Dani Tollemache and her 5-year-old daughter Lorelei have fun for free, dancing and singing and doing art, to afford their $370 a week Auckland rental.

Buying a house in the traditional sense is not an option for 31-year-old solo mum Dani Tollemache; she can barely afford to rent "probably the cheapest two bedroom place in Auckland".

It's $370 a week, 80 per cent of her income, and she's about right. A Trademe search shows one of the just two places listed for less on Monday is a short-term tenancy, and the other is a shoebox apartment in the city centre.

But Tollemache doesn't think her limited means should exclude her from one day owning a home in some sense – or, in the meantime, that her five-year-old daughter Lorelei's wellbeing should be determined by our fickle rental market.

The Salvation Army agrees. In a report published on Wednesday titled Beyond Renting it calls for Government subsidised home ownership, dubbed "KiwiBuy", and stronger tenancy rights.

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Its senior policy advisor Alan Johnson says we can't rely on the private market to keep pace with housing demand, now yields from rent and dwindling capital gains make property investment a less attractive prospect than it has been in the past due to rocketing house prices.

"The result will be rents rising faster than household incomes, increasing levels of housing-related poverty and unmet housing need, alongside growing numbers of people sleeping rough on our streets and in our parks and carparks," the report reads.

ALDEN WILLIAMS/STUFF Dani doesn't want to rent forever, but doesn't see herself ever being able to afford a house in the traditional sense.

To address the situation, the Salvation Army argues for a "a more deliberate set of housing policies" requiring more direct involvement by the Government.

Tollemache's house is cold in the winter, hot in the summer, cramped, dark and has leaky windows. But it's near her parents' home in Birkdale, North Shore, and has a small garden, helping Tollemache save money by growing her own vegetables.

The landlord is also a family friend, giving her a greater sense of security than she'd get by renting from a stranger. Together they are working to fix the place up.

Tollemache and Lorelei have lived there a year; she feels "really lucky" after moving seven times in three years.

"I was really worried before we found this house," she said. "Our options were pretty much share a room in a one-bedroom place, move in with my parents, or pay $450 a week for a two-bedroom ... and if we did that, I don't know how I'd have made ends meet."

The sole parent benefit with child support, minus rent, leaves the little family $115 to live on each week.

They are what the Salvation Army report dub the 'left outs' – a growing group too poor for home ownership but either not poor enough to qualify for state or social housing or, as in Tollemache's case, unwilling to sign up for it.

ALDEN WILLIAMS/STUFF The mother and daughter have shifted seven times in three years.

Tollemache would easily qualify as she earns less than half the income threshold, but says she "would feel too guilty" to register.

"I'm actually doing ok and have a lot of support; other people need it more than me."

As well as growing her own vegetables, she scrimps by forgoing a TV, scouring social media groups for freebies, and op-shopping. She and Lorelei have fun for free, singing, dancing, and making art. Instead of buying her daughter a doll's house, Tollemache made one out of paper mache.

"We do a lot of colouring, and making collages out of these big stacks of National Geographics I get from opshops," says Tollemache.

While Tollemache does drive a car, it was a gift from a friend who moved back to the United Kingdom – and her parents help out with petrol costs.

"That's my privilege and some luck," she says.

What Tollemache would like to do – and hopes to see become more normalised – is eventually buy a section of land with a group of other like-minded folk, then build tiny houses and communal areas as a model for affordable home ownership.

Her seven moves in three years has made her wary of the private rental market and with Lorelei now at school, she says she dreads the upheaval of moving again.

Some of the houses were so mouldy both she and her daughter got sick. Another was a huge shared house she and her then-husband leased, which got tricky when flatmates moved out and suitable replacements couldn't be found.

Tollemache has had to inform property managers of tennants' rights under New Zealand law – she feels "terrible" that renters less informed than herself could get exploited though their lack of knowledge – and has won battles in the Tenancy Tribunal.

Her experiences have given her strong views on housing policy: Tollemache wants a warrant of fitness system for rentals and for property managers to be licensed – at the moment there are no specific training requirements for the job.

In its report, the Salvation Army says New Zealanders needs to reconsider private rental housing as a "secondary but temporary tenure" due to more households being forced to accept they'll be tennants for life.

"This suggests that more attention needs to be given to elevating the status of private sector tenants by offering them greater tenure protection," the report reads.

The report highlights the power imbalance between tenants and landlords: "Tenants have poorer quality housing; they pay more of their income in housing costs and have much less wealth than those who own property. On the other hand, not only have landlords more wealth, but they have managed to accumulate more as house prices and rents have continued to rise faster than wages, salaries, pensions and benefits."

Johnson says it is also important to reduce New Zealanders' dependency on the private rental market by increasing the supply of social housing – at least another 2000 more each year for the next decade – and through subsidised home ownership.

The KiwiBuild scheme was still too expensive for modest income households, so Johnson proposes a shared equity scheme where the Government has "maybe 40 per cent ownership" of a house but be a passive stakeholder.

"Realistically, we have to look beyond our current ownership options," he says. That would include Tollemache's dream of communal property ownership and living.