’. ‘Build-to-rent’ demonstrates why ‘just build more houses’ is a profoundly inadequate analysis of – or solution to – New Zealand’s housing crisis. We need to consider who profits from any housing policy proposal, who loses, what has been tried already overseas, and how any proposal contributes to – or detracts from – viewing housing as a human right rather than as a commodity. 

There are plenty of other steps that can be taken to address our housing crisis. Jackie Paul, Jordan King, Jen McArthur, and I set out ten possible ideas here. 

The referendum in Berlin may well have been non-binding. But it is an example of what people power can do to kickstart debates. 

The victory in Berlin should give us renewed vigilance about proposed housing solutions, like build-to-rent, that may offer false hope – and may simply amplify corporate ownership of housing. And it should give renewed confidence to anyone who believes that housing is too important to be left to the market.

Max Harris is a writer, campaigner, and researcher