A new state housing agenda

Written By: - Date published: 2:31 pm, July 21st, 2010 - 35 comments
Categories: Economy, Environment, health, housing - Tags:

The country is short about 10,000 houses and many of the houses we do have (mostly privately owned rentals) are unhealthy. The housing shortage was a driver of the last housing boom and is still keeping house prices excessively high, while poor quality housing means higher health costs, more sick days, and kids that are sick so often it disrupts their education. It would be sensible on every level to build the extra houses we need, and the government should take the lead role.

The government is the only body that can afford to put up that kind of capital.

I’m not talking about more endlessly sprawling suburbs. We need smart communities with good population density, local commerce and public transport into the main jobs centres. We need smart urban design that plans ahead at every level and we need smart housing as well.

The government should lead construction of thousands of eco-smart homes that use sustainable materials and are warm and energy efficient. In the 1930s, state houses set a new standard for housing for the working class, they should again.

Mass-produced designs using local materials could create thousands of jobs. And using something like HIB’s awesome modular system which recently won the prize to build green homes in tornado-devastated Greensburg, where the houses are assembled from giant hollow wooden ‘bricks’ that fit together like lego, could actually let the people who are going to end up living in the houses participate in their construction.

The next element, I think, is to use a massive state housing construction programme as a stepping stone to increased home ownership. Let tenants rent to own but place a stipulation on the title that, once a state house passes int private ownership, it can’t be leased out. That would prevent families being priced out of the market by hands of private landlords who, last time state houses were sold, bought up state houses at prices the tenants couldn’t afford and then let them fall into disrepair while charging high rents. Ideally, the government could could compete modern slum landlords out of the market like it did in the 1930s.

By building high-quality, healthy eco-homes, on-selling them to tenants who wanted to buy, and then re-investing the recouped costs in more houses, the government could dramatically improve New Zealand’s housing stock in a relatively short space of time.

35 comments on “A new state housing agenda ”

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  1. vto 1
    21 July 2010 at 3:24 pm

    A state-owned property developer … who would have ever thought?

  2. Rex Widerstrom 2
    21 July 2010 at 3:29 pm

    I can’t add much beyond a resounding “hear hear”, Marty, and to note that the Australian Federal government invested hugely in building in order to keep the industry afloat during the GFC. And it worked.

    Unfortunately Gillard made an uholy mess of it, putting the money solely into school buildings and not housing (WA is officially building 5,200 homes per year less than is needed but I call BS on that… the waiting list for state housing is 6 – 7 years) and then getting ripped off by the builders who were charging $500,000+ for a one-room tuckshop.

    Investment in housing, properly supervised, is a different matter however. They could even outsource the supervision of the whole project to an NGO like Housing for Humanity.

    I’ve always believed proper housing, in which people have a stake (through sweat equity, cash investment or both) is a key to turning round a raft of other social ills.

    Here’s an idea just begging for Labour – who, as Marty points out, have a magnificant record in this area – to pick up. Will MJS’s inheritors have the foresight and guts, I wonder?

  3. bbfloyd 3
    21 July 2010 at 4:35 pm

    an elegantly simple concept.the political required to implement these kind of farsighted policies doesn’t exist here. but i will continue to hold my breath. i could imagine, that within a decade of commencement, the government of the day could then remodel the redundant prisons that were built to contain the malcontents that didn’t eventuate, because the communities they came from were infused with a sense of ownership and pride.
    which, as most of us would acknowledge, is the worst possible environment for producing quality criminals.

  4. Herodotus 4
    21 July 2010 at 4:47 pm

    And Marty land, town planning, services RMA etc this all takes time, friom experience about 10 years from farm land to a section being made available to the market. Building is amazingly expensive, a reative from Scotland (He hates the ref of UK or anything that ties into Mother England) was astounded at the price for housing within Auck burbs. When I explained that most spec houses are being sold at around cost to build, land developers cannot access finance (The Aussie banks are unwilling to finance, the 2nd tier have gone or are about to go).
    So Marty where does all this land to build 10k of house come from, and how long will this take?
    As Jafa land holds 1/3 of the pop I take it you would require 4k of houses, and not concertrated within a certain area as you have said. The cost is not only attributable tdirectly to housing existing services require upgrading e.g. roads, stormwater systems, sewerage etc. This as many within the industry will inform you of the slowness that councils and ARC move. Unless you desire that cent Govt just pass a law to subdivert existing practices and get heavy handed. Can you imagine the negative political capital in that. NIMBY.
    Also that state housing do not contribute to rates, though there are cent govt funds for roading and the like available. Also the time for cent govt to react to like education and the acquiring of land and building schools. The acquisition of land takes 2-3 years then there is planning and the construction.
    Everything takes time and more time than many think to accomplish.
    We are strating to realise ref NZ herald this week, NZ is a low wage BUT high cost of living country, even our cheep power (We have been told this over the years) is not cheep when compared to the UK.

    • Rex Widerstrom 4.1
      21 July 2010 at 6:10 pm

      about 10 years from farm land to a section being made available to the market

      What’s the porimary reason for this Herodotus? Regulatory approvals? I suspect that’s a large part of it. That could be solved at the stroke of a pen… get rid of the enormous council / regional council bureaucracy, streamline their functions and make planning approvals that fall within preset guidelines virtually automatic.

      Building is amazingly expensive

      Partly a result of the skills shortage… which we could overcome with a NZ equivalent of a 457 visa, which Australia is using to import migrant workers to feed the building and mining industries without having to commit to supporting them on welfare if / when the boom ends.

      Partly the cost of materials. NZ builds houses out of wood – ideal for warmer climes but hardly practical in freezing winters and spends a fortune heating them, just because we’re surrounded by trees. Australia builds houses out of bricks, which trap the heat extremely well, then spends a fortune on air conditioning them, just because they’re surrounded by sand. A solution sugggests itself…

      • Ed 4.1.1
        21 July 2010 at 6:30 pm

        Move our earthquakes to Australia?

        But the modular approach referred to in the article is worth considering, along with a number of other ‘cheap but efficient and environmentally friendly’ systems that we do not seem to take up well in New Zealand. The ‘stop-start’ nature of our building programme, and an aversion to anything other than individual houses doesn’t help.

      • Herodotus 4.1.2
        21 July 2010 at 7:52 pm

        Councils preparation for a plan change takes 3+ years from conception of ther idea to being documention for public summission. From notification to hearing 3 months then there is the appeal process, Envir Court etc. But the majority is prep work for the plan change documention. As councils do not have the skills or funding it is left for the developer to provided the solutions e.g. roading, traffic movements, stormwater management etc. Then ther eis Transit/transfund who then require traffic solutions to the added traffic to motorways. It is al this claim counter claim. In summary the developer provides reasons for the solutions, solutions for councils issues, then community. How infrastructure to the new development dovetails into existing. All this pre 2001/2? used to be preformed by council and developers would work within or obtain a consent variation.
        Previously stormwater was piped and houses built ontop, now we have green fingers and open stormwater, as a rule of thump 25% of land was not able to yield lots e.g. roads etc not it can appraoch 35-40%. as sections get smaller drains that were ungrounded on boundaries are now wiithin building platforms so bridging is required that adds osts underground so the unknowing are unaware as to why costs have gone up.
        All this and in Auck I would be surprised if you can buy a piece of land for under $225k on anythnk greater than 400m. We also have a requirement for double glazing additional $5+k and council requirements re code of compliance and the increase in time to build. Previously from S224 you could build a 200m2 house within 4 months, now I would be surprised if you could achieve this within 8. So ther is additional holding costs on top of everything else. Like most industries that are costly, no one knows why it just is. Just as well we live in a high valued wage economy !!!

        • Rex Widerstrom 4.1.2.1
          21 July 2010 at 8:36 pm

          Hmmm… a law which sets minimum times for these bureaucrats to process development applications and forces councils to recompense developers for delays beyond those parameters sounds like it might inject some vigour into grey shoe land.

          • RedLogix 4.1.2.1.1
            21 July 2010 at 9:05 pm

            The problem with the planning and consenting process is primarily that Councils and TLA’s are generally under-resourced to do the job well. It’s not easy work, it requires good judgement and experience to do well, and doesn’t pay all that well.

            Councils usually under-staff the consent dept leading to high work loads, stress and high staff turn-over, which in turn creates delays and more stress.

            One fairly straightforward consent I completed recently went a whole year and $25k over budget, SOLELY because we went through no fewer than four, count’em….four different planners in that time. In the end they simply wound up approving pretty much exactly what we had proposed at the outset… now just $25k dearer for no added value. Each one did their best, but each one needed to be brought up to speed, each had a slightly different angle and each being very junior, needed to kick the decision upstairs.

            I’ve no problem with the planning and consenting process, it’s necessary and useful, the alternative is chaos and corruption… but the under resourcing of the process leads to pointless delays and understandable frustration all round.

            • Herodotus 4.1.2.1.1.1
              21 July 2010 at 9:34 pm

              Yes we pay these guys peanuts and expect great things. Just as well we have the likes of Banks, the nort shore guy, Sir Barry Curtis (past MCC mayor) and the likes to lead us to the dark ages !!!
              Only thoswe directly involved know anything like how the system runs, like all bureausracies it is knowing how the system works and doesnt and working around. It is the unsuspecting public that bear the cost of this. As housing is market driven many do not know of the cost input that differentiates one house from the other. And for me many water tight houses built within the last 15 years (In Auck) are selling with great capital gains for the owner but well below replacement cost and many out there are so unaware just so chuffed at what they achieved with their selling price. What is worst how do Kiwis enter the market, and $350k appartment that offers nothng more than a roof over their head, and the prospect that in 15 years and a 50% mortgage that they could all going well afford their parents home.

              • Rex Widerstrom …
                22 July 2010 at 12:12 am

                Sounds like, from what red Logix and Herodotus are saying, we are in desperate need of accountability amongst councils. Less overseas “sister city” junkets, less birthday parties at flash restaurants, and more (and better paid) planning staff… or compensate the developers you’re p***ing round.

                • loota …
                  23 July 2010 at 12:19 pm

                  In Dunedin, the current city council has led the economic and population stagnation of one of NZ’s finest cities.

                  But we are getting a nice ~$200+M stadium with bread and circuses.

  5. Helen Kelly 5
    21 July 2010 at 4:54 pm

    National cut almost all the budget for renovating state houses in the last budget – leaving poor quality housing as its legacy

  6. MrSmith 6
    21 July 2010 at 4:54 pm

    The private sector could easily take care this problem, all they need is the banks to lower there interest rates and lending criteria.

    • loota 6.1
      21 July 2010 at 6:05 pm

      New over-leveraged, speculative million dollar houses and apartment developments going up aren’t going to be of much help.

  7. bbfloyd 7
    21 July 2010 at 4:58 pm

    @herodotus… grammatically correct, but shallow. does it not occur to you that the administration capable and willing to undertake a project of this magnitude would also have a firm grasp of the complexities and obstacles as well? applying current attitudes and circumstance to future realities seems to imply that time is a static commodity, and that nothing will ever evolve from today. in one way you may be right.

    • Herodotus 7.1
      21 July 2010 at 5:27 pm

      From my dealings with cent govt both under Lab and current Nat neither display any ability to have any understanding of the matter, and neither does the MOE when planning for schools based on THEIR pop models. Unfortunately pop increased in araes within Auck not according to the models so we had situations of new communities occurring 4-5 years ahead of the MOE and land not being purchased until the area was already populated, let alone the idea of construction to take place.
      Most large tracks of land are either held in small land areas and disjointed ownership, so the acquistion of any large land areas would be difficult, most land being developed would have covenants re building mats, size etc already applicable to them. Many of the covenants have requirements exceeding HNZ requirements for the 10 year lease back.
      Land on the outskirts on Auck is generally difficult and would require extensive geotech solutions, and are expensive to build on re foundation requirements.
      Let alone the zoning issue.
      It all takes time and we only have a 3 year term of which only about 2 years is useful in setting up mechanisms to implement a policy. Then there is the issue of being voted out and the new regime not being as supportive or tinkering with it to suit their own political means.
      For developers there are 2 enemies, the bank(abilty to fund) but predominately time is the greatest of the 2.
      bbfloyd, we get some crap legislation form both NAt and Lab so if they can only cope in superficial solutions to many issues why would we expect anything different with this??

      • prism 7.1.1
        22 July 2010 at 12:02 am

        just a thought herod.. do you think a four year term would allow time for planning and implementing in full for projects that the 3 yr trm doesn’t?

        • loota 7.1.1.1
          22 July 2010 at 12:20 am

          One issue is that the voting public must begin to take a longer term view of things. Once that happens, pollies will be able to take a longer term view of things. However, neither the MSM or the pollies seem particularly interested in encouraging this development.

        • Herodotus 7.1.1.2
          22 July 2010 at 8:40 am

          3 or 4 year term or even 5 would not have he structural changes that I think bbflody was hinting at. As you stil have the 1st year to get acquanted with your new seat, and the last so as to distance yourself from the bad thing you implimented in years 2-3, with the promise ogf a sweetner in yr 4 budget to be reelected. y then another 5 years has been lost in the process.
          or me all that could be done is for a task force (Unfortunately) to be set up to examine the easily picked fruit in delay and make best for streamline these.
          Unfortunately we accept the high cost of housing as long as ther eis inflation because then we can make a killing by selling, and home ownership is in our blood,(Though this is being thinned out with the rapid decrease of homeownership %)
          Opening up zoning for everyone who owns land as some have touted would not for me work, as there is the issue of councils overall strategy and proviosion of infrastructure. In Auck we had in the 90’s a Growth strategy headed up by the ARC that targeted certain areas for growth, Flatbush, Long Bay, Hobinsonville, Helensville, Kumeu, Silverdale and a few other areas. The strategy was to cater for 50 yrs requirements, most areas have already proceeded and these are expected to be completed by 2025, 25 yrs thru a 50 yr plan !!!
          Possable soln ring fence Auck and state that 2m pop is max, or have a pop strategy (The Greens are the only party that I am aware of who has such) by cent govt and fund infrastructure and plan. For some this is to close to a China or USSR of past, or just letthe mes grow and put out the fires as they appear.

          • Ryan 7.1.1.2.1
            22 July 2010 at 1:44 pm

            Good shot, so what if it is “China” or “USSR” thing. It’s based on solid facts and reality. Not that the “crisis” that we all seem to be paying for was based on reality. As far as I can see a derivitive is imaginary money used to blackmail governments into bailouts and austerity measures.

  8. just saying 8
    21 July 2010 at 5:31 pm

    The pick of state houses in Dunedin are still being sold despite a substantial waiting list. Apparently the money goes towards state housing in Auckland. Since the massive cut to housing in the budget, this kind of shuffling is probably helping cover the extent of the gaping hole in public housing, particularly in Auckland.

  9. Nick C 9
    21 July 2010 at 5:54 pm

    “The country is short about 10,000 houses”

    What is this based on?

    • jcuknz 9.1
      21 July 2010 at 10:17 pm

      I would guess that it is an assessment of the number of homes which have reached their use-by date and are basically unhealthy hellholes that the unfortunate are living in.

  10. RedLogix 10
    21 July 2010 at 6:57 pm

    By building high-quality, healthy eco-homes, on-selling them to tenants who wanted to buy, and then re-investing the recouped costs in more houses, the government could dramatically improve New Zealand’s housing stock in a relatively short space of time.

    As a small-scale builder/landlord myself I have to say a loud amen to that. That’s pretty much the standard of building I’ve done; this winter one of the tenants has got his power bill for a 125m2 townhouse (and two teenagers) down to about $150 per month while enjoying 20 degC temperatures plus all the time.

    I’d love to be able to on-sell some of my existing units to tenants and build some more…but as soon as I do that I get classed as a property trader and have to pay full income tax on any profit. Which in such a capital intensive business is totally unviable. Currently I’ve reached the limit of what I’m prepared to borrow (and what the bank is probably willing to lend in the current environment) so I’m stuck. Good idea, going nowhere.

    Even with good intentions the private sector cannot deliver at this time….only the state has the ability to drive the massive change in the building and housing industry that is so desperately needed.

    • Rex Widerstrom 10.1
      21 July 2010 at 9:04 pm

      I’d love to be able to on-sell some of my existing units to tenants and build some more but as soon as I do that I get classed as a property trader and have to pay full income tax on any profit.

      Just thinking aloud… what about some sort of vendor finance / rent-to-buy arrangement? Would that help minimise the tax situation whilst providing an (albeit slow-to-build) source of alternative reinvestment capital?

      (As you can probably tell, my knowledge of tax law is worse than zero).

      • RedLogix 10.1.1
        21 July 2010 at 9:13 pm

        Yes, the basic idea is sound enough and there are a number of people in that game, but your instincts are basically right… its a complex area of tax law. Even the GST treatment is a bit of nightmare because you are mixing residential renting (zero-rated for GST) with development and trading which is GST liable.

        We thought about it, but at the time we felt it was for folk with bigger gonads than us. On the other hand maybe we could have another think….

      • Ryan 10.1.2
        22 July 2010 at 1:47 pm

        The ONLY way not to pay tax is be a membership only incorporated society that is not for profit. And don’t accept donations. Otherwise you will pay tax.. Sounds outrageous doesn’t it?

  11. William Joyce 11
    21 July 2010 at 9:39 pm

    Despite National once being a party that welcome increased home ownership as a means of giving people a greater stake in society and thereby solving some of societies ills, it prefers that we are all renters and especially to private landlords.

    Having once worked work for state housing, we identified a threat to our continuing to meet “serious housing need” (as defined by then minister Helen Clark), as being an alliance between National and the Property Investors Assoc (and their like). When National got elected in 1990, they immediately began selling off houses and closed down the loans side of HCNZ.

    National would not like Marty’s ideas….
    It would increase the size of the state.
    It smacks of central planning (something you can’t have in a capitalist economy – except for China of course – am I still allowed to use the word smack?)
    It would make the state a greater landlord and deprive Nat-ACT consituents of rental income.
    It would put the shit-covered masses in the neigbourhoods of the Nat-ACT supporters.
    It would change the voting patterns of places like Epsom.
    It would not provide the needed ghettos in the outer suburbs that Nat-ACT people drive past on the motorway and point out to their children as warnings against indolence and penury.

  12. Herodotus 12
    21 July 2010 at 11:23 pm

    Home ownership is the easiest way to get the many to conform to societies norms. As they now have something that is costly and the fear that they could lose this tends to turn people to becomming increasing conservative, you now have entered middle class all that is required is a (married) partner 2.8 children and a dog!!!
    Beware you now have purchased a ticket to the rat race and there is no opting out !!!
    Both Lab and Nat spin drs like this conformity as they can now play on your fears!!!!!!

    • William Joyce 12.1
      22 July 2010 at 11:53 am

      I get your point and have sympathy with it. “Little boxes on the hill side” in “Nappy Valley Sunshine”.
      But we have people who feel that they have no stake in the country (in the world for that matter).
      How can we help them? Should we? Do we want people to find a role/place in society as “Convict”, “Welfare dependant”, “Home invader”. That disturbs my ability to be a clone.
      Home ownership is only one option and it not for everybody. I’m the last person who wants a docile populace because they are mortgage slaves. What I would like to see is more people build some capital for themselves – whether that is in their own home, a qualification, investments, family etc.I want them to have ownership in society – in what ever form that may.
      Any ideas?

      On another issue, for a number of reasons we need a landlord of last resort.

      • Ryan 12.1.1
        22 July 2010 at 1:49 pm

        A completely referendum run government via computer use along with a free education dammit.

  13. jcuknz 13
    22 July 2010 at 10:23 am

    While I used to be and probably still am all with you Marty, originally I went even further with a concept of state housing being available for all with appropriate housing for one at various stages of life … single men’s accomodation with shared abolution areas onwards … charged at 30% income … that an incentive to move out into the relatively ‘cheaper’ private zone as you progressed in life, if you did.
    But the thought of the dreadful urban sprawl that has occured over the past eight decades eating up in many cases valuable farmland continues to concern me. The idea of mass produced kitset but well designed ecofreindly houses appeals but the big question is … where will we put them. Instead of the traditional quarter acre section or even the tiny ones people put expensive houses on these days … we I think need to accept the highrise city block. There I seem to remember reading about stacking glorified containers so maybe I am mis reading your intentions. Another thought, floating homes such as Hong Kong spreading out over the Hauraki Gulf, but would people be happy with Porta-Potti’s. I guess if it was ‘marina like’ connections and pumping would be possible.
    The first step I think is to upgrade our current housing stock by retrofitting or replacement. Bringing back the sensible Buiding Code of pre-1990’s which guided the likes of me with no industry experience to build two homes, for first my family and my retirement by replacing buildings past their used-by dates within the city. Better that than all the longwinded and expensive carry-on we currently have with regulations imposed by politicians scared of public backlash at problems caused by their past timidity..

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