Sustainability and Affordable Housing
At least one sustainable development goal directly and undeniably impacts the day-to-day work of a property lawyer. Sustainable Development Goal 11 reads “Make cities and human settlements safe, resilient and sustainable”.
Our success or otherwise will be measured by the “proportion of urban population living in slums, informal settlements or inadequate housing.” This is one of the targets set for achieving the goal. “By 2030 ensure access for all to adequate, safe and affordable housing and basic services and upgrade slums”.
Unless there is significant and urgent change in how we provide housing, we will fail to meet both the target and the end goal.
By dint of process, we as property lawyers are intrinsically involved. We facilitate the existing system. We profit from the liveliness of the market. That keeps us so busy and focussed on the technical aspects of our instructions that, even with the best of intentions, we are slow to question the bigger picture.
Consider doing more.
Architects in Australia have spearheaded a new system of property ownership in the Nightingale developments and there is no reason lawyers cannot proactively seek a better system here. There are stages in the development process when broader issues can easily be raised – when designing ownership structures for example. We can engage in conversations too, both amongst ourselves and with influencers and decision-makers, to evolve thinking around legal and financial structures needed to address housing affordability in New Zealand.
Recent tweaking of the law aims to deal with the lack of affordability, but in my view, achieving widespread affordability requires more fundamental change. It is worth understanding what role greater flexibility in how we own and occupy our homes might have in providing housing to all New Zealanders.
Community living
Co-operative living is commonly seen as a way of making housing more affordable. Quite aside from the benefits of living with shared responsibilities to others, sharing facilities reduces cost.
There is a willingness in New Zealand to create communities of co-operative living. Earthsong, Cohaus, Peterborough Housing Cooperative, OHU and the Urban Habitat Collective are all examples, but our systems and our laws don’t make it easy to establish these communities. Many groups with great ideas and great energy have fallen by the wayside in frustration. Without a regulatory structure that supports the development and funding of affordable housing, only the robust and the well-funded survive the journey.
Those who do are forced to manipulate their structure to fit our legal and taxation systems - at significant cost. I remember a co-house client explaining that the cost of their tax and legal advice meant sacrificing the planned children’s playground.
Across the Tasman others are doing better.
Housing as a commodity
In New Zealand we are wired to believe that owning property is about making money – whether we’re flipping or we’re staying in one home for decades. Property is viewed in terms of an investment, a commodity, irrespective of whether it is also a home. The country is missing a universal system that enables home ownership without it being our retirement fund strategy. We would do well to have known processes, available, simple, robust and accepted structure documents and regulations, and mainstream funding mechanisms that bypass this assumption.
Because of the absence of specific financial and legal structures, New Zealand co-housing generally results in private ownership of homes (albeit it with shared ownership of common areas). Consequently, even in these housing structures, challenging the commoditisation requires a system that restrains on-sale prices. The communal aspect of the development and the use is not enough of itself. It provides one round of affordable housing, but subsequent prices are left to the market.
Ownership of the property by a co-operative or by a single philanthropic owner, for whom profit is not the underlying objective, might enable restrictions on the terms of transfer to be more easily embedded.
Nightingale
Nightingale Housing began in 2007. A group of architects, concerned at issues of sustainability and the quality of housing, purchased a block of land in inner city Melbourne and built a residential development called The Commons. They followed principles of sustainable and affordable housing. Now a not-for-profit social enterprise is behind the Nightingale projects, established initially to ensure information garnered from early projects was shared.
Architects can now apply for licences to develop housing projects using the Nightingale principles. They pay a fee. If they are accepted as a licensee, they receive intellectual property relating to the completion of the developments. Information and lessons learned continue to be shared.
Purchasers of Nightingale homes are found using a ballot system.
Four developments have been completed using these principles. Twelve more are underway. The housing:
Is minimalist in design
Includes communal facilities
Will be carbon neutral in its operations
Is energy efficient
Prioritises public transport, shared vehicle use and bicycles over individual car ownership.
The homes are initially sold at cost, not a profit:
To residents only
With a percentage retained for community housing providers
Using a ballot system that gives priority to some - including essential workers and carers.
A re-sale system operates that retains affordability. Homeowners agree to the registration of a caveat on the title limiting re-sale options. The sale price is limited to an amount equal to what the owner bought the property for plus a percentage increase equal to the increase in median house prices since the property was bought. The relevant increases might relate to the suburb where the property is or might be more broadly determined.
Canada
It is interesting to see the proactive steps Canada is taking as it aspires to the same 2030 target as New Zealand. They have introduced a national housing strategy which supports “the development of game-changing even disruptive ideas to dramatically improve housing affordability and sustainability.” The goal is to develop world-leading strategies to deal with housing problems.
A performance measure focuses on new ways of working with traditional and non-traditional partners towards creating options for housing solutions.
The Expert Panel on the Future of Housing Supply and Affordability actively examines housing systems and the National Housing Strategy Solutions Lab funds organisations exploring new ways of dealing with housing challenges.
A fund of Can$300m is available to support the removal or reduction of barriers to housing supply. Organisations (for profit and not-for-profit), government entities, teams of experts and others can apply for funds to develop their ideas about solving barriers to the supply of housing.
Perhaps we can learn from the new ideas these initiatives produce.
This article first appeared in the May 2021 edition of The Property Lawyer, a publication of the Property Law Section of the New Zealand Law Society. It is reprinted with their consent.