Gareth Morgan and Multiple Empty Houses

By
Keith Rankin
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35
154

Gareth-Morgan

I caught Gareth Morgan saying this on The Nation (TV3; 16 April 1026) in the weekend (Interview: Economist Gareth Morgan):

Look how many politicians own multiple houses. We’re all on this gravy train now. Look at me, I own six houses. I don’t have tenants; they just make carpets dirty. I do it because I know you want to get in on this as well and so you’re going to bid the price of those houses up. So as long as I sit there long enough enjoying this benefit, you’re going to double the value of my house. This is a major shift in wealth from the ‘have‑nots’ to the ‘haves’.

Now Morgan is not a bad person; rather, he’s a master of self-parody. He puts his money where his mouth is; he, as a more-than-slightly-rich person, shows us how the slightly rich and not-so-famous (the “you” in his quote) seek to ‘make money’ by doing absolutely nothing other than withdraw good houses, simultaneously, from both the rental and the owner-occupier housing markets. We even have the gall to call this activity ‘investment’.

More pertinently, he’s saying that politicians do the same thing as he is doing: sitting on empty properties, withdrawing houses from the housing supply. And he’s kind-of suggesting that people well connected in the media do it as well. No wonder neither the politicians nor the mainstream media want to address the issue; too many of the local well-connected appear to be into cynical land-banking. We don’t need to look to Asian money-launderers to explain why dwellings in certain parts of Auckland and Wellington are so scarce.

On 12 May 2015 I wrote (MPs’ Real Property Interests, Scoop). Unfortunately the register for MPs’ pecuniary interests is not well designed. When it comes to MPs’ real estate the categories need to be widened. It’s not enough for MPs to say that they own a ‘rental house’. We, the public need to know if these house are tenanted or not. We don’t mind if our MPs are good socially responsible private landlords. But we do want to know if they are landbanking or otherwise withdrawing houses from the supply available for New Zealanders to live in.

Given the stories I’ve heard about London and other world cities – with parts of Kensington becoming ghost communities; houses owned as holiday homes by foreign oligarchs; and that’s just the upper end of the phenomenon – we may in fact be bearing witness to the 21st century urban equivalent of the great Highland clearances of 200 years ago. Then, people were displaced from their Highland ‘places to be’ and into the slums of Glasgow because the putative owners of those lands came to regard people as an inconvenience; a liability rather than a productive source of rental income. (One of those Highland refugees came to be New Zealand’s most renowned land reformer, John Mackenzie; though few today have heard of any politician from the ‘olden days’, Grey, Seddon, Ngata, Savage and Muldoon excepted.)

Our politicians will not address the empty-house syndrome. We can easily imagine why. Our mainstream media will not do so either; same reason. There are some issues that we, the middle 50%, have to raise – and keep raising – through other channels. Until, that is, questions are actually answered, and policy solutions are taken seriously. It is not a solution to build houses on ever-expanding city fringes while larger numbers of houses in the most desirable suburbs are being acquired and emptied by ‘multiple-house’ speculators. Tax owners of empty and near-empty houses. Don’t tax socially responsible landlords.

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35 COMMENTS

        • Yet it’s still going on. Tax dodging is still a thing. And some how we are meant to believe because it’s regulated now that tax dodging want be a thing in the future.

          I think you underestimate the knowledge and conviction of your average kiwi

      • Yes, profiting by being a landlord should be made so difficult that they have to stop doing it. These economic masterminds can use their skills in the real economy. If they’re really as talented and hard-working as they claim they are, then they shouldn’t have a problem.

        But we all know they’re lazy untalented leeches.

  2. “Then, people were displaced from their Highland ‘places to be’ and into the slums of Glasgow because the putative owners of those lands came to regard people as an inconvenience;”

    A number of lairds and landowners went bankrupt trying to hold their clans together. They paid for people to go to America, Canada, Australia. They tried to bring in industry, different farming methods, fishing – and failed. Unfortunately.

    The population boomed after the Napoleonic Wars and land was subdivided to sizes that would not support the crofter farmers. Renters would lease land to kin and others at ridiculous rents and increased poverty. (Sounds familiar.)

    The land in much of the Highlands is such that it will not carry a large permanent population of crofters using subsistence farming.

    Sellars the factor was a scoundrel and gave rise to horrid stories. However, many people went by choice – as they had always done, for many centuries. (Mercenaries, drovers down to London, cod fishers to the Grand Banks, women to the fish processing, and other skills.)

    And, from the slums of Glasgow they went to work on Clydeside, as well as forming strong communities. The working class and, often, the base for both the SNP and the Communist Party in later years.

    Alba gu brath.

  3. I was disgusted at Morgans declaration “I own six houses. I don’t have tenants; they just make carpets dirty. I do it because I know you want to get in on this as well and so you’re going to bid the price of those houses up.”, and that he truly believes we’re all driven by the desire to make money by doing nothing.

    This game of land banking that Morgan so shamelessly practices is pushing the price of housing and rent beyond what many can afford. And it proves that there is no shortage of housing.

    Has it occurred to you Gareth Morgan, to find out what people do when they can’t afford to pay the rent?
    I bloody well suggest you do.

  4. Do we need a property & construction regulator like how we have a financial regulator?

    I’m just not willing to hold my breath under the idea that politicians will self regulate.

    We’ve done all the easy reforms short term solutions like supply side stuff over the last 15 years, and all the short term boosts from people moving to Auckland I think is gone. Now it’s time to do all the hard reforms like cracking down hard on corruption and reducing state debt. That sort of long term stuff is difficult, it’s not like the one off Keynesian boost we have become use to, but it’s more lasting once corruption reforms comes into effect.

    In the short term I think we should take any amounts of money the government wants to put in the housing but it is still to be seen weather it can sustain the recovery of the housing markets over the long term.

  5. I know a few youngsters who are now squatting empty houses in Parnell and Herne bay

    lets see how clean those carpets stay !

  6. Under law in NZ, landlords should be paying tax on their rental income. I personally know of people who do not declare rental income at all. We all hear about the ‘cash’ tradespeople constantly targeted by IRD but I have to say the people I know (Korean and Chinese migrants) never declare the rents and have never been caught and in fact have the properties in different family members names anyway so in one case they could claim a benefit. Is this right? Personally I don’t think so.

    One reason I am pretty angry about migration is the damage it is doing to the social welfare system which seems to be supporting wealthy fraudsters who do not care about NZ and not supporting poor people that actually need the benefit, because they don’t have 3 houses in all their family members names. I have zero problem with legitimate migrants but clearly there are zero checks and balances in the immigration system and once people get here or have been here as the first generation, no IRD checks to see whether they ‘understand’ their tax obligations in NZ and are compliant with them.

    The main reason I think landlords don’t put a tenant they aim to speculate on it and sell it quickly and therefore do not want IRD knowing they have an interest in the property and also nowadays there is the massive P problem. Nobody wants to have to have their house destroyed by P tenants or trashed.

    I see they have finally managed to catch someone importing P … surprise surprise -mother of 3, currency exchange operator, ‘food’ shipping company and frequent user of Sky City.
    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11624732

    • “One reason I am pretty angry about migration is the damage it is doing to the social welfare system”

      Do you have any data or evidence to show that migrants are overall causing strain on our welfare system? Usually migrants contribute positively overall to their new country’s economy. Our economy is fucked, but why do you blame migrants? Can you give some evidence and not just one off stories or anecdotes?

      If you know people avoiding their taxes, then that just shows we have holes in our tax system. It doesn’t matter if you know one or two stories about Chinese or Korean people, the problem is our weak regulations.

      If you want to make a point about ethnic minorities then you have to give some data and facts that tell the whole story, not just one off examples of minorities.

  7. Gareth Morgans comments just reflect reality. There as been a concentration of ownership of housing that has been fueled by bank lending,[ a house is worth whatever a bank will lend against it], and a tax regime that favors speculation over real productive investment. This ponzi scheme will implode.The debt that is fueling this madness is unsustainable.

    • Yes, further to that, National Ltd know it too. They don’t give a stuff for the damage it causes, they will just do all they can to make sure it doesn’t happen in their term, they’ll pass the ticking time bomb on.

    • democracy requires participation if the poor the disfranchised turn there backs on the voting system they effectively hand power to the rentier class who vote for number one.

  8. BRIAN:

    Is there really a concentration in ownership?

    Do you have any figures to back this up?

    In my view most middle class people own their own home and a some have a renter or two. There is a handful of ‘old money’ families who own significant portfolios as a leftover from a previous era, but I see no oligarch in NZ owning vast blocks of housing.

    Sure, there are youngsters who are struggling to get into the housing market, just as I did in the 70’s. Some things never change.

    OK Auckland is overpriced, but that’s more a function of Auckland Council’s ineptitude than anything else.

  9. I dare say, we do not so much have a housing crisis, we have a social injustice and wealth divide crisis.

    There are many examples for showing this, and what Gareth Morgan said is just a perfect one. In Auckland there are many homes that are occupied by only one, perhaps two to three persons, and many are at least two bedroom, up to four or even five bedroom homes, including standalone houses, sizeable units, apartments and so forth.

    This is the case in the leafy suburbs, in also more average middle class suburbs, and also in at least the “better” parts of Auckland’s CBD.

    On the other hand we have overcrowded homes, where renters and in some cases owners with flatmates, tenants or boarders share their homes with more people than would usually live in them.

    This is the case in many parts of South Auckland, parts of West Auckland and some other areas, where the poor and struggling middle class live.

    The wealth gap has grown with investors, which includes even the ones that own only two homes, one for investment, one to live in, buying up more and more homes, while home ownership on the whole is dropping to historic lows.

    If we would have a more balanced, share occupancy of homes, we would probably have not much of a housing crisis as such.

    This can be proved by looking at the limited number of homeless, which is nevertheless a serious problem, in the thousands, and those looking for rooms to rent say on Trade Me.

    There are always hundreds of rooms for rent, and this shows that there is not so much a serious shortage of accommodation, it is rather a totally unfair distribution of homes and rooms to occupy.

    Once upon a time it was a more balanced situation, where New Zealand counted itself as a fair country, those days are gone. Homes are a commodity for too many, an investment vehicle and unit, to speculate with. Some add to their capital gain by renting out the extra homes, charging high market rents.

    If we had rules to say, if you are single, you are only allowed to occupy a one to two bedroom home, and if you have a larger home, you have an obligation to share at affordable costs for a renter or flatmate, then we would probably not have the crisis we have.

    But as such rules are an affront to the neoliberal, laissez faire society we have under our present government, and have had for a while before, we have the total social injustice there is.

    The problem is of course aggravated also by additional investors and new buyers from overseas, whether they are speculators, new migrants or returning citizens, it all adds to the injustices, as they may have savings that our poor here have not.

    As nobody wants to seriously address this wealth and social injustice, we are bound to only get a worsening of the situation over coming years.

  10. Well, I hate to put the wind up anyone, but take care where you rent/buy ’cause Mother Gaia is on the move:
    http://galacticconnection.com/russia-prepares-for-catastrophic-earthquake-but-warns-america-is-in-worst-danger/?utm_source=Galactic+Connection+Newsletter+MC&utm_campaign=abdc992e60-The_Daily_Alternative_News_Source_April_18_2016&utm_medium=email&utm_term=0_aebd2bb672-abdc992e60-147554457&mc_cid=abdc992e60&mc_eid=992f5a3916
    In my research I found a comment about the seabed rising in the Pacific (which I now can’t find). Return of the lands of Lemuria and Mu?

  11. home ownership is vapor wealth here to day gone tomorrow house drops but the debt stays the other group subsidizing the home owners are anyone trying to save money we are in a low interest rate nightmare but i do be-leave there is no soft landing or even a hard landing out of this bubble the disconnect from reality income is so huge it can only end in an economic collapse.NZ house hold debt is staggering by its irresponsibility.
    NZ is a house of cards with foundations on a very slippery slope

    • Average house prices in Sydney reach a million dollars this year. Land banking is just as big a problem in Sydney as Auckland. The market sentiment is you should prepare for the Aussie short correcting its self in the next 18 months, that includes Kiwi investors because our big four kiwi banks are Australian banks so the Aussie short will set off any weaknesses in out own property market.

      Banks won’t trust each other, won’t lend to each other, that’s when you get a credit freez.

      It’s the banks own dumb fault for not doing there risk assessments properly. I don’t want my taxes to bail them out at all. So I’v protected myself.

    • It is important to remember, that OZ does have a Capital Gains Tax, and does not allow immigrants to purchase homes and then return to their own countries, plus immigrants are also required to build new houses and cannot purchase existing houses, so if it works well there I can not see why we are not doing the same.

      Well I can see why we are not – too many of the wealthy 1% would be unhappy to pay their fair share of taxes.

      I wonder if Gareth Morgan would have 6 houses sitting empty if he had to pay Capital Gains Taxes on these properties.

    • It is important to remember, that OZ does have a Capital Gains Tax, and does not allow immigrants to purchase homes and then return to their own countries, plus immigrants are also required to build new houses and cannot purchase existing houses, so if it works well there I can not see why we are not doing the same.

      Well I can see why we are not – too many of the wealthy 1% would be unhappy to pay their fair share of taxes.

      I wonder if Gareth Morgan would have 6 houses sitting empty if he had to pay Capital Gains Taxes on these properties. Just another money hungry landlord – hope he can take it with him when he goes.

  13. Nothing will happen until tenants decide that they will no longer be ignored. That means hundreds of tenants jamming every council meeting and surrounding council buildings demanding Rent Control, as is happening right now in many parts of the US.

    http://www.bizjournals.com/sanjose/news/2016/04/18/council-to-decide-on-future-of-rent-control-in-san.html?ana=twt

    There are relatively few “Gareth Morgans”. There are not very many more “House Hoarders” like him. Needy tenants number in their 10’s of thousands, vastly outnumbering these greedy landlords. This should not be a problem, except for the inaction of the majority.

    The answer is simple; make it impossible for the system to ignore you, by getting in their faces, clogging the wheels of government, demanding justice, continuously, and unflinchingly, until you get it.

    • An interesting video. I live in South Auckland and there are large areas that have been land banked to push up prices around the edges. I would like to see this land being taxed while it is unused. There are ways around this for developers (e.g. let the land out to farmers), but you can’t offshore land to avoid your tax burden.

      As presented in the video, the idea of a land tax is that it replaces the income and sales taxes that poor and middle income people pay.

  15. There are no statistics on the numbers of unoccupied houses in the suburbs of Auckland or anywhere else in N.Z.
    Post Shops have the information on which houses are vacant in their area though and information should be available about which houses have no water usage.
    Citizens could moniter and report to a web site which would publish addresses of permantly unoccupied dwellings. There are more ways of killing cats than sprinkling shards of glass through the shag pile.

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