Hard News: Arrest the bastards at the border
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Typically they're little old ladies whose kids left home in the 1950s, and whose husbands died years ago. HNZC would no doubt, dearly love to rehome thse people, to smaller properties, & free up the larger ones for larger families.
As far as I am aware, in Auckland you are unable to remain in a three-bedroom Housing New Zealand house by yourself unless you take in boarders or flatmates. Otherwise they can - and do - move you to smaller accommodation. They have quite strict rules on numbers of people per numbers of bedrooms.
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wot Andrew ll said
I'm not sure when, but fairly recently HNZ did insert clauses into their rental agreements with new tenants that HNZ retained the right to renovate or subdivide the property at a future time. Which is great because HUGE numbers of HNZ houses are sitting on subdividable sections.
The problem comes with those that have been in their house prior to this change. They are resistant to change, they are the ones who feel they 'own' their state house. That is the 'entitlement' I was alluding to. Imagine if HNZ ran the Unemployment benefit? The first 20,000 would get the Dole and the next 6,000 in need would be on a waiting list. Waiting for someone already receiving a benefit to die, find work, or retire. -
As far as I am aware, in Auckland you are unable to remain in a three-bedroom Housing New Zealand house by yourself unless you take in boarders or flatmates. Otherwise they can - and do - move you to smaller accommodation. They have quite strict rules on numbers of people per numbers of bedrooms.
Wanna bet? They might like to have strict rules, but believe me, they don't. They cannot move you at all - unless (! exception #1), they're having to demolish &/or redevelop a site.
They have no rules regarding overcrowding either (the rules they'd like to impose involve having to ask tenants who is sleepin g with who. So currently, what's called overcrowding is anything over the number of adults, + 1. That's just for reporting purposes though.
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Finance Minister Michael Cullen has backed a call to "ring-fence" losses on investment properties - meaning they could no longer be offset against other income such as wages and salaries - but few other parties appear warm to the idea.
If Cullen can get this thru then he will make great inroads into dampening the Housing market. The majority of investment properties are yielding 4-6% which is a pittance compared to the on-call deposit rates currently available (even Kiwibank is offering 7.75%)
If investors can't offset their trading losses against their income tax the maths starts to look bad. Add in the increasing mortgage rates and the equation gets worse. I would punt that 50% of investors might decide its not worth it and put their properties on the market, hoping to realise a capital gain.
Of course, with all those houses coming on to the market at the same time prices must fall, surely?
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So currently, what's called overcrowding is anything over the number of adults, + 1. That's just for reporting purposes though.
to clarify... that is if the number of adults + 1 is more than the number of bedrooms, the property is consiodered overcrowding.
Or something like that :) And they don't ever intend asking who's sleeping whith whom, it'd just be nice to know for reporting.
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I don't dispute that Landlords benefited with the introduction of the Accommodation Supplement, because it obviously added to the number of people who could afford private rental housing. But don't blame the landlords who are filling the void left by 'limited' State Housing stock.
The problem (well, one of them) with market rents was that quite a few Housing NZ properties were going unlet, because people couldn't or would pay the higher rents. So there was excess capacity and rents still spiked. Go figure.
Rents are determined by supply and demand. They go down when everyone can afford to buy their own home, and up when they can't. They could also drop if the number of houses were increased to the point that demand is satiated. At that point premium stock would be in demand and grotty old mouldy dungheaps wouldn't.
I think it's more complex than that. I think one possible pitfall of Cullen ending the tax-loss gravy train on investment properties is that the number of people prepared to make properties available for rent will fall, and so will the supply of rental stock. In that case, rents for those who can't or don't want to rent could go up.
OTOH, in Auckland you might just see more families able to buy and live in the burbs while the kids rent city apartments, of which there is a considerable supply.
Re: turnover. In our street, the Housing NZ properties that turn over are those let to more or less marginal types, who move on or are turfed out. The lasting tenancies are indeed 2 brm houses let to old people. But that's good if you live in our street.
But, really, there's no need to theorise. We did that thing, and all the research on market rents was negative. They triggered hardship and public health problems, and probably fuelled rental inflation that ran ahead of house prices. I could hardly believe it when National proposed a revival in 2005.
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WH,
I think one possible pitfall of Cullen ending the tax-loss gravy train on investment properties is that the number of people prepared to make properties available for rent will fall, and so will the supply of rental stock. In that case, rents for those who can't or don't want to rent could go up.
I've thought about minimising my own income tax exposure by setting up an LAQC, negatively gearing some rental properties, depreciating everything in sight and waiting for the capital gain.
It would be like having my own little Magnum transaction. O for awesome.
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HNZ had a celebration of a couples 60yrs in Morely St Bryndwr (just around the cnr from John Keys Mums place & 2 down from where my Mum & her 9 siblings were raised) in Christchurch on their website last month - I can't find it now.
A good solid home (of the time) for a family of 12. Any call of over crowding would have been against the will of God etc. G/Dad recons he's got 10 kids because they had no TV.
You could honestly write your name in the smoke in the lounge from all the ciggies - no-one smokes now.
Having mention Govt subsidies & their inflationary impact on private market rents.
We need to raise the obligation of Property Investors to supply & maintain safe insultaed housing.
I suggest a minimum of ceiling/wall/floor insultaion plus IGUs on the southern windows in the North Island & IGUs for all windows in the south island & alpine regions (Waiberia brrr).
Solar Hot Water is just a no brainer and should be mandatory in all NZ homes. -
Of course, with all those houses coming on to the market at the same time prices must fall, surely?
You'd think so. And as Russell pointed out, you'd also expect rental prices to go up around the same time. Various outlets have been reporting evidence of an oversupply in the rental market in a few parts of the country, which might explain why rents have been largely so flat when compared to the price rises in the sales market of late.
More expensive rent + less expensive mortgage (particularly if the housing bubble popping lets Bollard take the interest rates down a bit!) = more incentive towards home ownership? And ultimately a shuffling of more wealthy renters into ownership, freeing up the remaining rental properties for those at the bottom of the ladder who're realistically not in a position to buy?
That would strike me as the whole idea.. And to be honest, it seems solid enough. Various people have been arguing that this represents unfairness to property investors because the same favourable taxation arrangements exist for other investment vehicles, but I note some of those complaining are the same people who were pointing out quite noisily (and expensively) back in 2002-03 that property had all kinds of leverage and depreciation advantages that didn't apply to other forms of investment... funny that...
The big innocent losers in the whole thing would strike me as being the people who bought at the peak of the boom at the maximum their income would permit. Which is, admittedly, a harsh situation. But still - it's a marketplace, and how many years of "Oh my god, it's still going up!?" in the Herald around the 18th of the month did they ignore?
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Farmer John (obvious apologies)
Crown Control to Farmer John
Crown Control to Farmer John
Take your planning consent and put it up your bumCrown Control to Farmer John
Tenure review is all but gone
Check your balance sheet and may God’s love be with youSpoken:
Ten, Nine, Eight, Seven, Six, Five, Four, Three, Two, One, ripped-offThis is Crown Control to Farmer John
You thought you had it made
And the politicians want to know about pastoral care
Now it’s time to see the environmental impact report if they dare“This is Crown Control to Farmer John
I’m now shutting the door
And you’re floating in a most peculiar way
And the farm look very different todayFor here
Am I sitting in a tractor
Fark all of you
The lake will stay blue
And there’s nothing I can doThough I’m past one hundred thousand miles
I’m feeling very still
And I think my tractor knows which way to go
Tell my wife I love her very much (she knows!)
Crown Control to Farmer John
Your plans are dead, and all but gone
Can you hear me, Farmer John?
Can you hear me, Farmer John?
Can you hear me, Farmer John?
Can you hear....“ am I floating round investments
Fark you Helen too
The lake will stay blue
And there’s nothing I can do.? -
I think it's more complex than that.
Yup, but I've found I need to talk in generalisations or otherwise my comments end up really long.
depreciating everything in sight and waiting for the capital gain.
At which point you have to pay back the depreciation claimed because it didn't depreciate - it gained in value. Many investors don't bother with depreciation any more, especially since the IRD changed the allowance to a flat %. Property gurus and real estate agents will tell you to depreciate because it makes their numbers look better. But they usually neglect to mention the words 'Depreciation Recovery'.
We need to raise the obligation of Property Investors to supply & maintain safe insulated housing.
Fine for new houses, but what about old ones? You can retrofit the ceilings but walls and floors are much harder. Labour have addressed this with their new building standards ie insulation as you've suggested will be mandatory.
The big innocent losers in the whole thing would strike me as being the people who bought at the peak of the boom at the maximum their income would permit.
One could argue they are greedy, but let's leave it at: a fool and their money are soon parted. There are a lot of novice investors out there who don't know how the property market works and have bought on the advice of their Uncle Jack (who knows a thing or two about property, but not really), or worse, a seminar they went to. They will get burnt badly as mortgage rates climb higher. it's been made worse by a longer than usual boom in the market. Many experienced investors are sitting on cash reserves waiting for the crash so they can swoop in and pick up cheap properties. Olly Newland is one who admits it.
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A bit off subject now (but not from the original post)
RIP Big Matt - a truly great man who will never be forgotten
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Very good Michael! Kudos too to the Govt for finally waking up to the rort that was 'tenure review'. Taxpayers haven't been as royally screwed since the Govt sold off Telecom, NZ Rail, and the Govt Printing Office.
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I/O
Whatever it takes to bring housing to safe stands is what needs to be done.Moving away from the ownership issue.
Govt handouts to make houses safe is an investment in savings on the health budget and a further investment in the productivity of the nation.
The bottom line will outweigh any investment - whoever makes it.
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Wanna bet? They might like to have strict rules, but believe me, they don't. They cannot move you at all - unless (! exception #1), they're having to demolish &/or redevelop a site. They have no rules regarding overcrowding either.
Actually, yes, I do 'wanna bet'. A close relative of mine is a tenancy manager at Housing New Zealand and does, indeed, have to move people based on a) underutilisation and b) overcrowding. Now, I'm sure that the system is not exactly perfect, but this picture being painted of vast swathes of unused bedrooms across the land is, I think, an exaggeration.
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We need to raise the obligation of Property Investors to supply & maintain safe insulated housing.
Will those expenses be tax deductible under the "ring fence" regime? If not, why would landlords bother?
If tax changes take the heat out of the housing market, I say go for it. I have a suspicion however that it would be similar to the Reserve Banks intervention in the currency markets. Fiddling at the margins. Idiot Savant posted this link elsewhere:
Brian Easton points to the global as opposed to local nature of the problem.
Getting back OT. The F&R boys have been pinged for a transaction that took place in 2002. Years after the winebox debacle. This is the story that keeps taking.
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merc,
Hehe good old wiki http://en.wikipedia.org/wiki/Robber_baron_(industrialist) though a search on NZ's own historic RB's (sorry RB) is inconclusive, though I know Bellich treats them in his People Reforged books.
History never repeats, yeah right. -
"Actually, yes, I do 'wanna bet'. A close relative of mine is a tenancy manager at Housing New Zealand and does, "
And until recently I was their Information Manager for 7 years.
"indeed, have to move people based on a) underutilisation and b) overcrowding."
Overcrowding they can address - by putting the tenants on the waiting list as "transfer applicants", but they can only encourage people to move if the house is deemed "underutilised". But yes, encourage they do, one of the things they measure is how many bedrooms get freed up each month.
"Now, I'm sure that the system is not exactly perfect, but this picture being painted of vast swathes of unused bedrooms across the land is, I think, an exaggeration."
Well you'd be surprised I think at how many there are, but it is a small percentage. And probably balanced statistically, by the overcrowding cases.
Overcorwding's an interesting one thiugh, the problem is probably bigger than is reported because tenants do not necessarily want HNZC to know how many people are resident in a property (affects income assessment & income related rent).
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This from the HNZC website, of the 2006/2006 financial year:
"We transferred 410 tenants to homes more suited to their needs, freeing up 491 bedrooms for families in need."
These tenants weren't obliged, or forced to move, they either wanted to, were persuaded to, or by chance just happened to.
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WH,
I have a suspicion however that it would be similar to the Reserve Banks intervention in the currency markets. Fiddling at the margins.
However it is done, this is a problem that needs to be fixed.
http://en.wikipedia.org/wiki/United_States_housing_bubble
http://www.scoop.co.nz/stories/PA0703/S00615.htm -
merc,
When the Council sold off it's houses in the '90's wasn't there a no developer clause (only allowed to bid for one house)? It seemed alot of council workers got in the duplex bonanza in areas like Pt Chev. and Remuera.
BTW this from 1997, http://www.nzbr.org.nz/documents/speeches/speeches-96-97/greed-aa.doc.htm
there will always be ways for people to make money while others arn't llooking, creation of credit by inflated mortgages is the modern one. -
BTW Danielle,
the last HNZC annual report states that the number of underutilised homes (where the household count + 1 is less than the number of bedrooms), is 4%. That definition by its nature is pretty iffy though.
The report also states this:
Strategies to increase the supply of rental housing and improve property use saw a number of tenants, with their agreement, transferred to more suitable housing. This freed up larger homes for others in housing need.
The operative phrase being "with their agreement".
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Getting back OT. The F&R boys have been pinged for a transaction that took place in 2002. Years after the winebox debacle. This is the story that keeps taking.
There's a quite hilarious letter in this morning's NZ Herald from someone who thinks people shouldn't knock FR because they started with nothing and worked hard to build their company, and had done a lot of good things for NZ. The writer seemed deadly serious. They're either completely deluded or the non-deplume for Michelle Boag perhaps?
For those coming in late, this link is worth repeating. It's a pity the Herald don't link to it.
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The HNZC annual report may say 'with their agreement', but I bet that's a CYA maneouvre by management. The rule under which tenancy managers operate is this: if they are informed that children have moved out and left tenants alone in a three or four-bedroom house, the tenant either takes in flatmates or is moved. I am not talking out of my ass here: I know that this happens. Now, if someone goes to an MP and kicks up a stink, all bets are off - but most tenants don't do that, because most tenants are reasonable people. They'll see the unfairness of staying in a huge house when there are waiting lists a mile long. Additionally, they're not actually asked: they're told. I bet none of them even know the report says that they're supposed to 'agree'.
(Incidentally, I lived in a HNZ house for three years [not, needless to say, under my relative's care]. They were by far and away the best landlords I've ever had: they actually followed the rules about bonds/visits/inspections and so on, and they made sure the property was completely up to standard. If I hadn't bought a house, I would have tried to stay with them forever!)
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but I bet that's a CYA maneouvre by management.
And I am telling you quite catagorically, that it is not. I didn't get that from a "close friend", I got that from being an HNZC manager for 7 years..
If your friend the tenancy manager says s/he does otherwise, I would respectfully suggest s/he is in the wrong job.
The rule under which tenancy managers operate is this: if they are informed that children have moved out and left tenants alone in a three or four-bedroom house, the tenant either takes in flatmates or is moved.
Rubbish. How do they move them? That's called eviction & you will find that there have been very few over the last 10 years. And how come there are still a lot of multi bedroom homes with sole tenants who have lived there for more than 60 years if such a rule exists?
What actually happens, is if the tenant who has signed the lease moves or dies, the other tenants can be placed on the waiting list for another home. Otherwise, good old negotiation between the remaining tenants & HNZC takes place. They cannot be evicted just like that.
but most tenants don't do that, because most tenants are reasonable people. They'll see the unfairness of staying in a huge house when there are waiting lists a mile long.
So, um, in effect you're saying they agree?
Additionally, they're not actually asked: they're told. I bet none of them even know the report says that they're supposed to 'agree'.
I bet too, if this is actually happening, and did get out, say from one of the tenants who isn't so reasonable, you'd see it all over the newspapers & your friend would lose his job.
(Incidentally, I lived in a HNZ house for three years [not, needless to say, under my relative's care]. They were by far and away the best landlords I've ever had: they actually followed the rules about bonds/visits/inspections and so on, and they made sure the property was completely up to standard. If I hadn't bought a house, I would have tried to stay with them forever!)
Cheers - yes, the vast majority of HNZC staff are hard working & committed. But OTOH, not following the rules,if caught, is not tolerated by the corporation. And to be fair, most of the tenants are very reasonable too.
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