Why I want a Forever Affordable Home.

For many young New Zealanders like me, home ownership feels completely out of reach. The quarter acre dream is now more of a delusion, as many of us prepare for a lifetime of renting. House prices are skyrocketing, and mortgages are only getting harder to pay off with changes to interest rates. As a 24 year old living in Auckland, the idea of owning a home feels like a fantasy.

I have been living in ‘sick’ houses

Currently, I am renting in a central Auckland suburb with my partner and cat. We spend just over a third of our typical weeks' income on rent. My house has some issues with mould and ventilation. We are on a 1-year fixed term lease. We have no guarantee that the rent will be stable or that we will be able to remain here in a few months time. Despite all of this, I feel lucky compared to others. I am able to live in a house where I have space to work. Lucky to have landlords that will let me keep a pet.  Lucky that our landlords aren't intrusive. We are lucky our bond has been lodged correctly, and the landlord seems to respect the Healthy Homes Standards. Over the past 6 years of renting, I have lived in several homes that were mouldy, damp, and unsafe. During this time I dealt with landlords that didn't meet their obligations regarding bond and utilities costs. Some landlords simply did not respect privacy. This is not an uncommon experience for renters.

The unhealthy flat I lived in during 2016, for which we paid over $1000/week. Now listed for sale with an RV of $900,000. Its owner does not want to pay for earthquake (2016) damage repairs. Image via TradeMe.

Generation Rent is the reality that tens of thousands of us Millennials and Zoomers are facing. Trapped in a system with no stability, insufficient rights, in houses that are more likely to make us sick. Our housing market forces us to make heartbreaking trade offs. Can I afford to have kids? Can I afford to live close to work? Will I need to change my career? What am I prepared to put up with to keep a roof over my head? 

It's enough to make you despondent. My partner and I are contractors. Being eligible for a mortgage will be hard, saving enough for a deposit is pretty much impossible. We've had many late night conversations about what dreams we will need to sacrifice if we want to have a stable home.

But there is some hope. Aotearoa has the knowledge and the tools to repair our housing crisis. Forever Affordable Homes have the potential to be life changing for trapped renters. 

Hoping for a Forever Affordable Home

Forever Affordable Homes provides stability and affordability. Housing does not feel like such a burden. The method captures benefits of both renting and ownership. It removes the need for a (circa $1m) mortgage, costs are predictable, and it provides a form of equity.

A Forever Affordable Home (FAH) is community focused. Designed to be integrated into the community, with long term tenure. Living in a FAH would allow me to feel far more connected to a place than anywhere I have previously lived. Renting often results in transience, where people move from neighbourhood to neighbourhood without the chance to maintain deep roots.

The Auckland case study was for a middle ring suburb close to a train station. It is also an area that is experiencing uplift through other community based facility upgrades. It recommended a dense development given the zoning allowances and density of other nearby buildings. The FAH method works best with density, with proximity to transport and employment links. Car parking within buildings considerably increases costs.

For me the FAH method is attractive, as it means we can remain closer to our jobs and leisure. Long commutes harm health and rob us of precious time. By building on brownfield sites, in dense, transport accessible locations, FAH residents have better lifestyle and health outcomes than if they lived in suburban sprawl. Many First Home Buyers are forced to our urban edges with long commuting times because these are often where the cheapest homes are.

Designs are flexible and tailored to the occupants of a FAH through a co-design process. This supports intergenerational living. Multiple family members can remain close while having their own space without being pressured into overcrowded housing situations. The communal aspect of living in a FAH ensures these generational links are kept strong. Residents in similar developments describe living in the building as being part of one large family, where there is a lot of trust and safety between residents. 

A FAH could give me the confidence to put down roots and feel comfortable starting a family. While every house comes with a trade off, we shouldn't need to sacrifice our family, careers, health, or happiness when exercising our right to housing. No longer would I be throwing money into a black hole in a mouldy rental. While I wouldn't be realising huge capital gains like some others, it would mean more to preserve the use value of the home over its exchange value.

Dream living situation for me. The exterior of Mehr als Wohnen co-operative in Zurich. Image courtesy of The Urban Advisory.

How does it all work?

A Forever Affordable Home utilises a community land trust (CLT) and co-operative method of providing houses. Simply: land is held by the CLT, and is leased to the co-operative. The co-operative builds and owns the building as a limited profit company. Residents purchase shares in the company, which entitles them to a home. Residents pay ‘rent’ equivalents to the co-operative, which also pays a ground rent to the CLT. 

The cost of a share is considerably less than a minimum deposit on an Auckland house. Our case study from 2020 calculated the cost of a share at $55,000. The share buy-in depends on the individual development build and financing costs. The share earns a dividend on the resident's initial investment, accruing over time. A share represents effectively a license to occupy and is inheritable. Your home can still be passed down to future generations. 

Amenities can be shared, like gardens, laundries, and sometimes co-working spaces. The case study included commercial and a flexible space operated for the benefit of the cooperative. This enhances the community aspect of the home, as residents are given natural chances to interact. We can still keep our private spaces - this isn’t a glorified flat - but the design encourages to make neighbours also become friends. The rent paid to the cooperative maintains these spaces, and ensures that building costs are paid off. 

Residents are involved in the management of the cooperative. They are part of decision making about maintenance, use of communal space, and any needed upgrades. This is a form of human capacity building. Residents gain skills which can transfer to other parts of their life. Collective management gives each resident an intimate knowledge of their home and community. 

As individuals' needs change over time, there is flexibility to move between units for that to be accommodated in the same development. It is possible to down or up-size as other homes become available. The share ownership allows for this. It transfers with the resident wanting to move. There is no need to sell and re-buy shares.

If residents decide to move on, they sell their share back to the cooperative. The share is then able to be purchased by future residents for the same price. The home remains affordable forever. The ground rent for the land, held by the Community Land Trust, increases at a known rate. Half the standard market rate is the formula used in the Auckland case study to set the ground rent rises. 

Let's build one!

I'm excited to see Forever Affordable Homes built. To get there, we need support from the government and financial institutions. This needs to be in the form of policy tweaks to make building and financing these types of projects easier. We've already written about what policy levers could be pulled to help, and will continue to do so in the future.

If you're excited too, let's start talking about the benefits FAH housing could have for Aotearoa. Talk to your friends and whānau about us, and let your local officials know you'd like to see collective housing in your community. 

A project for West Auckland is currently in discussion. 

Have a question? Comment below or send an email to kiaora@foreveraffordablehomes.co.nz. You can also find us on Facebook, Instagram, and Twitter.