We have a homelessness problem in New Zealand. We also have 40,000 ghost homes in Auckland alone – properties deliberately left empty by hoarders, who just want to accumulate the tax-free capital gains. Writing in Newsroom, Cat MacLennan suggests looks at how we could use them to solve the homelessness crisis:
In New Zealand, the Government and Auckland Council are examining how vacant houses in the city could be used for the homeless or low-income workers. Mayor Phil Goff has spoken to ministers and says several thousand vacant homes could be pressed into service, perhaps for the Housing First programme, which finds shelter for homeless people, or for workers such as teachers, nurses and police officers who find it hard to obtain affordable accommodation.
We should look overseas to see what is being done there. Reoccupying existing homes is much speedier and cheaper financially than constructing new dwellings – in Scotland, for example, the average cost of renovating an empty property is between £6000 and £25,000, compared with the average new build outlay of £120,000.
In addition, it is less harmful environmentally to renovate than to construct from scratch.
A number of countries now tax homes left vacant for long periods. This raises revenue that councils can use for empty homes work but, more importantly, it is designed to nudge property owners into turning their houses back into homes.
Having houses lying empty in order to accumulate “wealth” while we have homelessness is simply vile. Taxing them is the least we can do. But if it continues, maybe we should look at simply seizing them under the Public Works Act for public use as state or emergency housing (and maybe homeless people should just start doing that themselves, UK-style). Houses should be homes, not investments.
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A Capital idea that will invoke screams of anguish from the wealthy,from the right.
A myriad of reasons and excuses for homes being empty will be put forward ,wrapped in outrage about freedom and property rights.
Levy them till they are utilised.
and from the Middle and from the Scramblers and from the average Labour voter…its the cherry on top of the 'NZ dream' to have enough money invested in property to have a couple of empty spares lying around (a guilty pleasure for those who view home ownership as a money making venture as much as a roof over their head)..
No, it was always the intention for NZers to own their own home so they would have security in their old age. Talking about residential property as an investment and "getting on the property ladder" I find deeply offensive.
And that's why I believe the failure of this Labour-led government to put CGT on all but the family home is a sellout. NZfirst be damned.
With you RosieLee. I think this government has done a pretty good job overall but I was very disappointed when JA ruled out a CGT as long as she was in charge. She didn't have to box herself into that corner.
I imagine the new occupiers of those houses would pay a modest rent. Therefore the "wealthy" would not be completely out of pocket, and therefore would have less to "scream" about.
Modest rent? Rents are exorbitant. The reason why even working couples cannot save for a deposit on a home. The reason why superannuitants and beneficiaries cannot afford more than a basic living.The reason why we have "child poverty"
If you are renting, try asking if your landlord will show you their books.
If you're paying $400pw rent, the fixed costs such as insurance, rates, regular maintenance, management and accounting will consume 50% of this. After this will come the variable costs, mortgage interest and/or tax depending on the age of the mortgage.
Typically you'll be doing well to see $5k pa in profit, which on an investment that is probably worth $500k or more to replace, is pretty slim pickings really.Yes I've no doubt you feel rents are exorbitant, but so are costs everywhere in the housing sector.
Except very low interest rates and no capital gain tax.
At present mortgage rates are low, but this just means it's less of a deductable cost, thus increasing your annual company profit tax. Over the life of the mortgage there is a tradeoff between the table mortgage, the total interest paid to the bank, and the company tax paid to IRD. As one reduces the other increases.
As for CGT would not be relevant to the annual accounts; it only has any possible impact when the property is sold, which may not be in the lifetime of the owner. Also when the property is sold any depreciation claimed will be included in the tax calculation owed.
It's a total myth that rental companies don't pay tax.
"It's a total myth that rental companies don't pay tax."
Strawman
As for you cgt explanation that a landlord may die – sheesh your worst bullshit argument ever. Did you reread that after you wrote it? Depreciation is sweet bugger all in relation to overall profit – reading that was like watching billionaires cry over having to pay their fair share.
You know low interest rates help a lot, and bullshit tax merry-go-round argument is just that, a bullshit merry-go-round argument. Leaving aside the majority of cases were people involved in property, are not paying company tax.
Must be hard people being critical of you being a landlord, but take a step back from it if you can – because on this argument your logix has left the building.
As for you cgt explanation that a landlord may die
Distortion. CGT only applies when the property is sold, and for the majority of landlords who are running a 'buy and hold' strategy, it has precisely zero relevance.
Hell if I transfer the business to my family over time (my daughter is already a shareholder), the properties may never be sold in the foreseeable future.
The point is that demanding a CGT to solve a problem where it has zero leverage is pretty silly.
Besides I’ve consistently argued for TOP’s CCT
asset tax which would actually impact my position far more severely than any CGT. Totally against my own self interest. You may want to consider that before spraying bullshit around about my motives.
You know low interest rates help a lot
Yes they do, but the increased before tax profit attracts higher company tax, so the impact is not as large as you imagine. And if interest rates do rise dramatically rise, it will hit everyone.
And again most people imagine depreciation is some kind of tax gift, when it isn’t. It gets paid back eventually.
The comments I am making are from 20 years of experience in this game. What is obvious to me is just how much ignorance there is out there, and how many pernicious myths have been built on that ignorance.
I've not argued for a cgt, I'm pointing out that there little to no tax on making money off property. cgt being short hand – no need to lose sleep.
But no cgt nor any other mechanism to tax making money off property helps landlords, as they can at the very least loan more money on their property – and is even better for those who flip property.
Glad you agree that low interest rates help landlords.
My comment originally was to point out you missing things.
I had hoped you might have noticed I didn't actually want to discuss silly aspects of Liberalism with you. I still don't.
I will point out though – your experience "in the game" don't mean a short piece of crap to people paying upwards of 80% of their income to pay rent.
And it means even less to those watching themselves and their families suffer under the growing property gap which appears to be gamed against them, and in favour of property owners.
Myths exist, becasue people who have the least can never argue with experts – their opinions never count. Plus the experts and managerial types just don't give a fuck about them anyway. Which your comments today have a heavy does of Redlogix, I'm not sure that is by design on your part. But it is coming across that way.
Capital gains tax would make no difference since it's not paid until the property is sold.
"The number of real rental businesses, like real farmers, rather than Capital gains farmers, is unknown, but the steep rise in prices, for buying and selling land suggests capital gains speculators, rather than long term business operators, are the majority".
Boo hoo. And then you sell up and realise millions in tax free capital gains.
So what. Let's look at the typical landlord who has two units. Let's say they purchased them around 1990 for $150k each and now in 2020 they're sold for $700k each leaving after depreciation payback maybe $1.2m left. Now subtract the original capital of $300k and the $500k of interest they probably paid in interest over the life of the mortgage. This now only stacks up to maybe $400k over and above simply putting the same money in a bank account, or Kiwisaver, for 30 years.
Now let them retire at 65 and assume they both live active lives until their mid-80's another 20 years. That extra $400k from their rental business, spread over 20 years doesn't even double their Superannuation. It's welcome extra income, but they're scarcely rich.
Then of course if they do need residential care, their asset base will be too high to qualify for an RCS subsidy, so they’ll get to pay that privately as well.
Of course if they accepted more risk and took on more units they would have done much better, but these people are the exception.
No one will probably read this but you have omitted to include the case where the landlord has probably (often against equity built up in other properties he/she owns) borrowed to buy the units in the first place. He/she knows that, not only will the rent cover the mortgage payments and more but that all interest paid on the loan is tax deductable against nett income from the rental paid. In the meantime he/she is making considerable capital gain which, in turn, is not taxed on sale. In the final analysis the property owner has made a considerable profit with very little outlay – exactly as predicted by Bob Jones when he promulgated the doctrine of "mortgage gearing".
If you think it's so easy try doing it yourself. The income is always riskier and less than you expect, and the expenses higher and more certain.
Yes you can leverage yourself up to the eyeballs to do this, but you will encounter at least a decade of needing to pump in personal funds to keep it afloat. It doesn't take much for it to all go badly wrong.
Actually I have – not on a large scale but certainly experienced all the advantages I have mentioned above. I guess that a key point is the quality of the home you purchase and the reliability of the property managers you engage. However, I can assure that it works alright. Why are there so many landlords with multi properties if it doesn't.
Your calculations include both a full capital investment, and a mortgage.
If someone has a mortgage at the lowest equity rate of 20% on a $500,000 rental, then they have only invested $100,000 of their own. The remaining $400,000 in equity is realised by the tenancy income, over the course of the mortgage.
So, a $5,000 return is quite a good one in terms of current interest rates.
Not to mention, capital gains also increases equity over time. As many know, and use that increase in value to purchase other rentals.
True there is a number of different ways to calculate ROI. The fact that the tenancy income pays off the majority of equity over 20 years or more cuts both ways … it doesn't land up in the landlord's pocket, it goes to the bank.
I simplified my description above, there are a lot more expenditure line items and only one that produces income. Indeed often for the first decade or so costs exceed income considerably, and the landlord is putting equity in from their other day job. They're effectively subsidising their tenant's housing during this period in the hope that 20 years later there will be a reward.
But however you cut it, the actual cash flow profit from a typical tenancy isn't all that flash. $5k pa doesn't put anyone into the filthy rich category.
Why do you bother then?
Altruism towards your tenants?
The fact is, your characterisation, of a landlord living off the rental income in retirement is not generally what happens.
The reality is that the landlord expects the tenants to pay the mortgage off, so they can sell the house to a bigger sucker when they retire, for several 100 thousand in capital gains. Making money out of the rent is not a goal. They get taxed if they do. Better to put the money into doing up the house to get more money on sale. If you have a good accountant, you can even use the money spent, to reduce the tax on your day job.
A good lurk for those of us that already have enough equity in one or more houses to get bank finance for a second. In effect we can gain several hundred thousand dollars with a net expenditure, of zero. While pushing up house prices so high that our tenants can never buy a house.
I see it happening in our area. Aucklanders, often young ones with parents with Auckland houses, buying up houses as “investments” and putting tenants in. To the detriment of local youngsters, who can no longer afford them on Whangarei wages.
Why do you bother then?
This is a question many smaller mum and dad landlords are increasingly asking themselves.
The problem of funding a comfortable retirement is non-trivial. Given that you can easily find yourself unemployable from the age of 50 onward, and these days live into your 90's, this is a very long time indeed to self fund even a modest lifestyle from savings or investment. Plus we only have one or two children these days, who often live in different cities or countries, and we can no longer rely on them to directly support us as we traditionally did.
Putting your money into the bank goes backward. Kiwisaver is a pretty weak mechanism (especially compared to the Australian equivalent) and wasn't available to me most of my working life.
The NZ sharemarket is too small and incestuous; it's almost impossible to avoid insider advantage in some form or another. Most people of my generation do not trust it.
80% of small businesses fail in the first year, great if you can afford to throw your life savings and home away, but too risky for most people.
This left residential rentals as the best of a bad bunch, which accounts for why many people entered the industry. (The one positive thing you can take from this is that in contrast to many other countries who typically have relatively few landlord entities, who may operate 10's of thousands of units, rental ownership in NZ is highly diverse and spread out over a lot of people.) Still even this option is becoming less attractive.
Economists keep telling us we must trim NZ Super back relentlessly; so even this safety net looks less secure than ever,
We are not called the 'bookend generation' for nothing; we're often financially supporting our own parents one way or another, while our children look to us for cash to finance their own aspirations. The idea that we're all filthy rich parasites is plain ignorant and actually offensive.
Human psychology is weird; we embrace celebrities and highly successful/fortunate individuals because we tend to put them on pedestals remote from our own lives. But woe betide our next door neighbour who is doing just a little bit better than us … this is what the kulaks discovered to their horror.
The "bookend generation" is correct.
And, I can see why housing is an "attractive investment".
Shares, as Keynes said, are a casino, bearing little resemblance to reality.
The lack of people starting real small businesses, instead "investing in housing", Kulaks, is holding us back. We need Government to fill the hole.
As someone who had a "successful" small business, it ran for 13 years while I owned it, the success rate is much better than 80%, if you count all the tradespeople and service people.
The lack of risk and guaranteed high returns from house price rises is pushing out any other investment.
However the huge amount of money tied up, in paying banks to increase house prices, and the population increase required to keep them going up, is Killing our economy, and our society.
A better retirement strategy, would have been keeping super at a reasonable rate and paying enough taxes to invest in things that really did pay off in New Zealand's capability to support the elderly, in future. Education, health, infrastructure, small farms, State housing and supporting small local business. However you all, voted for tax cuts and immigration, to keep your Capital gains intact.
Embracing celebrities may be you? However the rock singer is taking much less from our individual community, than the owner of a dozen rentals down the street.
The lack of risk and guaranteed high returns from house price rises is pushing out any other investment.
In terms of risk/reward rentals sit roughly between putting money into the bank or kiwisaver and running your own business.
Relatively few people have the appetite for the risk involved in a high capital business, but a lot more can tolerate rentals. But the returns are correspondingly lower. After all if you had $1m of capital at stake and only made $10k pa profit in a tough business, you’d be pretty disappointed.
if you count all the tradespeople and service people.
These are forms of self-employment based largely on labour value only, with only a modest capital investment. Yes they have real cash flow risks, but typically there isn't millions of dollars of capital at risk as well. In the context of this conversation they're a different class of business.
Maybe it depends on how you got the money?
I'm better off than most of the people around me.
But I get respect, rather than resentment.
But then. I really did earn it through hard work.
Helped of course, by our formerly excellent public education and apprenticeship, systems.
Trades and services where you put in your own labour, are the only form of business most of us can afford.
However we add real value to our community, which millionaire, "investors" and indeed any housing speculators, do not.
To claim that pushing house prices up, with all the money in interest and capital repayments going to offshore banks, instead of the community, is not a parasitical activity, is just self delusion.
Which will probably come home to roost when all that money cannot buy you a good retirement, because our third world economy hasn’t the resources to give it to you.
But I get respect, rather than resentment. But then. I really did earn it through hard work.
Yes I accept that running your own business is hard work, after all I did it myself for almost a decade as a contract engineer. But the returns were a great deal higher on far less capital at risk.
A large part of this resentment is because most tenants don't see what it took to provide them with the home they live in. They don't see the risks that bad tenants pose, they don't see the cash flow juggling that goes on, they don't see their landlord's costs and expenses and imagine the entire rent goes directly into his/her pocket. They don't see the tripling of insurance costs, or the relentless rise of rates, and all the other expenditure line items. They don't see the personal funds pumped into the business for a decade or more to keep it afloat. They don't understand how the business works at all because it's entirely invisible to them.
And into that vacuum of unawareness, all too often rushes resentment and envy, stoked by people like you.
Which will probably come home to roost when all that money cannot buy you a good retirement, because our third world economy hasn’t the resources to give it to you.
So much for the left pretending that it wants to eradicate poverty. And no we don’t have a third world economy, you need to get out more.
I think I have adequately explained, why the resentment is justified.
Your mistake is in thinking that resentment is ever 'justified'.
It's actually just toxic; all the ancient scriptures tell us this. Hell it's the exact story of Abel and Cain.
Very convenient for the person who is shafting the poor, if they are not allowed to"resent it".
So. You can continue, without any problems
In fact I've no problem with people who are jobless and living in a car, resenting the people whose self interest put them there.
It is entirely justified.
Well yes, but resentment and bitterness alone will merely ensure a longer stay in that car.
There is a deeper theme running here; the wealthy have a moral obligation to avoid falling into the trap of arrogance, hubris and entitlement. And the left just loves to point this out.
While at the same time the left seems to struggle with the idea that the poor may have moral obligations as well. This is the fundamental problem with the ‘victim’ game, it erases individual agency and replaces it with the darkness of identity groups and power games.
"The poor are poor, because they deserve to be".
Recycling another right wing meme.
Very convenient rationalisation, if you want to justify continuing keeping people in poverty so a few can become rich, making money off them.
But. Untrue.
How can the poor be expected to have responsibilities, when they have no power, or agency.
A rock singer could hardly be considered a typical small business and, in any case, much of his income should probably be regarded as "economic rent", based on his talent.
"The poor are poor, because they deserve to be".
The individual and the society they live in have a mutually interdependent relationship. Each has mutual rights and responsibilities.
The left is very fond of insisting that the rich have all the agency and holding them accountable for all the evils in the world, while pretending the poor are always the helpless victims of circumstance beyond their control.
The right asserts the exact opposite, that the wealthy are the virtuous saviours of humanity, while the ‘poor deserve what they get’.
Both are false narratives that distorts reality and only reinforces the drivers of inequality. The harsh truth is that unless anyone is ready to take responsibility for their life, it is impossible to help them. Telling them they are never responsible and have no personal agency only perpetutates their helplessness. And the wealthy equally are responsible for to use their wealth constructively and remain engaged in the communities who helped make them rich.
Telling someone who cannot get a job when a room costs $250 a week, and they are getting less than that, to "take responsibility" is just a sick, joke.
I'd have more respect if you didn't persist in narrow reductionist arguments, this is a deep topic that deserves better.
“Here is the letter written by King Leopold II of Belgium to the missionaries traveling to the Congo in 1883 to spread Christianity:
"Reverend Fathers and Dear Compatriots; The task asked of you to accomplish is very delicate and demands much tact and diplomacy. Fathers, you are going to preach the Gospel, but your preaching must be inspired by first, the interest of the Belgium government state.
The main goal of your mission in the Congo is not to teach the Negro the knowledge of God, because they already know him. They talk and commit themselves to their God. They know that killing, stealing, adultery and blasphemy are not good.
Your role essentially will be to easily facilitate the task of the administrative and industrial personnel. That is to say, you will interpret the gospel in a way to protect and serve the interest of Belgium, in that part of the world. To do so you will see that our savages be not interested in the riches that their soil possesses in order that they not want them. Thus, they be not involved in murderous competition with us and dream to live a luxurious life.
Your knowledge of the scriptures will help us to use special texts that recommended the infidels to love poverty such as, “The Beatitudes”, “Blessed are the poor, for theirs is the Kingdom of Heaven”; and "It is impossible for the rich to enter the Kingdom of Heaven”.
You will do all that you can to cause the Negro to fear being rich in order that they may go to heaven. From time to time, keep them from rebelling and keep them in fear that you will use violence. You will teach them to endure anything, even when they are insulted or beaten by your compatriots (administrative).
You will teach them that whosoever uses vengeance is not a child of God. You will cause them to follow the example of the Saints who turned the other cheek. You will take them away from anything or any act that gives them the courage to confront us. I am alluding myself here to their magic, i.e., Ju-Ju, Voodoo.
They should not feel like abandoning their Ju-Ju, and you will do your best to take them away at the same time. Your action will be essentially on the younger people that they might not rebel. If the commandments of the Father is in conflict with what the parents teach, the child should learn to obey what the missionary teaches him because he is the father of his soul. We must force them into submission and obedience.
Dear compatriots, these are some of the principles you must apply. You will find many more in the book that will be given to you at the end of this session. Teach the Gospel to the Negroes in an African style, in order that they are kept submissive to the White colonist. They would not rebel against the injustice done to them by the colonist. Make them always meditate on “Blessed be those that who weep, for theirs is the Kingdom of Heaven.” Convert the Africans always by means of the whip. Keep their wives in submission for nine months, so they can work for you graciously. Require from them an offering of recognition to you; goats, chickens, eggs, each time you visit their village. Avoid, by all means, the Blacks becoming rich. Cause them to sing each and every day say that it’s “Impossible for a rich man to enter Heaven”.
Make them pay tithes each Sunday for church. Utilize this money that is intended for the poor, for our own business investments. Institute a system of confession, which will make you good detectives in order to denounce/put down every Black which has a spirit of rebellion against the system.
Teach the Negroes that their statues are works of the devil, confiscate them and fill our museums with them. Teach the Negro to forget about their heroes in order to worship and give praise to ours. Don’t give a seat to a Negro when they come to see you, at the most just give him a cigarette.
Don’t invite him to break bread with you, even if he gave you a chicken every time you went to see him. Consider all blacks as little children, and require from them to refer to you as father.
My dear compatriots; if you apply to the letter all this, the interest of Belgium in the Congo will be protected for many centuries. I thank you."
King Leopold II of Belgium.”
Sound familiar. Just substitute “poor” for Negros.
There is no connection between what I am saying and that letter above, except in the twisted recesses of your idle fantasies.
Nonetheless I’ve no doubt you think highly of yourself in pulling what you think is a very clever trick. Enjoy.
I didn't think you would like the parallels. To close to the bone.
There is no parallel whatsoever, except with the fantasy projection in your head.
I've encountered this kind of problem before on completely different topics; on the basis of reductionist caricatures derived from some idiot dogma, you become blind to the words I'm typing and leap directly to pre-formed conclusions that have zero basis in reality.
If I'm disappointed it's in this; instead of hearing something thoughtful, something that genuinely comes from your broad experience of life and your reflections on it, something a little courageous even … all I get are safe, predictable ideological soundbites that could come from any one of millions identikit undergrad rantings. It's boring.
What’s worse is that I know you are better than this.
That depends on how the $5000 "return" is arrived at. If the $5000 is merely the principal component of the mortgage repayment, then it is not a true return. i.e. if the return based on cash flow is zero, the landlord may still be recording a "book" profit due to the fact that that the principal component is not deductible from revenue when arriving at the profit figure.
Taxation is a reasonably good idea but it would have to have some clear rules. For example, in some places, the whole area may be having a population decline. Another example – in Christchurch we still have a lot of empty houses in the east as the home owners are still negotiating with their insurance company &/or EQC or builders/repairers or have simply run out of energy or have more pressing issues to deal with.
Waiting for the screams of "we'll have to put the rents up!"
This is now absolutely critical due to the virus. Homeless and down with Covid…and the spread between homeless and charities/churches/marae helping them….whatever it takes to avoid this must be done.
not to big a leap from regulating around empty houses to putting on rent caps 😉
So?
When people scream "we'll have to put the rent up", this isn't the only thing that can happen.
A situation that graphically highlights "He who pocesses a surplus pocesses the goods of another." I hope this surplus is spread around the needy in the community soon – like before winter..
It is of course unappealing and economically inefficient to have houses empty while others are living in cars nearby. Even worse would be the even larger number of people living on their own in houses with 3 or more bedrooms, this has to be an even greater problem.
There is only one rational solution to this, the state seizes all private property and gifts it to iwi (who are the only true owners over everything in NZ) and let them allocate homes on whatever basis suits them. The state then dissolves itself preventing any future govt attempting to undo this; which addresses the NZ state's lack of Constitutional justification.
Solves three major problems in one simple, clean ideologically satisfying move.
Reductio in absurdum.
A tax on houses that are MT, CGT that we should have had all along, and maybe even squatters rights like the UK, will suffice, to offset the economic and social inefficiency of empty, “investment” houses.
Not really, each of the steps outlined above are ideas I've heard expressed directly either here or elsewhere. Just very few people are willing to put them altogether and examine the logical consequences out loud.
The first step is essentially the agenda of the OP, given that NRT has gone full metal communist on us in recent years.
The second step is a widely held narrative. Hell even that renegade leftie Gareth Morgan has said as much, and I've heard Maanu Paul, the head of the NZ Maori Council express exactly the same sentiment in person.
And the third step, given that the colonising settler state cannot functionally co-exist with prior legitimate claims of iwi sovereignty, it is is only logical for the state to dissolve itself. It’s a bit radical, but would certainly put a dampener on any reactionary forces.
But maybe this is all a hypothetical distraction. Rather than a CGT which only has any impact on the sale of a property (which for most buy and hold investors will never happen in their lifetimes), TOP's Comprehensive Capital Tax (CCT) which is a much smaller amount collected annually would indeed have an impact on behaviour. If faced with a minimum annual tax of say $5-10k pa, leaving a house empty and not earning any income, suddenly becomes much less palatable.
NRT, is "communist"?
Really?
See 5.2 below.
What is so terrible about nationalising stuff? We have a history ya know. And countries like Sweden and Germany manage their rental markets a lot stricter than we do here in the land of exploitation.
NZ should nationalise all empty “Ghost” houses under the public works act (with appropriate compensation), and begin a programme of nationalising the entire for-profit rental market. Only nonprofits like the Salvation Army should be allowed to provide social housing in future.
And while we’re on a socialism spree, let’s take over the insurance and real estate “markets” as well. ACC is more than capable of expanding into other forms of insurance. Real estate agencies are leeches. Also capital gains taxes should be 80%. Housing is a human necessity not an investment vehicle.
you may wish to talk with some Christchurch EQ(C) victims before rushing to nationalise insurance
A consequence of trying to run EQC, "like a (private) business". The usual right wing “disaster capitalism” of running state provision into the ground, to try and make privatisation look like an alternative.
Several Christchurch residents at my work had, or are still having even more harrowing experiences with private insurance companies.
What is so terrible about nationalising stuff?
There you go, and just a few comments ago you were telling me that I had gone all 'reductio ad absurdam' and that NRT wasn't really communist …. we have a pretty normal lefty like roblogic openly advocating nationalisation.
My question, is what is the justification for just stopping at empty or inefficiently utilised homes and property? Why do you imagine that only other people's property would not be seized by the state?
RL could you clarify whether you think that the solution you put forward @5 is the best way to go, or do you think that it doesn't go far enough? "There is only one rational solution… Solves three major problems in one simple, clean ideologically satisfying move."
Your solution seems eminently (and possibly imminently) sensible to me, but then your comments @5.1.1 and @5.2.1.1.1 suggest that it might be a step too far, or not far enough?
Maybe the owners of each of those 40,000 empty homes in Auckland could pay someone a token amount to occupy their under-utilised assets, thus putting them beyond the reach of the odious state apparatchiks
Heck, at only mild personal inconvenience, the owners of unoccupied homes could simply move from home to home on a daily basis, thus securing their personal wealth from the grasp of the entitled have-nots. In any event, and notwithstanding the premise of the post (which I heartily endorse), the wealthy in NZ have it ‘made‘ – “In property we Trust“!
https://www.yourinvestmentpropertymag.com.au/news/in-property-we-trust-80605.aspx
Your solution seems eminently (and possibly imminently) sensible to me,
Yes indeed I've long understood, since the 80's, that this was always the long term goal of the hard left in this country. Congratulations on being honest about it, that I can respect.
As for my alternative options, well it's as well to have fallback positions in remote case the NZ electorate doesn't enthusiastically consent to your first 'eminently sensible' choice .
BTW I have in the past advocated a number of times that all land could be nationalised and title allocated to local govt. Then instead of paying rates, we would simply pay rent. There is plenty of leasehold land like this in NZ, so there is functional precedent. Most importantly it would prevent speculation in land values, which is the primary driver of our current affordability problem.
But whenever I’ve suggested this … crickets.
So, despite what you wrote @5, you're not actually in favour of nationalisation; for example no bail-out of Air New Zealand? Or you are in favour, a la @2:37 pm above?
All well and good for those that have a choice (and perhaps a wide choice) about where they sleep, but the normalisation of house hoarding is denying many that 'choice'. Just the way it is.
http://norightturn.blogspot.com/2020/02/time-to-crack-down-on-house-hoarding.html
But I have previously written in favour of effectively nationalising all land … so where exactly does that fit in?
Besides the obvious response to an intention to nationalise the entire private rental property sector is for landlords to en-mass kick out tenants everywhere and give it to a family member to live in. That would have a whole cascade of consequences, many quite unintended.
That's what I'm trying to understand – "where exactly does that fit in?"
Your recent comments/replies leave me none the wiser
RL and (Re)nationalisation: For, Against, or ‘It depends‘?
Bloody "communist".
It is, in fact, how Singapore operates. The State gets a lot of it’s income from ground rents.
Allowing the low income taxes, that the right wing like to quote, forgetting that the whole place is run like a giant SOE.
it is, in fact, how Singapore operates. The State gets a lot of it’s income from ground rents.
This is an idea I've mentioned a number of times here over the years, but so many lefties are so obsessed with a fucking useless CGT, they completely ignore what I'm saying.
Hell I even repeated it a 2:37 pm on this very thread and no-one but DMK noticed.
Probably because most people you call "hard left" are a long way from being "communists".
The State, owning all land will never fly in New Zealand. The "quarter acre" is too much part of our culture.
However restricting the ownership of land over the "quarter acre", or a genuine, "family farm" is rather popular, exemplified by the public support of restrictions on wealthy buyers of large estates.
Capital gains tax will come. It is effective, and also necessary to broaden the tax base.
Probably from a right wing party, when the capability to soak the working class for taxes is taken away, because they have dropped wages too much. How will they maintain the police and army to protect them from the "pitchforks" otherwise.
Since ground rents would, in all probability, be based on the value of the land, capital gain would be included in ground rents as the value of the land increased.
@mike
Indeed that is one of a number of attractive aspects. The one that first prompted me to consider this idea is that leasehold land is reasonably common in NZ, usually either Church owned, Trust lands of various types or Maori iwi owned. In one instance I know of the Porirua City Council holds title to all of the city centre land and derives a significant income from land rent. And of course there is Singapore (and Dubai IIRC) who do exactly the same. None of these are considered 'communist' regimes, because they still allow a relatively high degree of freedom around what use the land is put to.
After all what almost always matters to people is not title to the land itself, but the secure right to occupy it and put it to some use of value to them.
The interesting element is because the banks cannot put the value of the land down as security, this limits the amount they can lend against the total property and inherently dampens asset price speculation.
Another idea promoted by Steve Keen, is the notion of limiting the amount banks can lend against a property to around 12 times the annual imputed rental income.
Or we could seriously consider TOP's Comprehensive Capital Tax (CCT) that annually levies a small, but extremely broad tax, over all asset classes. Unlike a CGT which only has any impact if the property is sold (and if I was going to be hit with a 30% tax I'd be highly motivated to never sell), a CCT has a direct and immediate annual impact of behaviour, motivating people to use their capital to generate positive taxable income, which is good for the tax base and economy at the same time.
Legally, in fact, apart from Māori land under original Iwi ownership, all land in NZ , is "owned" by the crown. A title is just that. A right to occupy in perpetuity.
My brother once owned a house on land owned by Napier CC. He and other householders in the same position were trying to pressure the council into selling them the land. I think it may have been because they feared missing out on capital gains.
I think the only way the government could afford to to nationalize all land (excluding maori land), would be if:
(a) it was stipulated that compensation paid should first of all be used to pay off any outstanding mortgage; and
(b) government bonds be issued to cover any remainder.
Yes I agree, while the idea has technical merit, I'm fully aware that there are many serious obstacles to any real world implementation.
But sometimes just working ideas through hypothetically can open up fresh avenues of thinking.
the Gov could 'afford' to nationalise all the land (and pay compensation) but it would require cognisance of the impact on the desireability of the NZD
Normal? I question your judgement! 🤓Economic far left, social conservative, Christian
I'm delighted you've expressed yourself openly and honestly on your hope to go full communist. However before inflicting this on the rest of us, how about going abroad and living in a nation that has a non-authoritarian, prosperous, and fully nationalised communist economy for a while. Given it's such a good idea, there must be quite a few choices out there, especially ones that openly embrace Christianity.
And write back to us telling us how wonderful it is. That might persuade me.
I mentioned 2 (non-communist) countries that I feel NZ should emulate, before I indulged in a bit of spitballing. Wanting a more equitable society isn’t communism.
Fair enough. Nothing wrong with a bit of spitballing given how often I do it myself
Yes Germany and Sweden have different rental regimes, and considering their quite different historic and cultural experience with home ownership this is to be expected.
Too often however lefties like to point to all the reasons why tenants might like the German system (I've no experience with the Swedes), but fail to mention the significant extra obligations it places on them as well.
This has been my point all along, all well and good to raise standards in the rental market, but the increased rights and responsibilities need to cut both ways.
Redlogix.
By your definition, Singapore is communist.
Actually, it is rather a pleasant place to live.
The justification for nationalizing empty properties is that they are not being used "productively". However, things could get rather messy when it comes to determining whether occupied houses are "sufficiently" occupied.
"A consequence of trying to run EQC, "like a (private) business".
You appear somewhat confused….any insurance company , private or state operates in the same reinsurance market.
And you will find that although most involved have little complimentary to say about insurance companies the most disparaging and almost universal criticism was saved for EQC
Yes. Because people expected private insurance companies to be arseholes. They didn't disappoint.
Not many realised, until Christchurch, how much successive Neo-liberal Governments had run down the States, EQC's, capability.
yes. people largely did expect IC's to be arseholes and didnt expect wholesale incompetence and worse, dishonesty from their Government agency but that demonstrates that simply moving the role of insurance to the public realm is no solution to the problems presented…..much the same can be said of ACC in reverse.
Not really.
What it shows, is that right wing Governments/Managers are just as incompetent at running State owned providers, as they are private ones.
That the deliberate policy of running down State health, ACC, insurance, housing and other State providers, to transfer assets to their cronies in the private sector, exemplified by Coleman, with health in the last Government, ends up costing us all more in the long run, is no surprise.
It demonstrates the ability/desire of the electorate to provide the funding to provide the wherewithal of an unsustainable system….that is why neoliberalism was widely adopted, it provided a (false) sense that the problems could be solved by the superiority of 'efficiencies of the private market' and removed much of the political pressure to provide more than was possible
Yes 100%
What criteria would you use for labeling it a "ghost house"? After all it's the last thing you'd do in government.
You will recall when we used to have the BNZ, and State Insurance – and of course the NZ Government bailout of AMI only two years ago.
Nationalisation was useful when there were huge pressures on the state like reinventing society after the devastation of World War 2. It's not an impossible scenario. But it's for use in extremes.
Land ultimately belongs to the community as a whole, and private ownership is a privilege extended to those who need it for various purposes. The land under vacant houses should therefor be nationalized on the grounds that it is not being used for some useful purpose. Homeless people being moved into those houses would pay rent, which would then be split between the owner and the government, apportioned in accordance with the respective values of the house and the land.
The more efficient forces are:
Airbnb and Bookabach.co.nz, bachcare.co.nz, holidayhouses.com, homeaway.co.nz, bachstay.co.nz, etc etc
These are stronger reallocative forces than anything the state could come up with.
And they are good for everyone.
How are they good for those lacking affordable housing? They are good for those seeking a return (and better return than renting to tenants) off their property assets.
One could argue they are supplanting motels and this allows the government to buy them for emergency housing …
But they also encourage people to buy up holiday camps (everyman affordability) and develop property assets for use by those of the upper income deciles.
The renting websites strongly encourage higher use of every room, as well as higher use of houses that are under-used.
In terms of your everyman note, the original Tourist Hotel Corporation had that end.
The two extreme options
1. Allow squatting.
2. Assess a rental income for the property and after one year without being used as a residence tax the owner as if they were being rented out.
That might be the first tax they paid!
The idea has an historical parallel in the land tax placed on large land holdings under the 1891-1912 Liberal government.
"The government increased land taxes on large estates to encourage owners to subdivide. In 1894 Parliament passed the Land for Settlements Act, giving the government powers to acquire land when offered it by its owner, or compulsorily. However, compulsory acquisition was rare. Many landowners subdivided and sold land on the private market, especially after a growth in the prices for meat and dairy products after 1895 made farming for export more profitable. Others chose to sell to the government because it saved time and uncertainty. Most vendors kept part of their estate for themselves."
https://teara.govt.nz/en/land-ownership/page-5
Can you stop abusing the word "home". If no-one lives there it is unambiguously not a "home".
If Jacinda lets he market work the valuation of those homes from speculators should plummet very shortly and the banks foreclose. Problem is the poor still won’t be able to live in them as the only buyers will be cash ones.
Due to a weird quirky section we have 11 neighbours, most are state houses.
4 are bordered up, all 4 are state houses.
We have lived there for over 20 years and only once seen a bordered up statie, after the tenants trashed it big time, something some are very good at. But over the last 2 years bordered up state houses have become very common. So has moving the house off site and growing large weeds in it's place.
11 neighbours, wow, I don't miss that. I have a neighbour on either side, neither of them can hear me whistling the dog.
Are any of the boarded up places facing the street?
Words are mightier than the sword. Some jolly scoundrel could spray-paint. "A family could be living here." Right across the front of that place, jolly scoundrels.
I guess the *grafitti squad would show up and paint over any poignant message.
Then, if a bloody jolly scoundrel returned and sprayed. "Uh-oh, we'll need to squeeze in 2 families."
Provided a history is retained, that's when shit gets viral.
*Do you think grafitti squads have priorities? Does 'Politician A' make a call "That garbage on the Kyber Pass overpass, it needs to be gone by midday."
I can't keep a brief articulate slagging up on the Kyber Pass overpass past 2pm.
I'm kidding, Jail wouldn't suit me. Like most of us, I grafitti here.
A few people, not many, see more income from an additional property via Airbnb etc than they would if they had a long-term tenant in place. Most Airbnb hosts are out to assist with the non mortgage overheads.
Airbnb are offering those that have booked and wish to cancel 100% refunds, all those sites are. Airbnb offerings in NZ's coastal locations are well into shoulder season after a strong Summer. Droughts = good demand for beach places.
In the Northern hemisphere they are in that stage of the year when the Airbnb bookings are being placed. The visits aren't for some months but now is when deposits get paid, plans made. We dodged a bullet, so far.
I wonder if we might see an influx of rentals and an easing on pricing now that the Airbnb thing is tanking.
I think it's a given that we'll see rental houses available numbers rise in areas with Winter pull. Queenstown is notorious for being reasonable rental place scarce. Airbnb action there for this Winter will be slim and losing weight fast.
Tax Ghost Houses 1% on the basis of what the owner thinks their house is worth. But on condition the Council has the right to procure the house at the stated value: https://www.stuff.co.nz/life-style/homed/real-estate/119593887/heres-how-the-government-could-force-you-to-sell-your-house-for-state-housing