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NRT: Half-measures on housing quality

Written By: - Date published: 2:00 pm, June 9th, 2015 - 71 comments
Categories: health, housing - Tags: , , ,

From I/S at No Right Turn


Half-measures on housing quality

Last week we learned that a child’s death had been explicitly blamed on the poor quality of the state house she lived in. The government’s polling must have been telling them about how angry the public are about that, because yesterday the government flip-flopped from calling housing standards “extreme” topromising to introduce them:

Rental properties will have to meet a set of minimum standards under rules to be unveiled by the Government next month.

The move will stop short of a full “warrant of fitness” for rentals but is aimed at ensuring all tenants have a safe and healthy home to live in, Government sources confirmed.

That is likely to include a requirement for insulation, although sources said there was still work to be done to set any standards at a practical level. It is due to be announced next month by Building and Housing Minister Nick Smith, along with an assessment of a warrant of fitness trial in state houses, and would apply to all rentals both private and public.

Any improvement is better than what we’ve got now, where there seems to be no obligation on landlords to ensure that their houses are fit for habitation and don’t kill children. At the same time, we should recognise that this is pathetically weak. There’s no mention for example of things like carpet, heating, or houses being required not to leak, despite these all being contributing factors to Emma-Lita Bourne’s death. As with capital gains taxes, National is reacting to overwhelming public demand by doing the least it possibly can, in order to protect the profits of its slumlord friends and MPs. But as with capital gains taxes, it means that it will be much easier for a future left-wing government to strengthen those provisions and require every rental home to be warm and healthy.

71 comments on “NRT: Half-measures on housing quality ”

  1. The Chairman 1

    The challenge is strengthening those provisions will require to overcome the fiscal burden being passed on while balancing investor sentiment, thus avoiding an exodus.

    • McFlock 1.1

      Well, if there’s an exodus of speculators, house prices will fall and a lot more renters will be able to buy.

      • The Chairman 1.1.1

        Passing the problem on, further driving up rents while putting the wider economy at risk of a mass correction isn’t the solution.

        • McFlock 1.1.1.1

          If more renters can buy, then there are less renters.
          Less renters = less demand.
          Rents go down.

          But really there’d only be significant impacts on the housing purchase and rental markets if a large chunk of rental properties aren’t fit for human habitation. I’m sure that can’t be true, surely it’s just a few bad apples, yadda yadda, easily sorted by industry self regulation, nothing to see here, etc…

          • The Chairman 1.1.1.1.1

            With cost burdens being passed on, rents will increase.

            Moreover, less rentals at the bottom end (with an exodus outweighing demand) will result in rent increases.

            National’s plan to introduce minimum rental standards nationwide will test the waters, giving us a small taste of the wider impact of a more comprehensive rental warrant .

            • miravox 1.1.1.1.1.1

              Even without going into the housing quality standards in other countries,
              It’s been done before in NZ, it can be done again.

              6 Every living room shall be fitted with a fireplace and chimney or other approved form of heating.

              15 Every house shall be free from dampness.

              17
              (1)The materials of which each house is constructed shall be sound, durable, and, where subject to the effects of the weather, weatherproof, and shall be maintained in such a condition.
              (2)The walls and ceilings of every habitable room, bathroom, kitchen, kitchenette, hall, and stairway shall be sheathed, plastered, rendered, or otherwise treated, and shall be maintained to the satisfaction of the local authority.
              (3)Every room in every house shall be adequately floored so as to have a washable and durable surface, and every floor shall be kept in a good state of repair free from crevices, holes, and depressions.

              Housing Improvement Regulations 1947

              • The Chairman

                These are largely the same houses that are being rented out today.

                Heating (and containing it) is key to keeping a house warm.

                • miravox

                  That’s like saying there has been no substandard or poorly maintained housing used for rental since 1947.

                  Also in the context of your anxiety about the cost of healthy homes, your comment makes no sense.

                  “Heating (and containing it) is key to keeping a house warm.”
                  Well, yes. And that the what is driving the WoF for housing discussion at the moment. It’s also worth recognising there are an awful lot of other things required to provide healthy homes.

                  The point I was making is that legislation to ensure safe and healthy homes has been done in NZ before (1947). There is no reason, despite your anxiety, that it cannot be done again. There are mechanisms to contain or offset costs to landlords outside of the market model. For example, Austria has a maximum rent increase in the case of renovation but in addition to this low cost loans and housing assistance are also available to help landlords renovate and tenants afford the rents of improved dwellings. Landlords can evict tenants of renovated homes in order to seek higher rents either.

                  It’s worth looking around to see how regulation is managed in other places and times rather than accepting the status quo of dangerously unhealthy homes.

                  • The Chairman

                    Of course some homes have been neglected over the years, but a number have also been improved.

                    My concern is that costs will be passed on and improvements will do little to impact on the high cost of heating, which is the crust of the problem largely being overlooked.

                    This is not an excuse for doing nothing, it merely highlights the challenges that require to be overcome.

                    Nothing wrong with looking at overseas examples, however I’m waiting to hear how National’s minimum standards and Labour’s comprehensive warrant plan to sufficiently overcome these challenges

                    My comment was in the context of a warm home, thus your confusion.

                    Additionally, Labour seems to have a short memory (i.e. shower heads/light bulbs) voters won’t be to impressed having inspectors with clipboards going through their homes.

                    • miravox

                      Error in my previous comment ‘Landlords can evict tenants’
                      should be *cannot

                      It appears to me, from this reply, that there are two related, but separate issues in your concern. First it the cost of fuel, and second is the cost of bringing rented homes up to standard. One can’t happen efficiently without the other in terms of improving tenant well-being. Well insulated and dry housing lessens the need for expensive fuel. It also reduces the need for healthcare.

                      Having more affordable fuel makes appropriate and efficient utilisation of heating more likely.

                      Both factors are examples of market failure.

                      I think we both agree on these points. The cost of fuel, however, should not detract from regulation for habitable housing, imo.

                      As for putting private landlords ability to make a profit ahead of tenants need for warm, dry and otherwise habitable homes – I disagree with you. The only concern government should have here is who will replace the landlords who withdraw from the market. I suggest regulation will mean the housing market will work better with these landlords gone, as long as the government looks elsewhere (history and internationally) for ways to manage this exit. It appears to me (and to you, I guess) that they have no strategy for this outcome. This is what should be debated, not a watered-down housing WoF that puts landlord profits ahead of tenant well-being.

                    • The Chairman

                      @ miravox

                      I’m not using the high cost of fuel to detract from introducing rental standards, merely highlighting improving standards alone largely fails to address the growing concern.

                      As for introducing rental standards, it’s not that profits should be put first, it’s that the market model largely facilitates this, thus generally results in costs being passed on. Negatively impacting upon tenant well-being.

                      Which, of course, is the challenge to overcome.

                      Therefore, the debate is a little more complex than you imply.

                      If the Government is going to benefit from health savings going forward, some would argue the Government should therefore also cover the initial costs.

                      Voter sentiment is another balancing act the pollies will have to consider. While a number of voters may want to see standards improved, going off the public backlash over shower heads and lightbulbs, a number will also be adverse to annual inspections with state inspectors going through their homes.

                      National seem to have at least acknowledged this, Labour, however, seem to have a short memory.

                    • Weepus beard

                      Isn’t it ironic that the encouragement of power-saving devices in the home championed by the Labour government in the mid 2000’s, an idea ahead of its time, is still used as a whip by right wingers, like The Chairman, with which to beat Labour today, 10 years later?

                      Yet we almost all use such devices now and such devices might go a long way to reducing power consumption and costs in Housing NZ stock and low income rental stock.

                      The current right wing government however continues to refuse to acknowledge something that we people have realised long ago, for fear of some sort of eco light bulb backlash by their dumb voting base, one presumes.

                      As an aside, The Chairman’s use of a 10 year old Labour policy as an assault weapon differs not one bit from the constant cry by Key, Joyce and co:

                      “Labour did it too!”

                    • The Chairman

                      @ Weepus beard

                      I’m not right wing. Nor have I used power-saving devices to whip Labour. I was highlighting public discontent of the mere notion (of over the top state interference) and how quickly Labour seem to have forgotten the public backlash.

                      Which is something they must consider if they want to win back power. Not doing so allows National to further utilize this public discontent against them.

                    • Weepus beard

                      Oh well. The dead bodies are starting to pile up at the current government’s door regarding lax regulation in health and safety and in social housing and they are not shy of over the top state interference themselves with 900million payouts to rich SCF investors and the selling of state assets in order to manufacture a surplus.

                    • The Chairman

                      @ Weepus beard

                      In health and safety they sure are.

                      In social housing, not so much.

                      The two deaths recently reported both share the fact the tenants couldn’t afford heating.

                      Bailing out SCF isn’t akin to the state coming in your door. My house my castle an all that.

                    • miravox

                      @The Chairman
                      Therefore, the debate is a little more complex than you imply.

                      Really it’s not. Framing the debate in terms of competing interests is complicated. Having a policy of housing that meets the needs of the people living in houses and is energy efficient is quite straight forward.

                      There has been screeds of (ongoing) research about healthy, affordable, efficient housing that is readily available. It’s not a case of wondering about this and that anymore. The results are in.

                      “If the Government is going to benefit from health savings going forward, some would argue the Government should therefore also cover the initial costs.”

                      Yes. That is what a state housing programme is for. I don’t have any problem with that whatsoever. Having said that, my perspective comes from living in a city where 60% of all housing is state-owned, has strict standards and almost all is rent-controlled.

                  • Weepus beard

                    To “The Chairman”…

                    Quite. Heating being a necessity of life.

                    When does a government govern and when does it leave its own vulnerable citizens to the wolves?

                    That is the question.

            • McFlock 1.1.1.1.1.2

              You have heard the theory of supply and demand, right?

              Less renters = less demand: prices down
              Higher costs = less supply: prices up
              Situation: draw

              Mandatory upgrades = increased lower/midrange supply = lower rents for currently unaffordable properties.

              So at the very least, your argument about rental WoF driving up rents is plausible, but really could go either way depending on the actual numbers.

              If all houses were fit for human habitation, WoF would have no impact on the market at all. Basically, you’re just recycling the excuses that factory owners used in the 1800s to defend employing children to run beneath the steam looms.

              • The Chairman

                Less renters coupled with less rentals at the bottom end (many renters won’t be in a position to buy) would result in higher rents.

                Increased lower/mid-range supply offset by removing cheaper alternatives shifts demand, result higher rents.

                No one is forced to rent a dump, most tend to because it suits their needs and the rent is cheap.

                Increasing standards will rob people of that choice.

                • McFlock

                  The offset is offset by the lower number of renters in the mid to high level because they can afford to buy (and insulate) the houses not fit to rent.

                  Basically, this is why economics is bunk: the tenets of faith are pointless without specific data, and the specific data is unique and any subsequent data is under unpredictably different conditions.

                  But your statement “No one is forced to rent a dump” is just bullshit. Utter, utter shit. It asserts that people simply, without force, choose to live in cold damp homes they can’t afford to heat to the degree that it kills them or their baby. Yeah, nah. Learn how the other 27% of kids live before you start talking about what choices their parents aren’t forced to do.

                  • The Chairman

                    As for data, first home buyers make up a small portion of the market. Moreover, with house prices several times incomes (albeit if prices somewhat fall) there still wouldn’t be many renters in a position to buy, thus rental demand would merely shift, result higher rents.

                    My comment asserts exactly what it stated. Some are attracted to and reliant upon cheap rentals. Students are one example and we’ve all seen how a number of them treat their rentals.

                    Moreover, while circumstances may limit peoples choices, people can decline to rent a dump and can opt to continue to shop around or look at cheaper suburbs.

                    • RedLogix

                      Sighs deeply Mr Chairman. As a landlord myself I know how much bs that claim is.

                      The fact is that people’s circumstances DO limit their choices. For instance I could rent you a really nice clean 160m3 five bedroom character villa, well insulated, ventilated, re-wired with two car garage and 1200m2 section for $290 pw. Absolutely not a dump.

                      Except it’s in the fucking Wairarapa. Still interested?

                    • McFlock

                      But but but if there’s a sudden glut of homes not fit to rent to people on the housing market, and a sudden drop in investors because of these awful WoFs, first home buyers would increase as a proportion of the market, no?

                      Indeed, rental wofs sound like an awesome way to transition from a parasitic speculative market betting on how much someone else will bet people will want homes, into an actual market of people with homes and people needing a place to live.

                      As for renters, if they have nowhere to live past 31december, how can they “opt to continue to shop around”? Live in the car they don’t have? And dumps are in the cheaper suburbs.

                    • RedLogix

                      Could not agree more McF. As a landlord I’m in the business of providing decent houses for people to make their homes. More than happy to get a Rental WOF for any of them – because that adds credible value to my product and help drive out the capital inflation speculators who damage the industry.

                      I’ve said this before – I hate property price inflation. It just makes it harder for me to build and provide my product.

                    • The Chairman

                      @ McFlock

                      Indeed. But as current house values are so high, you’d require a massive price reduction to see a significant impact, thus large increase in first home buyers.

                      A price reduction of such magnitude would see the wheels fall off this economy.

                      While prices are bubbling a massive correction is not a viable solution. They key is to slow the excessive increase in prices, not destroy current values and wreck havoc on the wider economy.

                      If the situation is dire, people can opt to move in with relatives or friends short-term while they continue to shop around

                    • The Chairman

                      Does she flood, Red?

                    • McFlock

                      No, because house prices are a continuum from shithole to JAFA mansion.

                      WoFs strictly affect the lower end (a minority, if you believe property investors associations) of both the rental and purchasing markets.

                      Smaller market segment requires a less dramatic input for a significant change in a smaller segment, with an undramatic change in the aggregate market.

                    • The Chairman

                      It may only be a smaller part of the market, but coming off such a high base, prices would have to significantly drop to have a significant impact on the number of first home buyers.

                      And a drop of that magnitude would have some impact on the aggregate, thus the wider economy. The domino effect.

                    • McFlock

                      so sub-WoF properties are a “high base”?

                      I guess that we should bite that temporary bullet so that all homes in NZ are fit for human habitation. Maybe increase the accommodation supplement. But tax the landlords.

                    • RedLogix

                      @ The Chairman … nah. Not that excitable.

                    • The Chairman

                      @ McFlock

                      Depending on their location, you’d be surprised on the price some dumps can and have achieved in this overheated market.

                    • McFlock

                      in that case their price is irrespective of their property and they can be upgraded to a condition fit for human habitation with no impact on the rents.

              • john

                If you don’t think a housing WOF will increase rents, then you need to get out and run something like a lemonade stall.

                Then you might understand the simple truth that if something costs more, you’re going to have to charge more.

                • One Anonymous Bloke

                  The National Party can set whatever rent it chooses on state-owned housing. It’s their personal responsibility.

                  • john

                    If it charges less than the houses are worth, it would then have to cut spending elsewhere like on benefits, health or education.

                    And you’re totally delusional if you think private landlords are going to spend a fortune on getting houses up to standard and regular WOF testing and not pass the costs on to tenants.

                    • One Anonymous Bloke

                      If incompetent Tory scum can’t run a country with warm dry housing, they’d be better off dried and used as kindling to keep kids warm in the meantime. There are plenty of competent, non-sociopathic politicians who won’t be bought so easily to replace them.

                    • john

                      There’s 49,000 MORE state houses with insulation than when Labour was in.

                      That’s 49,000 MORE.

                      Even if I remind you of that every few minutes, I’ll bet you’ll still forget it in seconds.

                      You’re so patently desperate to blame the govt for something, that you’ve probably forgotten it already

                      That’s because facts that do not suit your ideologically-driven tunnel vision are simply rejected.

                      You’re so tunnel visioned you’d reject the fact the sun rises in the east if your dogma said it rises in the left.

                      How many houses have been insulated since National came to power?

                      Can you even bring yourself to write down the number of newly insulated state houses.

                      I bet not.

                    • RedLogix

                      Oh that’s about – 7,000 per year? Fuck me my granny could have done better.

                      Oh and most of it done to very minimal standard that makes sod all real difference.

                    • john

                      Yeah – Labour doing no insulation of any houses over nearly a decede was much better.

                      It doesn’t matter how well insulated a house is – if you don’t heat it, it’s not going to make much difference – it will still be cold.

                      And if you don’t ventilate it, it will actually get even damper than an uninsulated house.

                    • One Anonymous Bloke

                      I note that National cancelled the Green Party’s insulation scheme with 30% of state houses still un-insulated.

                    • One Anonymous Bloke

                      it would then have to cut spending elsewhere like on benefits, health or education.

                      Or increase revenue.

                    • miravox

                      “it would then have to cut spending elsewhere like on benefits, health or education.”

                      I’m sure there would be quite a few medics happy to cut the need for spending on rheumatic fever, pneumonia and bronchiolitis.

                • McFlock

                  what you charge, and people accept, is not dictated by your expenses. It’s dictated by how much is supplied and how much demand there is.

                  If you can increase prices because of your own problems, you’re undercharging in the first place. What a nice man you must be /sarc

                  • john

                    Of course expenses have a big impact.

                    If everyone has to pay to improve their rental properties, and pay for inspections, that doesn’t change how many people still need to rent a house.

                    Prices go up.

                    Just like they did when used car importers could no longer import older cheaper models.

                    If you think all this work will get done, and all these inspections will get paid for, and the costs won’t get passed on to renters, then you’re dreaming.

                    • McFlock

                      See, if you’d argued that increased costs would lower the investment incentive and reduce supply, thereby raising prices, you’d have a position to argue from.

                      But when I go to new world to buy an orange, I give precisely zero fucks what their overheads are. If it’s cheaper at countdown, I go there.

                      As a tory, you should be familiar with supply and demand.

                    • john

                      But if countdown oranges also are required to be upgraded with warm insulated packaging and have to have an expensive WOF inspection, you can guarantee you’ll pay more for oranges.

                    • Draco T Bastard

                      /facepalm

                      They do moran and they’re still cheaper. It’s truly amazing at how you RWNJs, ever crowing about how great the market is, fail to understand how it’s supposed to work.

                    • McFlock

                      but oranges are already required to meet standards, like not containing lead or banned mutating pesticides, and being pest-free if imported.

                      A bit like a WoF for oranges.

                    • john

                      I seldom ever hear anyone crowing how great the market is.

                      What is common is to hear those on the extreme left, claiming they hear it all the time.

                      I think their ears are living in the 1980s.

    • Weepus beard 1.2

      An investor exodus is exactly what is needed. Only a greedy investor would disagree.

      • The Chairman 1.2.1

        No doubt a number of investors would be happy to see rental warrants take out the bottom end of the market, resulting in removing the cheaper alternatives, thus forcing a number of renters to pay more.

        • McFlock 1.2.1.1

          while increasing the supply of the slightly less than cheaper alternatives, thus making them the cheaper alternatives

          • The Chairman 1.2.1.1.1

            No. Increased lower/mid-range supply offset by removing cheaper alternatives shifts demand, result higher rents. Forcing those seeking cheaper alternatives to pay more

            • McFlock 1.2.1.1.1.1

              Dude, seriously.
              increased supply + increased demand from below – decreased demand from above (purchasers) = go check your priviledge.

              • The Chairman

                People currently renting cheaper rentals would be force to upgrade to nicer homes as the bottom end of the market is reduced, thus shifting rental demand (as they wouldn’t be a position to purchase) resulting in offsetting the increase in lower mid-range supply. Result, higher rents.

                • McFlock

                  But we’re not reducing the number of buildings.

                  Non-WoF homes are either upgraded to minimum (increases WoF rental supply) or sold (lowers property prices for first home buyers).

                  So the lower-mid has a drop in demand (increased first home buyers due to supply of sub-WoFs), increased supply (upgraded former sub-WoFs), and increased demand (former sub-WoF renters).

                  Result: who the fuck knows.

                  A bit like how an increase in the minimum wage doesn’t increase unemployment, unless you fudge the numbers.

                  • john

                    Small increases in minimum wages do little to unemployment, but big changes do.

                    Otherwise we could simply double everyone’s wages and nothing would happen – hell why not triple or quadruple them.

                    With the housing market, there are still the same number of houses, and still the same number of people who need to live in them.

                    The difference is 35% of houses would have to start having regular inspections, and a large number of them would require expensive capital expenditure.

                    And just like if you rent a $400,000 house it will cost more than a $200,000 house, the increase in capital and ongoing costs, will pass through to rents.

                    • McFlock

                      [facepalm]
                      Does insulation expire? Why the need for regular inspections?

                      As for the rest, I repeat: when I get a haircut, I don’t care if the barber has had a rent increase. It’s strictly the cut&experience supplied vs the cost demanded.

                    • john

                      The 20,000 students in Dunedin aren’t all going to suddenly rush out and buy a house.

                      So any shifts in the market are going to be so small that the difference will be insignificant.

                      And landlords who improve their properties will charge more for them. They always have.

                      And that’s whats happened for the last hundred years so I don’t know why you’d think you’d suddenly get a different outcome to what has always happened.

                      It’s not rocket science, but if you don”t believe it, then that’s fine.

                    • McFlock

                      Right.

                      So you obviously haven’t watched the campus inner circle for a while.

                      Because every ten or fifteen years not all the availablerooms have been rented in august for the following year, and when that happens it’s hilarious watching the landlords add $10k in whistles in the hope of leasing their leith st sth dwelling for $35k. Supply vs demand. If you don’t understand the game, don’t play.

                    • locus

                      john and The Chairman have framed this discussion about supply, demand and landlords who pass on additional costs as increased rental

                      this framing is short-sighted and misdirected

                      the framing should be about the serious consequences for health and energy usage – and hence cost to society and the economy – that poor quality housing represents.

                      NZ must catch up with the current housing regulations and standards that exist in NW and Central Europe with regards to healthy homes: insulation and prevention of rising damp, mould and condensation.

                      To reframe:
                      The issue that we need to talk about is how to achieve this change in standards in NZ without escalation in rent?

                      (examples below are only to prompt discussion)

                      – how should NZ support landlords? e.g. by setting reasonable compliance timeframes, offering cheap loans or grants

                      – how to control the slumlords? e.g. inspections, fines/community service, and loss of rights for serious non-compliance

                      – how to ensure prevent spiralling rent increases? e.g. index linking rents, cost of improvements to the property only allowed to be recovered over a minimum period

                  • The Chairman

                    When sold to first home buyers, the number of rentals would be reduced.

                    But as most renters aren’t in a position to buy, there would be minimal impact on net rental demand.

                    Therefore, current rental demand from the bottom end would shift to the upgraded, lower mid-range homes. And while rentals were sold, supply of rentals in that range would fail to cope with the shift in rental demand.

                    • McFlock

                      again, all conjecture that might well fall over in practise.

                      This is getting circular. The plain fact is that you want the poor to continue dying in places that are unfit for human habitation. Your argument that making homes livable will increase homelessness has a simple solution: increase benefits and funding for HNZ.

        • Colonial Rawshark 1.2.1.2

          The government could buy those failed rentals on the cheap, and refurbish them into quality income related rentals.

  2. b waghorn 2

    Can I suggest to anyone who reads this and is involved in pushing for wofs for rentals that they add farm workers houses as a lot of the housing stock in rural areas 50s or older . I’ve seen a few shockers.

  3. There’s no mention for example of things like carpet, heating, or houses being required not to leak…

    Well, in the cases of carpet and heating, the government has no business issuing decrees about what kinds of floor coverings or heating systems must be fitted to your house so of course there’s no mention of them.

    …it will be much easier for a future left-wing government to strengthen those provisions and require every rental home to be warm and healthy.

    It will? How does a future left-wing government “require” a rental home to be warm? It could hire inspectors to go round taking indoor temperature readings and fining the tenants if they aren’t running the heating, maybe? And what does “require a rental home to be healthy” even mean?

    • McFlock 3.1

      Not being mentioned in coronor’s reports would be astep towards “healthy”.

      We already have health inspectors who visit homes, make sure they all have toilets, etc. Marginal costs to carry a thermometer when they visit is pretty minor.

  4. john 4

    How does a coroners comments about how a damp house

    “could not be ruled out as a contributing factor in her illness”

    turn into

    “a child’s death had been explicitly blamed on the poor quality of the state house she lived in.”

    I suppose it comes from a desperation to mislead.

    • One Anonymous Bloke 4.1

      “It is entirely possible the condition of the house had contributed to the pneumonia-like illness that Emma-Lita was suffering at the time of her death,” he wrote.

      Coroner Shortland described the Housing NZ property as “very cold and not getting much sunshine [with] no carpets and only floorboards”.

      I figure if you’re going to start quoting Brandt Shortland you shouldn’t leave things out, in case people think you’re lying about a child’s death, and form unsavoury conclusions about your ethics and character.

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