Questions
The Herald reports on the sad case of Bruce Burgess, who has lost his job and risks losing his property.
I find the story frustrating because it does not provide enough information to properly reach conclusions. I should say at he outset that Mr Burgess and his wife seem wonderful people, in a very difficult position. My questions are not a criticism of them, just what springs to mind from the story.
A Helensville man is wondering how, after a life spent working, saving and paying his mortgage, he can be in danger of losing his property just months after losing his job.
Bruce Burgess, 60 years old and a qualified engineer, has been busy his entire adult life.
Aside from a couple of years overseas in the early 1970s, he has worked, paid his taxes and saved his money.
His wife Jo has held down regular work as an office administrator and accounts person.
Neither of them smoke, they don’t take extravagant holidays, and drink only occasionally.
They do regular community and church work and have never been on any type of welfare benefit, save for Mr Burgess’s short stint on ACC about seven years ago.
As I said, sound a wonderful couple.
In 1989, the couple bought a 2.5ha lifestyle block on Old North Rd. They moved on to the property in 1992.
My first question is how much does such a lifestyle block cost? I genuinely have no idea. Was it a $200,000 purchase or a $800,000 purchase?
Since then, the pair have tended the sheep, chooks and fruit trees, all the while working at steady jobs to cover the mortgage. They have also worked to protect a stand of native bush, and have put a house on the property.
But about four months ago, Mr Burgess lost his Avondale-based engineers job – and with it a $750-a-week paycheck.
That works out to around $51,800 a year gross.
To make matters worse, Mrs Burgess’ income – which totals about $21,000 a year – makes the couple ineligible for any type of unemployment benefit.
Which suggests their joint income was around $73,000 a year gross.
And my God it will be damn near impossible to cope with dropping back to $21,000 a year. Possibly they may be eligible to get the Accommodation Supplement which is an extra $125 a week, but still not much.
“I was told that because the wife was working, I couldn’t get any [benefit],” Mr Burgess said yesterday. He now fears he will “soon” lose the lifestyle block the couple have worked 20 years to build – possibly within the next couple of months.
This is the part, where I don’t have enough information. They have presumably had 20 years of paying off the mortgage. Over that time the principal remaining should be greatly reduced, and the value of the property greatly increased. So I would have thought one could borrow against the property for the months you are out of work.
So while very sympathetic to their situation, I can’t work out what caused the situation where four months of unemployment can force the sale of a house purchased 20 years ago. If it was a more recent purchase, then it would not be a surprise. But normally 20 years of repayments should give you flexibility with the bank.
Regardless I hope Mr Burgess is successful in finding work soon, and they keep their property.
July 22nd, 2009 at 9:36 am
“Regardless I hope Mr Burgess is successful in finding work soon, and they keep their property.”
So do I, but he’s the author of his own misfortune.
Most people with a brain could see the socialist bubble had to burst.
NZ and worldwide.
July 22nd, 2009 at 9:42 am
Life isn’t always “fair”, none of us are guaranteed an easy ride.
I have a “lifestyle” block. I accept that if either I or my partner lose our jobs we may have to refinance, or to sell it and get a smaller place. It would be a bit disappointing to have to do that but it wouldn’t be the first time I, or many others, have had to adjust to changing circumstances.
July 22nd, 2009 at 9:52 am
Stick with these three rules & you will do alright. Modest accommodation, quality footwear & discreet transport.
July 22nd, 2009 at 9:53 am
I am stumped by the missing information like you DPF.
Something doesn’t add up here at all. Perhaps they had an interest only mortgage of some sort?
If it was a normal reducing balance they shouldn’t surely have a huge short term problem.
Wish them well for the future.
July 22nd, 2009 at 9:58 am
Something doesn’t add up here. If the property was purchased in 1989 at 1989 prices, and they’ve been repaying the loan ever since, then there shouldn’t be anything more than loose change to pay back now.
July 22nd, 2009 at 10:03 am
Journalist with an agenda.
A man hears what he wants to hear, and disregards the rest…
July 22nd, 2009 at 10:12 am
There’s a lot missing from the story, yes. What’s not missing, however, is that no bank today will authorise ANY lending to someone whose joint income is only $21k. I’m puzzled as to why there does not appear to have been an approach to the bank for a six month mortgage holiday. Maybe there has and it’s been declined, for good reasons yet not made public.
Whatever way you look at it, the story itself is a fraud.
Banks av oid mortgagee sales if there is ANY possible alternative.
July 22nd, 2009 at 10:15 am
$50 grand a year for an “engineer” with that much experience? Not buying it.
July 22nd, 2009 at 10:16 am
C’mon guys, be fair to the journalist. Our 4th estate is full of committed, diligent, well trained journo’s who would not fail to gather all the relevant facts before crafting the “story”.
Having removed the defences of ignorance and incompetence, you are left only with deliberate withholding of key, pertinent facts in order to create a misleading “tale”. Unfortunately, its credibility is akin to fiction as the result.
Note to teh editor of the Herald. We know you read this blog, how about leaping to your own defence? (cue Tui ad!)
July 22nd, 2009 at 10:17 am
He’s been working hard all his life. Apart from when he was overseas in the 70s. Oh and when he was on ACC (how long is a short stint anyway?).
How much money does he give to his church and why would I want to fund that?
They don’t take “extravagant holidays” – when was their last overseas trip I wonder?
I am certain there is more to this story than meets the eye. I wonder if Phil Goff put him up to it? Is he a member of the Labour Party? Where is Whaleoil on this one?
July 22nd, 2009 at 10:17 am
This is typical of mainstream media coverage, the numbers aren’t important, just the emotions. Many journos these days seem to have no grasp of when numbers are significant and why, or why not. We frequently get international transactions reported without mentioning the currency unit, or metric measurements given to some absurd number of decimal places which were converted from someone’s rough guesstimate in feet, or increases and decreases mentioned on their own without any idea of the total.
July 22nd, 2009 at 10:19 am
david ( not DPF) – the term you are looking for is “the greater truth”, which is usually crafted entirely from lies
July 22nd, 2009 at 10:20 am
Goodness me, there must be thousands of NZers, or for that matter millions of people around the world, who strike rough economic spots exactly like that from time to time. Time to sell something on Trademe, get those chickens laying eggs to sell at the local farmers market, whatever!!
Sign of the socialist political climate we have just come out of (?) that such events can hit the headlines, I guess. My grandparents would not be able to understand what is newsworthy about this case – they survived much tougher times and situations without State help.
For what it is worth, I am aware of a acquaintance with serious health issues and much less able to help himself who is in a much worse situation and getting only minimal and inadequate help from the State – a much more justifiable case for State assistance to the needy. In this instance, because the State is failing to deliver the needed help, there is an interesting intervention happening by the community – pretty much as Adam Smith talked about way back when. Socialism has not quite destroyed local community support and charity yet where we live.
July 22nd, 2009 at 10:23 am
The only real question is why did The Herald publish the story.
Could it be that this is a back-door type method of pushing the dole-for-the-undeserving thing the quasi-commies are trying to weasel their way back to power with at the moment?
July 22nd, 2009 at 10:34 am
The more I think about it, the more this feels like a National Party beat up, as sponsored by the diligently truthful, alcohol nicking, expenses fiddling, immigration scamming, Pledge card robbing Labour Party, and the sleepers in the NZH.
Whaleoil needs to smoke these journalists out. There is a huge furry rodent attached to this story. As ever, not understanding money and in a desperate attempt to paint these folk as stable citizens they have shot themselves in the foot.
Do these folk exist? $50k in Albany as a fully qualified Engineer? Hmmmmmm. More like what the journalist hopes to earn when it has written the required amount of scare stories, to try and reach out to middle NZ.
Feeling like Rochelle Rees, and her unconnected political affiliations.
July 22nd, 2009 at 10:40 am
Lifestyle blocks on Old North Rd are worth a good bit, they may well have $500,000+ equity on the property. So the quote should read:
He now fears he will “soon” lose the lifestyle block the couple have worked 20 years to build – and walk away with $500,000 in cash.
July 22nd, 2009 at 11:04 am
I reckon the information that is being left out would blow the entire story to pieces. This reeks of a journalist writing a story and then going out looking for someone to fit the description. Of course, with a deadline drawing near they would be willing to take anyone.
They may have purchased the property 20 years ago, but I am willing to bet they also have a huge mortgage now. Probably borrowed for renovations and expansion, or maybe they own another property the reporter didnt bother to mention.
Because the “journalist” obviously left so much out, any speculation we engage in is perfectly valid.
July 22nd, 2009 at 11:24 am
Oops
July 22nd, 2009 at 11:32 am
The subject matter living in Helensville, and Quote “In the centre of it” has just sealed my belief that this story is almost entirely contrived.
BULLSHIT from a deadwood media.
July 22nd, 2009 at 11:41 am
I think the angle that “because my wife is working so I cant get welfare” is the key – essentially this is the poster child for Labour’s welfare for everybody proposal for the dole. Having him live in Key’s electorate just makes it a vein even more worth mining.
July 22nd, 2009 at 11:52 am
I think the angle that “because my wife is working so I cant get welfare” is the key
Relevant angle considering the Goff comments that have been in the news, but poorly researched or written.
July 22nd, 2009 at 12:05 pm
This story does not indicate if his or his wife’s pay were before or after tax. It does not tell us how much his existing loan is.
I agree there is information missing. In 1992, houses were relatively cheap compared to today. New Zealand was just coming out of a recession. If he earns $50,000 today, he would have been earning much less than that when he bought the property and the borrowings at the time would have reflected that as well.
My conclusion here is that he has refinanced for reasons undisclosed and his misfortune today is the product of this, not just because he took out a mortgage in 1992. I agree with others here, if he had not borrowed any more since 1992, banks would allow him to have a mortgage holiday until he found meaningful employment again.
July 22nd, 2009 at 12:36 pm
That’s why people should take out income protection insurance, so in cases like this they can continue on until they find a new job.
It’s not rocket science.
July 22nd, 2009 at 2:36 pm
What kind of redundancy package did this guy get? 20 years of working, I’d expect some level of redundancy.
July 22nd, 2009 at 2:53 pm
Engineer or tradesman ?
Some in the metal industries are called engineers when they are tradesmen.
$50 k for a person with a BE with twenty years experience, I find that bloody low.
July 22nd, 2009 at 2:56 pm
Apparently a friend of Burgess approached Key’s office for assistance. The office requested more information which was not forthcoming. Key has said that a assistance is available on application to WINZ – $91.00 per week I understand. When Labour raised the issue in the House they were smacked down by the facts. However there is a corollory to this; that is that the Labour Government in their attempts to create more ‘takers’ (who traditionally vote left) than ‘givers’ who vote right, have created a whole now paradigm in Government assistance. Welfare is now not a hand up but a subsidy designed to allow people to continue their lifestyle whatever happens. Unfortunately the Herald is unlikely to publish a more factual story.
July 22nd, 2009 at 3:57 pm
A highly qualified and very experienced 60 year old engineer on $750 per week.
Bullshit.
New Zealanders with no qualifications whatsoever will not get out of bed to milk cows unless they are on an effective remuneration package of at least $40,000 per annum.
And the missus, presumably about the same age, can only get a 32 hours per week job on the minimum wage. An experienced woman of her age (no pregnancy problems or sick children problems – the best employees to get) who is only on the minimum wage must have absolutely nothing going for her. What kind of wanker (sorry I meant banker) would lend money to dropkicks such as this.
July 22nd, 2009 at 4:07 pm
Here’s the information that the NZ Herald left out, assuming that the couple only earn 21k.
WINZ was wrong to turn these people away. On that income they’d be entitled to $91.20 a week in unemployment benefit, accommodation supplement and possible additional support if they have a high mortgage. So why didnt Labour find that out before telling the NZ Herald of this mans plight?
July 22nd, 2009 at 5:45 pm
I don’t know if the story has been updated, but I went to read the article his problem seems pretty clear to me:
He owned a lifestyle property and recently bought another house and an inner city apartment. My guess (I don’t know for sure) is that he wouldn’t have the income cover and probably used his equity in his existing property to purchase two investment properties. Looks like they are both cashflow negative and he was chasing the capital gain. i.e. speculating. Let me re-itterate – Even if he didn’t lose his job, he couldn’t cover the interest.
Then he says this “The apartment was purchased for “$260-something”, but he did not know the current market value.” This doesn’t strike me as a particularly sophisticated investor – He doesn’t know exactly how much he paid and what his investment property is now worth?
My advice to this guy. Sell both of your extra properties. Meet the market. Don’t ask the taxpayer to cover your three mortgagages.
Yes. It hurts but nobody is crying for the hundreds of big and smalltime property developers and speculators who are in the same boat as this after they too were burned by the decrease in the property market.