A couple of times over the years I've helped different friends move house. They'd been given notice on their rental. Both times it was not because they'd done anything wrong, just because the landlord needed the property back. They had kids in school, not many options in their area, and the whole thing was chaos and stress. Around the same time, I watched my own children and their friends trying to get on the property ladder and realised how much harder it had become compared to when I did it. These weren't abstract statistics. They were people I knew.
Shamubeel Eaqub and Selena Eaqub's book Generation Rent had already framed the problem clearly: this isn't just hard on renters, it's bad for all of New Zealand when home ownership becomes the preserve of the already-wealthy. We're also talking about an ownership structure that sends billions of dollars out of the country every year in bank profits, around $6.5 billion annually heading to Australia. The structure of the housing market makes it harder and harder for many people to build any equity at all.
At the same time, I also witnessed the increased costs and hassles of being a landlord. More regulation, more costs, more things to think about. While I'm not a landlord myself, my wife has invested in property, and the shift in compliance and complexity has consumed significant headspace. The intention behind the investment is to provide a quality place to live while holding on for an eventual capital gain. However, this now involves a constant stream of issues, often requiring complex decisions.
I started wondering whether there was a better way. I'd heard about shared equity schemes overseas and wondered why they weren't in New Zealand already. When I looked into it, I was surprised to find that what existed overseas wasn't really what I had in mind. So I started asking why. That question eventually became Passive Partnerships.
What follows is a bit of an unlikely story. The solution came from a group of people primarily based in Akaroa, not exactly a known fintech hotspot. But I think the background matters, both so you understand our motivations and so you can judge whether we know what we're doing.
A bit about my background
I've spent my career as an inventor. I didn't like the idea of a conventional career, and I've been lucky enough to make that work. Over the years I've been involved in a handful of things that turned out to be early in their fields: an internet search company before Google (sold to NBCi), a social networking company before Facebook (sold to Intel), one of the world's largest SaaS ecommerce search providers (listed on the NZX, later sold), an electric micro-transport company whose product appeared on the cover of Time magazine as one of the best inventions of the year, and more recently an AI camera and trap company that helps with conservation around the world.
Alongside all of that I've kept a foot in economics. I did a PhD in ecological economics about thirty years ago (considered very hippy back then — maybe still is), wrote a book on economic growth theory called Comparonomics, and gave a TEDx talk on why Christchurch should pursue a bold rebuild after the earthquakes. I was a founding director of the New Zealand Venture Investment Fund, and served on the board of the Foundation for Research Science and Technology and Canterbury Economic Development Corporation. I mention all this not to impress but because the economic lens turned out to be important in how we approached this problem. This combination of being an inventor and an economist is rather odd.
One other thing relevant here: I'm a committed passive index investor. I've never believed I'm clever enough to pick winning stocks, and the evidence on low-cost index investing is so compelling that I've stuck with it for years. That philosophy of simplicity, low fees, and letting the math do the work ended up being central to how we designed Passive Partnerships.
Two Oxford economists in Banks Peninsula
My process when I have a hunch is to talk to the smartest people I know and see if it holds up. Stu Foster and Anna Gibbs are Oxford-trained economists who ended up living on Banks Peninsula. Stu in particular took a real interest in the idea. We spent a lot of time working through the pros and cons, sometimes literally thrashing it out in the surf at Le Bons Bay. Eventually we concluded it was worth pursuing properly.
Getting the law right: Chapman Tripp
When you have a new idea, the first thing you want to know is what would stop it working. I happened to go to school with Matt Yarnell, who is a partner at Chapman Tripp, one of New Zealand's top law firms. I called him. He thought it sounded interesting but assumed it must have been done before, so he put a couple of sharp young lawyers on it. It turned out to be genuinely novel. They could see the potential benefit to New Zealand if it worked, and allocated a team to work on it pro bono.
It wasn't obvious from the start what legal structure would work: trust, company, financial instrument, or something else. Whatever it was had to be simple enough that the tax and legal implications were completely clear. We went down a lot of dead ends before arriving at a modified co-ownership structure. It's actually quite elegant: two joint owners on the title, with well-established legal precedent governing how that works. No GST on the fee when only one owner lives there (same treatment as rent). Tenancy law doesn't apply because both parties are owners. Simple in the end, but it took a lot of patient, clever work from the team at Chapman Tripp to get there.
The model we admire: Simplicity
I've been a Simplicity customer since the beginning. They brought a proven overseas investment approach to New Zealand at scale: charge low fees, track the market, and let the compounding cost savings do the work over time. They're now one of six default KiwiSaver providers, manage over $11 billion, and are consistently voted one of the best KiwiSaver providers by their members. If you haven't looked at them, it's worth a look.
A couple of years ago I approached Simplicity as a potential partner. They were interested but had a full pipeline, including building quality rentals around New Zealand, and suggested we come back once we'd worked out the details and demonstrated some market demand. That's what we've been doing. There's a neat symmetry in the fact that Shamubeel Eaqub, whose book first framed the problem for me, is now Simplicity's chief economist.
Simplicity also shows that a non-profit structure can be a serious, professional organisation. We've modelled our corporate structure on theirs.
Adam's insight: how we got unstuck
For a while the project stalled. It had the classic cold start problem: you need a fund to build a track record, but you need a track record to raise a fund.
The person who broke the deadlock was Adam Martin, over a coffee in Akaroa. He pointed out that we didn't need a fund at all. We just needed landlords who wanted to convert to being passive owners. He was one himself: someone who'd love to remove all the hassle of being a landlord, earn a better return, still benefit from capital gain, and know they were helping someone get onto the property ladder. I started talking to other landlords and found enough interest to get going.
Adam also brought the operational capability to make it real. He manages accounts and marketing for holiday homes, working with a range of complex providers, and quickly saw that the mechanics of Passive Partnerships are actually quite straightforward. He built everything out. We're ready to go.
Why this matters
When you're an early adopter, you're always taking a bet on the people behind the service. We hope this gives you a clear picture of who we are and why we're doing this. Our goal is to make home ownership accessible to another 10–20%+ of New Zealanders and see the well-documented benefits of stable homeownership. If we also chip away at the $6.5 billion in annual bank profits leaving for Australia, and reduce the stress and disruption that comes with the rental market, that would be a welcome side effect.
It's an odd, unlikely story. A bunch of people in Akaroa came up with a novel solution to a national housing problem. We think we've found something genuinely new and important, and we're glad you're here.