29-08-2008

The following is a report for the month of August 2008 concerning various issues monitored and or activities undertaken on behalf of the Federation.

Housing Affordability - Report

After many months of deliberations the Commerce Select Committee presented its report on its inquiry into housing affordability to Parliament on 15 August.

On the committee’s terms of reference concerning the “impact of increasing demand for residential properties by investors” the report said submitters were divided on tax treatment of property investment; there were those that thought benefits such as expenses and losses coming off tax bills and the largely untaxed capital gain contributed to demand and raised prices, but others said any change would hurt tenants and deductions homeowners claimed were equivalent to those business would claim.

Against this background, house prices are currently falling.

Questions about the Reserve Bank and interest rates were raised but the Finance Select Committee was holding an inquiry into monetary policy which would address them.

The Finance Committee’s report is not expected to recommend any move for change in the Reserve Bank’s job.

The Federation presented both written and oral testimony to the Committee.

The committee report can be viewed at: http://www.parliament.nz/NR/rdonlyres/3137FA40-2DF3-4311-B9E9-9621DBD5C7A7/92084/DBSCH_SCR_4170_6189.pdf

Lawyers and Conveyancers Act - Implemented

The Lawyers and Conveyancers Act 2006 came into effect 4 August.

Of interest to the Federation, the Act provides comprehensive protection for consumers of legal and conveyancing services.

The Act also introduces a new complaints service for customers of lawyers and conveyancers, and also establishes an independent disciplinary process for reviewing complaints.

HOUSING POLICY 1 – Kiwi Party

In an address to the Kiwi Party National Conference (9 August) Gordon Copeland (currently an “Independent” MP in Parliament) became the first political party, during this election campaign, to announce its housing policy.

The flowing excerpt outlines their policy:

Housing affordability is also an urgent priority for New Zealand. Housing is now less affordable for young kiwi families than at any time in my adult life. In some areas of New Zealand, notably South Auckland, only one third of families are now living in their own home, with two thirds renting and these statistics are getting worse. Right across the country home ownership levels have reduced significantly.

Frankly the Government’s response is frighteningly inadequate. Simply stated, home ownership must become a national goal.

Firstly we want to greatly increase the supply of land for subdivision. Artificial restraints on the supply of land, through so-called “smart growth” initiatives have been the single largest contributor to the increase in house prices we have seen over the last three to four years. If you intervene to limit the supply of land for housing then its price will go through the roof!

We should aim to see new houses coming into the market at 4 times the average wage or about $190,000.

Secondly the new “development levies” now charged by local councils are, in reality, a “new house purchaser infrastructure charge.” They can add as much as $20,000 to the cost of a new home. New infrastructure such as sewerage, roading etc, should be financed by issuing bonds with debt repayments spread on an intergenerational basis.

Thirdly, new requirements imposed by the Building Act in 2004 went way over the top. While builders need just four or five pages of plans to build a new home, they now need 12 or 13 pages of plans to obtain the building consent! That is absurd and must change.

These three issues, taken together, essentially explain why housing has become so expensive.

And from a press release dated 15 August:

“We will: 1. Increase the supply of land for subdivision. Artificial restraints on the supply of land, which have been the largest single contributor to the increase in house prices over the last four years, will be removed. Our aim is to see new houses coming into the market at around four times the average wage, or about $190,000.

“2. End the "development levies" charged by local councils. They are, in reality, a "new house purchaser infrastructure charge", and can add as much as $20,000 to the cost of a new home! The Kiwi Party believes that new infrastructure such as sewerage, roading, etc, should be financed by issuing council bonds, with debt repayments spread on an intergenerational basis.

“3. Rewrite the Building Act to simplify the issuance of a building consent. The present situation is absurd, with builders needing to provide twelve or thirteen pages of plans to obtain a building consent, but just four or five pages of plans to actually build a new home”.

HOUSING POLICY 2 – National Party & NZFirst

During the month the National Party and New Zealand First both issued press statements calling on state house tenants who intentionally damage their rental property to repay the State and that these tenants be held to account.

The statements are interesting and in the upcoming debate on the Residential Tenancies Amendment Bill it would be consistent for both parties to strongly fight to ensure private residential landlords rights were defended especially on the Bill’s proposals to limit tenants' liability for damage to the equivalent of 4 weeks rent.

HOUSING POLICY 3 – Green Party

The Greens are calling on the Government to take action after a report that overseas buyers are swooping on the New Zealand property market, allegedly keeping out first time home buyers.

Dr Norman said he was worried recent price drops in some areas and especially Auckland could be countered by overseas speculation.  He also said the Government has a responsibility first and foremost to ensure New Zealand citizens and residents can afford to buy a stake in their own country.

Elsewhere, the Government/Green Party has announced a one billion dollar energy efficiency fund (e.g. for insulation etc) available to all households, as part of a coalition deal on climate change legislation.

The Energy Efficiency and Conservation Authority Board would administer the insulation fund with grants for low-income families and "heavily subsidised loans" for those with higher incomes.

Housing New Zealand vs. Tenancy Tribunal

The press (27 August) has reported that Housing New Zealand has appealed a Tenancy Tribunal decision in which permission was refused to terminate a tenancy at 39 Rangeview Road, Mt Albert, Auckland.

The appeal, to be heard by the Auckland District Court, will decide whether to require the Tenancy Tribunal to re-hear Housing New Zealand's case against the tenant.

The court case will be of interest to the Federation as it will clarify whether public and private landlords must now meet a higher threshold of evidence proving a tenant's antisocial behaviour before a tenancy termination can be secured.

POLITICAL CONTACT

During the month the New Zealand First Housing spokesperson, Pita Paraone was briefed on Federation perspectives on the Residential Tenancies Amendment Bill.

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APPENDIX A: TRACKING TABLE OF LEGISLATION/REGULATION

The following table summarises the status of current Bills and/or issues affecting landlords/rental property.

END