Councils reject Government housing affordability bill

March 24th, 2008 at 8:33 am by David Farrar

Every Council that has submitted on the Government’s Affordable Housing bill is against it, and has said it does not know of a single Council who would use it, if passed.

Here are some quotes:

Auckland said the bill would require it to analyse who qualified as needing an affordable home.

“This bill requires [councils] to take an interventionist role in social policy and the domestic arrangements of residents that Auckland City Council does not consider appropriate for local government.”

Indeed.  It means big rates rises for everyone, including oh yeah home owners.

Manukau City’s submission called for the bill to be withdrawn, saying it left councils and ratepayers effectively subsidising cheaper houses.

This is all the Government seems to know sometimes. Instead of focusing on fundamentals such as how to improve the overall wealth of NZ, their instinctive response to every issue is merely for rich pricks to subsidise everyone else.

We’ll see this later this year when all taxpayers will be asked to have more of their tax dollars go towards extending paid parental leave.  That won’t stop people fleeing to Australia.

The North Shore City Council said it would need two years and up to $250,000 to establish a policy on implementing the changes.

The bill’s provisions would push up the overall cost of housing, leaving “middle-income New Zealanders” paying more for their homes.

Yep affordable housing for Labour means having “rich pricks” or as NSCC calls them “middle-income NZers” paying more for their housing.

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17 Responses to “Councils reject Government housing affordability bill”

  1. RossK (275 comments) says:

    Can anyone out there tell me what the effect would be of a law prohibiting people from owning more than one residential house?

    Would the introduction of such a law, with a fairly lengthy transition period, cause house prices to fall? Would it result in a deterioration of the standard of housing?

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  2. goodgod (1,348 comments) says:

    I don’t see any relationship between how many houses are owned by a single person and the overall cost of housing. If person X owns 5 houses and rents 4 of them, how is that different to 3 or 4 owning the same amount of houses and renting the same amount out? The only time it would change was if, say, some large organisation owned 50% of all houses. If everyone had to own their home because of legislation, you are left with the real problem you started with: people aren’t wealthy enough.

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  3. Lee C (4,516 comments) says:

    There is a relationship between investment property and cost, the question is how did it start? see – cost of housing = Cullen’s tax rate:
    http://monkeyswithtypewriter.blogspot.com/2008/03/property-crash-cullens-fault.html

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  4. francis (712 comments) says:

    Why stop there? How about a universal One Law. One car. One toy. One pair of shoes. One child. Would really cut down on wasteful consumer spending and simultaneously do a lot to save the planet.

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  5. Lee C (4,516 comments) says:

    francis – You just summed up all I can afford these days anyway!

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  6. Paulus (2,607 comments) says:

    Its panic Election year obfuscation of the moral corruption of this Labour Government.

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  7. dad4justice (8,137 comments) says:

    “Can anyone out there tell me what the effect would be of a law prohibiting people from owning more than one residential house?”

    Holy hell what would the lawyers and politicians do with such a law? Yeah right pull the other one. How many houses you got Helen? How many horses you got Dame?

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  8. reid (16,290 comments) says:

    We all know how closely Clark follows New Liarbore in the UK and hopefully most people also recognise that this is just another social engineering policy inflicted upon us by the evil one.

    By 2001, the notion of social capital had jumped the Atlantic, along with the mixed-tenure ideals of US housing regeneration projects such as Hope VI. In 2001, the Joseph Rowntree Foundation commissioned former journalist and policy analyst Nicholas Schoon to write a book about how to bring about urban regeneration and coax people back into stigmatised inner-city areas.

    “The next phase of government policy is likely to be more direct intervention in neighbourhoods”

    In The Chosen City, Schoon came down forcefully in favour of mixed tenure and mixed communities. Social capital formed a large part of his rationale. He wrote: “Poor, unemployed people who live in deprived areas and depend upon state benefits lack useful connections and networks that the rest of us take for granted. Because they are short of both work experience and contacts inside the world of work, they find it much harder to get jobs. Because their income is low and their address has a bad reputation, it is difficult for them to get credit. Potential employers may also reject them because they come from a bad neighbourhood.”

    Schoon’s solution was that all developments of nine or more homes for private sale include a proportion of homes for social rent, and vice versa. This, slowly and surely, would blur the boundaries between the ghettos of the deprived and the better-off as they infiltrated each other’s domains. “Tenants would prefer to live in more mixed communities, in places which look and feel like ordinary streets,” he wrote. “The aim should be to turn every council and housing association estate into a place where owner occupation is the dominant form of tenure and where most people would be happy to live.”

    Obviously as with all their insidious underhand and sinister social engineering, this Bill is not the only arm of the overall agenda, and just because the local councils don’t like it, doesn’t mean it’s going away. It’ll either be rammed through regardless or more likely in this, an election year, return wrapped up in another guise.

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  9. RossK (275 comments) says:

    Thank you Lee C. I guess we have to accept that those who can reduce their returned incomes so as to minimise tax will – certainly you will never hear an accountant telling a client that, in actual fact, it is wrong to allocate $40K of salary to the wife (or husband – no sexism here!) who works one day a month in the business.

    Goodgod, I guess my idea is that more of the people renting would be able to own their own homes.

    Dismal Soyanz – You make some good points. Philosophically I object to the way trusts are used nowadays but that genie is well and truly out of the bottle. I think that a lot of your points could be adequately dealt with though.

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  10. RossK (275 comments) says:

    Francis,

    It is not something that I would really propose right now – the risk of unintended consequences is too high – but I am curious whether people believe it would be beneficial or detrimental to society.

    I would note though that I subscribe to the belief that land, money, and labour should not be treated in economic theory as being just like other commodities.

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  11. Owen McShane (1,226 comments) says:

    I would like to think that these councils have read the reports on the negative impact of such mandated affordable housing in the US where the end result over the decade has been to reduce supply by 10% and increase prices by 20%.
    Also most of the restrictions on sale and subletting at market rates are breached and Councils do not have the time or inclination to police them.
    Also because the low income people realise that by buying one of these affordable houses they are locked out of the capital gain process (unless they cheat) they take little interest and in surveyed estates it was found that the “affordable” houses were occupied by people with close relationships to either the developer or the council.

    Great policy.

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  12. bwakile (757 comments) says:

    Thank goodness there are councils out there that now realise that throwing more socalist controls at a problem is the last thing we need.
    The irony is that these councils in the past were a big contributer to the problem.
    NZ is still a young country with a huge amount of growth to come.
    Our past model of controlling land supply around cities has driven the prices.

    A few have benefited
    Existing land holders selling out to developers
    Landbankers
    Banks with 10-12%+ money for developers and 8% mortgage money
    Mezzanine funders with 15%+ money
    Two tier Councils (local and regional) justifying and paying for their existance.
    Building supply companies with big markups.
    The government collecting GST on the whole caboddle.
    That’s a lot of mouths to feed

    Most have lost
    Joe Bloggs paying top dollar for somewhere to live.

    Solutions
    Very difficult to undo such an interrelated upward spiral without spilling blood
    It will be better to allow the market correct itself as quickly as possible (10-25%)
    Land around our cities will always be expensive so governments would be better to focus on allowing our country to create wealth with two free arms rather than the one armed approach the current incompetants now promote.
    Then maybe people will afford houses.

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  13. Anthony (794 comments) says:

    NZ has plenty of smaller,older run down houses that should be affordable. There is no lack of housing that only a few years ago was affordable. Building a few newer ‘affordable’ houses is going to do next to nothing to help the situation.

    The property market is now falling and would fall even quicker if the tax breaks for landlords were removed so that rental properties needed to earn a reasonable rental yield. Demand from all the baby boomers wanting to become landlords would then subside and prices could return to a point where the cost of renting or buying was similar.

    There no good reason why land and houses have double the intrinsic value they had 6-8 years ago. Think tulips, NZ shares in the mid 80s, dotcom companies, etc.

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  14. Owen McShane (1,226 comments) says:

    The very good reason is the constraints on the supply of new legal titles.
    THe old houses sit on pieces of land which are worth far more than the house.

    IN fact the existing house has negative value because it has to be bulldozed to free up the expensive land to allow construction of a house worth more than the land – as it should be.
    No one wants to under capitalise.

    There is of course no good reason to restrain the supply of land. All the excuses – from running out of productive land to pricing minorities out of the neighbourhood to climate change are nonsense and destroy wealth.
    Those jurisdictions which do not constrain the supply of land have no problem of affordability.

    All those that do constrain the supply have afforability problems and now they have foreclosure problems.
    California is the prime example of sub prime collapse and it has embraced climate change driven Smart Growth more than any other state.

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  15. Fred (163 comments) says:

    It’s really difficult for the Government/Local bodies to intervene in the market without creating winners and losers. I think there are a number of market neutral ways to intervene though. All interventions have to carried out on a long term and consistent basis.

    1. Sell approximately 10% of the state stock per year starting with the lowest rate of return houses (ie the high priced houses compared to rent received.

    2. Call tenders for the construction of new houses to replace the state house stock (plus a small increase) plus an additional number to be sold on the open market at the cost of construction (including standard margins). The bulk of these tenders to be for at least 5 years with a built-in price reduction each year based on productivity gains, a smaller number of tenders to be released each year for those companies that miss out on one of the 5 year programs.

    Don’t attempt to make councils police an “affordable” quota of houses in new areas but do allow councils to explore innovations such as developers to be made accountable for mini water and sewage schemes (more cheaply than the average council).

    Let developers identify their markets, they will do that better than a council. Work with councils to introduce planning rules that ensure land isn’t locked up for the wrong reasons.

    Australia are tacking the issue with a massive building program, 100’s of thousands of houses and will be recruiting all trades, unless we do something similar our building companies will loose all of their good staff, and without such a boost of work we will find that their prices will go up.

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