Pampering landlords has been a consistent feature of New Zealand economic policy by successive governments.
Leaving housing to the market has meant plenty of quality homes and good choices for higher-income tenants and families but the reverse for everyone on modest and low incomes.
Today’s housing crisis means impossibly high rents and steadily reducing quality for private-sector tenants.
Housing is grinding modest income New Zealanders into the ground. Here is some background:
The average rent for a new agreement increased by 5.4 per cent in the 12 months to December, 2017, from $426 per week to $449 – according to the Ministry for Business, Innovation and Employment.
This isn’t massively out of step with increases in recent years. In the past decade the average increase over any 12-month period has been 4.1 per cent and in the 12 months to December, 2016, rents increased 7 per cent, on average.
People can’t pay these rents but instead of imposing rent controls on our broken, dysfunctional market, Labour and National governments have use taxpayer money to subsidise grasping landlords and their criminally-high rents.
We pay $2.2 billion of taxpayer money in rental subsidies each year through the accommodation supplement.
At the time National increased the accommodation supplement by $254 million in last year’s budget, estimates were that 30% to 78% of the increase would go direct to landlords as they hiked rents.
We also subsidise landlords through having no effective capital gains tax. In fact the unearned income from capital gains is often so high some landlords don’t bother to rent out the houses they have bought for purely speculative reasons.
The best estimate we have for our rental vacancy rate is 6.6% in Auckland which means 33,000 homes without tenants. It also means more landlord subsidies.
As we head into winter and the squeeze comes on low-income tenants and families the government is set to pay $37 million for emergency accommodation for people without tens of thousands of homes lie empty.
This is insane.
Not only are we subsidising exorbitant rents as landlords use the housing crisis to hike rents to the maximum they can change but we are also subsidising landlords with tens of millions to provide alternative accommodation because so many are land-banking homes they own. The bastards.
Whichever way you look the government is subsiding some of our biggest bludgers who use homes as commodities to buy and sell for profit while families live in cars.
Our housing market is broken, dysfunctional. Instead of rent controls, an Empty Homes Tax and a comprehensive Capital Gains Tax the government is rewarding landlords with massive government subsidies and tax-free unearned income while wage and salary earners pay far higher tax rates through income tax and GST.
Will this Thursday’s budget end this landlord bludging? Don’t hold your breath.