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5:30 pm, March 29th, 2021 - 46 comments
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With the Prime Minister today ruling out any intervention to regulate house rents, one might immediately think there is the opportunity for the Commerce Commission to form an inquiry.
Except …
However last time I bought a flat, the bank was able to show me on a rate card exactly what I should charge.
Also it will take a while before we can see the cumulative effect of the changes both to minimum standards and to landlord financing to see any synchronous price movement.
It was good that the PM and Minister finally reacted against speculative investors. But I would still want the Commerce Commission to invite closed-door briefings from Harcourts, Barfoots, the five main banks, and some of the main landlords including Kainga Ora to get people talking about robust pricing elements.
It would be convincing if rent subsidies would have a cap. This would very soon show how bad the situation really is. If even more of our taxpayer money is being handed over to landlords I will definitely vote for Act. Labor is just throwing money around without flinching that future generations have to pay back, National is on the opportunistic tide- no alternatives there, the Greens are nowhere to be seen. That leaves Act as the only party that has so far at least offered ideas.
Do you really as you say want renters to be far more exposed to these market conditions, in order that the government can show the amount of subsidy?
So far, every time the sub was increased so where the rents. If these are only allowed to adjust once per year it will be an astronomical amount. Funny that, it will – coincidental of cause – be taking all the sub. Why not have the snout in the trough right from he start and do away with bureaucracy in between?
The market works both ways. Instead of giving the landlord the money, increase benefits. It also shows that obviously incomes are far too low and it maybe needed to reduce taxes for income earners up to 50K. It would than be for landlords to compete with renters not just automatically increase rents because the government is re-indexing the rental subsidy. It would be by far a better solution.
With the Prime Minister ruling out any intervention to regulate house rents
I wouldn’t worry too much. Jacinda and Robbers have a history of saying one thing today and doing the complete opposite tomorrow. We can take what they say today with a grain of salt.
I like history, especially annotated and well-documented history, with reputable references. Got any of that? 'Having a history' implies a series of events, not one, now. So, put them on the table or I'll have to find my salt shaker…………
I’d start with the entire 2017 Labour manifesto then roll forward from there …
… but COVID 🙂
So no real evidence of a history of reversal behaviour? I guess I'll have to use the garlic salt, then…….
When you say robust pricing elements, do you mean things like social harm, affordability…that kind of thing, hence Kianga Ora's inclusion. It's not like they set rents they just pay subsidies based on the assumptive market rent which imho has always been out of whack because it assumes that despite shitty antisocial neighbours who will never leave or be kicked out + bad maintanence people will pay the same as other places nearby without those issues.
The way rentals are subsidised is a huge freaking State problem.
If the govt did limit market rents then landlords leasing to Kianga Ora might have a legal point to argue. Their contracts stipulate they will be paid market rent, and from memory it is assessed every year.
Ad
29 March 2021 at 5:50 pm
With the Prime Minister today ruling out any intervention to regulate house rents….
Hi Ad,
I'm sorry I missed this statement from the PM can you provide a link?
If PM has made this statement, it makes me wonder, who is setting the country's housing policy?
The government, or the Nact opposition?
Robertson Must Rule Out Rent Control
Saturday, 27 March 2021, 2:05 pm
Press Release: ACT New Zealand
https://www.scoop.co.nz/stories/PO2103/S00212/robertson-must-rule-out-rent-control.htm
Government must rule out rent caps – National
4:58 pm today
Jane Patterson, Political Editor
https://www.rnz.co.nz/news/political/439403/government-must-rule-out-rent-caps-national
If PM has made this statement, and if the situation for first home buyers and renters worsens, I just hope the PM can feel free to break this promise to the rentier class and their political water carriers.
As per the link I gave below:
https://www.theguardian.com/world/2021/mar/29/new-zealand-housing-crisis-jacinda-ardern-says-rent-increase-warnings-are-speculative
The government will just wait and see what effect the interventions they've just made will have.
I see rent levels as a third term issue now. And even then, they've shown they will subsidise housing, hotels, rents, and accommodation generally about as fast as they can print money.
Good one, meanwhile in on of the poorest areas in any city in NZ:
Rent in Porirua, Waitangirua: lower end: $ 499, upper $ 588.
This is a absolute rort from the landlords. Many renters are on a benefit and the only way to pay for that is when a house is over crowded. And here are the health issues that affects a system that is completely overloaded and people are actually dying waiting for surgery.
Oh bless your cotton socks.
https://www.tenancy.govt.nz/rent-bond-and-bills/market-rent/
"But nobody can really tell at this stage by how much rents could go up and how widespread this might be.
The fact is the days of 'cost plus' being a viable pricing mechanism are long gone in New Zealand, as they are in the rest of the world.
Rents will only go up substantially if 'the market' can take it.
Most renters would probably feel that accommodation in this country is already pretty 'fully priced'. So, the question is what 'market' resistance would landlords face from widespread rent hikes?
I suppose the big question there would be the ability of peeved renters finding alternative living arrangements. But you can't get blood out of a stone. And to mix up my metaphors, landlords would risk killing the golden goose if they squeezed too hard.
So, okay, that's one aspect.
The other significant aspect is the prospect (very real I might have thought) that at least some landlords might see this as all too much bother and look to cut and run – IE sell their property or properties."
https://www.interest.co.nz/opinion/109735/david-hargreaves-assesses-some-more-intemperate-suggestions-being-made-about-what
All without the mention of AirBnB or vacant properties.
Both through Statistics NZ and through the Tenancy service, the state gives a pretty good idea about what each place is worth to rent.
https://www.tenancy.govt.nz/rent-bond-and-bills/market-rent/
It's also not hard to find the vacancy rate in each city. It's pretty tight in Auckland.
And of course not hard to find out the price the state is paying to keep most people in motels and off the streets. It's a fair bit, as you'll see in the upcoming budget.
That is to say, we already have market failure and it's likely to get much worse.
When you say 'the vacancy rate' I assume you mean the rate of untenanted properties available to rent…..that is very different to the rate of untenanted properties that COULD be available to rent but are not.
Since the Prime Minister has ruled out intervening in the price of available renting properties, you can take it as a given that she is ruling out intervening in the price of hypothetical ones as well.
It would also be an impressively flexible Commerce Commission that tried to run that kind of hypothetical as a baseline for an investigation.
lol…they are only hypothetical as long as they remain outside the market….and the PM is busy minimising (not ruling out) rent controls mere weeks after the latest control ended.
From the Guardian quoting the PM's press briefing:
“What we’ve seen in our rental market has not mirrored what we’ve seen with house price growth,” she said.
“In fact, more often than not, it’s tended to mirror wage growth and so we will keep an eye on the numbers closely, but at this stage, we have no further plans in that area.”
She would not be drawn on what level of growth she would rule unacceptable.
Earlier on Monday morning Ardern’s chief press secretary had accidentally sent an email to Stuff, intended for his staff, asking for quotes from economists that could be used to rebut “the assumption rents will go up”.
https://www.theguardian.com/world/2021/mar/29/new-zealand-housing-crisis-jacinda-ardern-says-rent-increase-warnings-are-speculative
She gave herself a tiny 'out' with her phrasing, but it's pretty clear. They've intervened enough in the market for the foreseeable future.
"Finance Minister Grant Robertson said the Government would be keeping a close eye on any increase to rents and would "take action if necessary".
https://www.nzherald.co.nz/nz/politics/housing-crisis-government-must-rule-out-rent-caps-national/RL5IKJK5QWQN246V4ZJUL3A6HQ/
That was before Ardern's conference. He knows who he works for.
My bet is this is a third term issue … unless there's some almighty uprising.
Have you found that link yet where the PM said rent controls were 'off the table'?
Her phrasing is as cited above.
You want to read that optimistically, go right ahead.
lol…Judith is very concerned about the wiggle room…is she an optimist or a pessimist?
Judith Collins is Leader of the Opposition, for which pessimism is in the job description.
Hi Pat
From the link you supplied;
The shrinking rental market myth
A common thread I've seen in comments since the Government's announcement is that if landlords have to sell, this will itself force rentals up in price because there will be fewer of them and, well, supply and demand and all that.
Actually, as a piece of logic that doesn't work out….
If it's bought by an investor then the investor will continue to rent the property out – so, there will be NO change to the rental market. Okay the investor might try to hike the rental but I divert you back to the earlier comments in this article about the market and resistance etc……
David Hargreaves
Except if the investor finds the aformentioned market resistance doesn't allow him to get the rent he wants, he might just decide to park up the house, and get what he can from the capital gains.
The thinking behind this, goes 'If I, or other investors drop the rental to what we think tenants can reasonably afford, this will cause a drop in rentals being demanded everywhere. Better to try to artificially limit the supply to keep rentals up.
Lol…going mad…this is daily review.
Yes flooding the market is a big no no in real estate but sometimes you cant control it…we have around 150,000 investors all with peculiar positions that will make their own decisions….good luck herding that many cats….especially if the market starts to fall.
Does anyone know if we had rent control in NZ before?
You used to have councils like Auckland City and Wellington and Christchurch with really big council flats, which had very clearly targeted rent controls.
That was when the public sector dominated renting and took the prices with them. Back in the 1940s and 1950s.
Note the Tenants Protection Association and NZFirst were both arguing for rent controls in Christchurch back in 2012. But then the market really did alter:
https://www.stuff.co.nz/business/opinion-analysis/300100607/heres-what-would-really-control-new-zealand-rents
we had rent controls last year…they ended on the 25th of September
https://www.hud.govt.nz/residential-housing/tenancy-and-rentals/new-rules-for-rent-increases/
There's nothing new under the sun…
https://www.stuff.co.nz/the-press/business/your-property/9154737/Ice-cold-response-to-rent-freeze-plan
https://www.nzherald.co.nz/nz/imary-holmi-rent-control-doesnt-help-the-poor/5W7MATYSMIS7JVGYTFNNH5FBJU/
https://teara.govt.nz/en/video/33455/muldoon-announces-a-wage-and-prize-freeze-1982
millsy
29 March 2021 at 7:20 pm
Does anyone know if we had rent control in NZ before?
Yes.
State housing rents are limited to 25% of income.
https://nzhistory.govt.nz/culture/we-call-it-home/the-state-steps-in-and-out
The large pool of fixed state rentals acted as a competitive brake on private sector rentals.
The political agents of the rentier classes have been trying to whittle this buffer down, as much as they can by privatising and selling off state rentals whenever they are in government.
One of the reasons we are in a housing crisis is the removal of that brake.
agree….and to get the ratio of state houses to population back to the levels we had in the 1990s (before the sell off) we need around 100,000 state houses (total)
Looks like the National caucus is about to make a more on Collins. They voted down an indecisive Collins and her hand picked doctor deputy over mandatory fluoridation.
https://www.newshub.co.nz/home/politics/2021/03/national-mps-vote-against-judith-collins-shane-reti-on-fluoride-policy-in-rare-move-for-caucus.html
In 2018 Simon Bridges won a leadership battle after Bingles' retirement. Following that I had hoped to see four National leaders in a year. It didn't happen then but it might happen this year.
Todd Muller rolled Simon Bridges on 22 May 2020 so for there to be four National leaders in a year Collins will have to last until 22 May 2021…
…not looking good at the moment.
Let's check in on them again in 2026.
Muttonbird
29 March 2021 at 8:15 pm
…. They voted down an indecisive Collins and her hand picked doctor deputy over mandatory fluoridation.
That's nothing.
Around the globe conservative parties are not noted for heeding sound evidential science based advice.
Collins thinks she has a problem getting her party to accept the science behind flouridation. It could be worse. Collins is lucky she didn't ask her MPs to vote that climate change is real, as Erin O'Toole the leader of the Candadian Conservative Party made the mistake of doing.
'Canadian Conservative party votes not to recognize climate crisis as real'
https://www.theguardian.com/world/2021/mar/20/canada-conservative-party-climate-change-real
Blimey, get the popcorn out. Farrar has made a special post trying to run interference after having spoken directly to Collins.
They are doing damage control because the incident suggests Colins and Reti are anti-fluoride. Even Hooton has been trundled out to steady the sinking ship.
Thing is, these two clowns, Farrar and Hooton will know exactly who the anti-Collins faction is but they can't do a thing about it in case they prevail over Collins and then shut Farrar out.
Alo can't belevive Collins is still using Farrar for information distribution. This is the guy whose blog had to be moderated post Christchurch because of Islamophobic hate speech.
Meanwhile, Chris Bishop seems to think himself eminent PM material…but can'r even win his own seat.
For me, the schadenfreude peaked with the last sentence in yr link:
"Remember, National's caucus meetings are supposed to be top secret and impenetrable, but once against the caucus is leaking like a sieve. "
I'm astonished that Shane Reti – a family doctor – is not supporting an obvious move to make fluoridation available to more of NZ. It is a very safe and proven way to improve dental health, especially for children. The current local body approach allows vocal opponents with lots of energy to dominate what should simply be a public health matter – the result being more kids with rotten teeth than necessary and much of NZ without fluoridation.
Hard to believe New Zealand has a timber supply problem. We are basically a forest with some shitty towns tacked on.
The invisible hand strikes again.
The forestry bosses worked out they could make bigger profits exporting whole logs than finished timber, so closed down all the timber mills.
Now we find we can't get timber to build houses in a housing crisis.
So it looks like we won't be able to build our way out of the housing crisis afterall.
Concern grows over impact of timber shortage on New Zealand's house building industry
March 27, 1 NEWS
https://www.tvnz.co.nz/one-news/new-zealand/concern-grows-over-impact-timber-shortage-new-zealands-house-building-industry
With over 40,000 empty houses just in Auckland alone…
Is it time yet to start using our existing supply of houses more rationally?
Howsabout an empty homes tax, like they have in Vancouver?
Any takers, or is this just a step too far?
Bugger the homeless, would instantly increasing the availability of rentals and houses for sale cool the market to quickly and be too much of a shock for those middle class Moms and Pops who invested in property, to bear?
All those ugly freemarket chickens coming home to roost.
"Marty Verry, CEO of Red Stag group talks to Jesse about the current shortage of construction timber for building homes and how long he expects that to last.
Red Stag is a privately owned, independent timber company based in Rotorua.'
https://www.rnz.co.nz/national/programmes/afternoons/audio/2018789495/framing-timber-shortage-in-nz
heh
https://twitter.com/spat106/status/1376310103154913283