Labour government: Prioritising the interests of middle-class landlords over struggling working class tenants

By
John Minto
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77
3341
One of these PMs built houses. One didn't.

Yesterday’s government announcement on new state housing is a pathetic response to the biggest housing crisis in New Zealand since the 1940s.

At a time when the country needs an industrial-scale state house building programme, the government building just 1,600 new state houses per year – the same number built by National in its last term.

The announcement was simply a rehash of the budget 2020 announcement of an extra 8,000 homes (6,000 of them state houses) over the next five years.

Since Labour took office in 2017 the state house waiting list has more than quadrupled to over 22,000. It is increasing at a rate of over 5000 per year but the government is building only 1600 new state houses each year. In other words, the waiting list is increasing at three times the rate the government is building state houses.

Ardern’s government is going full steam backwards.

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The last time we had a housing crisis this big – in the late 1940s – a Labour government built 10,000 state houses per year. 75 years later Labour can only manage 1,600 per year. Pitiful.

And the government is still refusing to borrow the money for building state houses (it doesn’t want the debt on its books) but insists Kainga Ora borrow the money, at higher interest rates than the government is able to do so.

Looking to iwi or social housing providers to help bridge the chasm is not an answer. Only the government has the capacity and the resources to deliver the industrial scale state house building programme the country needs.

The effect of government inaction is to prioritise the interests of middle-class landlords over struggling working class tenants. The 22,000 families in desperate need for state housing are being forced to stay in private sector rentals and therefore keep pushing up rents which the government is subsidising to the tune of $2.6 billion per year.

Senseless and stupid.

John Minto

Convenor

State House Action Network

77 COMMENTS

  1. The middle class are a product of the welfare state, this phenomenon was called the middle class capture. As initially NZ Pakeha and English immigrants got all the welfare state jobs setting them up for 30 years plus of there working lives with a good safe reliable income. And a state paid job and career enabled them to move into higher paying roles and jobs, on the job training, control over who was employed and control of resources. By having these state jobs made them middle class and they were able to get bank loans and help for them to achieve home ownership. To say we all had and still have equal opportunities in our country is utter bullshit.

    • From the Herald story:

      “There is no argument that, as far as is possible, it is incumbent upon society to make escaping from a violent home as easy as it can be. Certainly no one could reasonably expect that a victim of violence should, or would, remain where they are living because leaving would create financial difficulties. But are we really expected to believe that anyone in this country would stay put, at the risk of their physical and emotional wellbeing, because to leave would make it harder for whoever remained in the home to pay the rent? Even if that was the case, why should the owner of the property be forced to suffer a financial loss?”

      Because it does create financial difficulties, and being in business isn’t just about the widget you sell. Holy shit, did the Herald just argue that marketing and advertising shouldnt exist? That sales happens in a culture-free environment? Their advertisers will be happy to hear that. And yes, some would stay out of fear of the abuser, and some will stay out of love for the abuser, and some will stay out of compassion, because it already happens. Did the Herald just totally dismiss women and feminism for the sake of slumlords in one foul swoop? Jesus. Someone add them to the new hate speech laws hit list.
      Landlords should take a loss, in just the same way as you won’t see an advertisement for Beer that says, “Pretty Tasty, but not for anyone but White People.” It’s culturally unacceptable. How else will “society” take responsiblity for it’s values of power and oppression? Will they do it from a distance? At no cost? Change that way? Sure, Herald. Sure. And yes, it is one of the marginally useful features of the totally useless amendment act.
      The real concern for the change isn’t that the “battered wife syndrome” is treated, but because when that woman, or other, leaves an unsafe home they take with them debts, legal reputation and active gossip ro slander, no or little money, and legal penalties that see them not be able to afford or secure safe homes. At best, they get to run from violence straight into the hands of bastard landlords that take advantage of them financially. At worse, they’re now homeless. The Landlords who can’t stand to lose 4 weeks rent aren’t landlords. They aren’t in business. True to the rules of the free market, they should be alowed to drop out of the market as insufficient to supply demand. And no, the moral certitude the Herald claim exists in landlords, simpy doesn’t exist – or in business. They are in it for the money, and only the money. Fix that problem, Labour.

    • It’s seems like incentivising violence to me, get a 50% rent reduction for 2 weeks, but only for domestic offenders.

    • Hard to have much sympathy for those who think that “private property” is some sort of god given right to place property rights above human rights. At its most fundamental level, this is the sickness that is capitalism. My right to make money from my property is more important than the life of this or that piece of scum. Just add some prejudicial label and a good dose of vitriol!

  3. Until population growth and neoliberal economics are dealt with there will always be a housing crisis.

    The Adern government is fully committed to population growth and neoliberal economics.

    • At least some are starting to get it. Point is if (ignoring a couple of boutique sectors) all you do is export animal and plant byproducts then over time you get poorer as the price rises on these are far slower than products (say cars, TVs etc) that we import.

      Hence over time we get relatively poorer UNLESS you a). develop high earning alternative/complementary industries/sectors; or b). get a massive influx of immigrants that stimulates the wider economy. Without immigration you need to stimulate the housing market/domestic production another way hence the monetizing debt strategy that Beetroot and Grunter have embarked on. Developing alternative/complementary industries/sectors required long term planning and nonpartisan politics. Our mobs are too lazy, insular and feckless to care and try this.

      Problem is when your private debt to GDP ratio is 150% and climbing you really are doing the equivalent of giving an alcoholic more alcohol in a vain attempt to drink themselves sober. Long term this doesn’t end well whatever path you pursue.

  4. I’ve gone in plenty on this subject as to our governments shortcomings so here’s a basic blueprint to solving the housing crisis.

    1. Someone in her government tell Jacinda there IS a housing crisis and why.

    2. Appoint a housing Minister who is competent and who cares about the community, Willie Jackson comes to mind.

    3. Give him a blank cheque to solve it and Jacinda this use her capital to sell it.

    4. Public Works Act land acquisition. This is an emergency. The subdivisions should link to railways

    The Stick.

    5. LVRs set to 90+ %. Proof of funds approved by IRD before any purchase made. Brightline test to 10 years.

    6. IRD fully funded to have a dedicated housing investigation team to hound investors who evade.

    The Carrot.

    7. Tax breaks for those who build and sell.

    8. PPP with investors to construct Flatpack houses of approved design using government builders on the above government acquired land. The investor is paid off at completion. The government guarantee the build.

    9. The net result is rent to buy housing, from the government. It encourages investment into productive areas. It solves the housing crisis, reduces house prices, should kill speculation, rids the building industry of boom bust, creates work.

    • 1. Someone in her government tells Jacinda there IS a housing crisis and why. – get her some help with understanding basic arithmetic and what “exponential” is i.e. the more people you let in the more housing and infrastructure needs to be built. Also please help her make the connection that housing is linked to child poverty. If someone could sit her down and do the maths with her then I think maybe she might start to GET IT. otherwise, we’re fucked.

      • Jacinda knows, she acknowledges and talks about the housing crisis that National denied for years and thats why she and her govt have the biggest house building program well underway, thousands of houses have been built so far with thousands more currently construction.

    • Provision of houses on land leased from government could help since owners would then need to purchase the house only. Rents paid on the land could be tailored to suit the owners income.

      • Mikesh, you are close to the truth here. What is really wanted is for land to not be available for sale at all. The land of NZ belongs to all New Zealanders and should be administered by the Government of the day on behalf of Kiwis.This would stop all speculation on houses, which is really speculation on the land itself.
        The cost of building a house depends on material and wages costs which are fixed within fairly tight margins. On the other hand there is no right or wrong value to a piece of land which means the cost of land in practice is whatever the speculators can get out of it.
        Can anyone tell me why, if you buy a second hand car, its value drops rapidly by depreciation, but the cost of buying a second hand house always goes up indefinitely? The secret is in the land.

        • 100% nobody should own land. Māori were right all along. Leasehold, or at least implement a LVT. But this government just sits on its fat majority doing the easy stuff

        • I would agree that the crown should own all land and hold it on behalf of the people as a whole. I think I would pass legislation which provides that only the government would be
          able buy and sell land. Anybody selling a property would then have to sell to the government, and over time the government would probably come to own most of the country’s land.

    • Unlike National, Jacinda acknowledges and talks about the housing crisis she inherited. Her govt have embarked on the biggest housing build since the 1970s. Its pretty ridiculously unrealistic to expect a housing crisis that took years in the making to be solved overnight let alone in 3 years. Jacinda and her govt are also addressing the massive shortage of tradies after the previous National govt slashed apprenticeships.

  5. On this one we agree John, the performance of this Labour Governments a quite spectacular failure.
    Why? it comes down to competencies within Government, Cabinet in particular. It is great to wax lyrical about having “most diverse cabinet ever”.
    Yes Parliament is about diversity of representation but cabinet needs to be about competetency of the Minister to do the job. Ministers with the skills to identify the issue, make a decision, and then most importantly ensure that action actually takes place, such that something real happens, like houses actually being built!!
    Jacinda just doesn’t have any of those”get it done” people as Ministers.

    Your comment re
    ‘And the government is still refusing to borrow the money for building state houses (it doesn’t want the debt on its books)’
    Shows just how naive and inexperienced even Grant Robertson is.
    If you have debt on one side of the balance sheet balanced by an asset (the new state house) on the other then your debt to equity position ought to unchanged and potentially enhanced . NO ISSUE = GOOD BUSINESS
    On the other hand if money is borrowed to fund rent to private land lords, debt grows with no new asset to balance it. BECOMES A CRISIS IN TIME = BAD BUSINESS

    Jacinda is starting to look beaten on this issue of housing, and she probably is, her opportunity was three years ago when there was slack in the system in terms of tradies and materials fairly much readily available. Neither is the case now, both of these are under strain,
    The builders are all fairly much booked up on private profitable jobs and their numbers are dwindling by the day as the boomers are rapidly dropping out of the trades after 50 years work into retirement.
    So the people are not there to build the houses, that is the first problem. Followed by Local Government, then the supply chain for materials.
    So what is the solution?
    First just get houses built, any new house, even a retirement village frees up a house somewhere when the retiree moves in.
    Second Have real on site trade training, just like it used to be, most of Savages houses were built by turning the depression unemployed into “hammer hands” under the a supervision of a very few tradesmen carpenters.

    Third stop beating up on small time landlords who brought second homes to rent to fund their retirement.
    Exit from being a landlord looks like the only option for these people given the new tenancy laws coming in to place next month. Right now the country needs them to stay for as they exit that waiting list of 22000 will grow. I estimate it will hit 30000 before year end and quite possibly within 3 months as a result of the new tenancy laws.
    And Jacinda has no answer!

    • I fail to see how landlords exiting the rental market increases the housing maket shortage. Do the houses magically disappear or do you subscribe to the recent theory of one real estate sales person who blamed first time housing buyers for much of the housing crisis because they moved from shared rental accomodation (no data supplied, just anecdotal reckons), to occupying a house on their own?

      • Yes! the message was correct the presentation was all wrong. The issue is the total pool of rental is declining by week by week.
        As rentals come to market with vacant possession they are in the main part being purchased by owner occupiers. NOT being purchased for continued rental. Any land agent will tell you that. = less rentals longer waiting list
        Further 500 odd NZers are returning from off shore each week now tjat is a requirement of at least 100 houses per week ( more like 200 ). So unless more than 100 new houses are finished each the problem grows

        • And the person who was renting now goes off the list of those wanting a rental because they now own and may even need to take in flatmates to pay the mortgage. So unless you can supply some proper analysis your logic is faulty. The second part of your equation is correct however and is the total reason for increased housing pressure. People swapping between the renting/ownership lists has no effect. Increasing population or dcreasing average number of people per house are the only things that drive housing shortages and only if the new builds dont keep pace. Landlords might like to inflate their sense of self importance by claiming they are an essential service but actually they arent. And if landlords get in a huff and spit the dummy then the best remedy would be a Barcelona style tax on unoccupied dwellings

          • Spikeyboy, the people who are purchasing former rentals to become owner occupiers were never on the the 22,000 waiting list, the fact that they can fund the purchase means they would never have qualified to be on the ‘list’. It is the people who were renting it and now have no where to go who add to the list. This is fairly much is what John was pointing out in the lead to this train! The system is stacked against the poor renters.

          • Sorry man but your argument is totally illogical. The people who buy the house vacate a house to move into the one they bought. Avaiable housing stock remains the same. Only the two changes stated above affect supply. Unless houses are left vacant for which the remedy is also above. Rental prices are a function of asset value for which we both build more houses and completely discourage property speculation. Encouraging more landlords or preventing first time home buyers is the most ridiculous thing I have heard!

  6. This is a government who are happy to give tax payers money via accommodation supplement –

    Isn’t that communism by stealth (paraphrasing Donkey)?

    Proving once again, the middle class and land owners like socialism – but only if it benefits them.

    • How about as a first and simple move, BAN accommodation supplements to anyone who rents a house from a speculator who owns more than one rental or who is not an NZ citizen
      This would:
      a) lower Govt costs
      b) free up houses for first time buyers, as the speculators sell up, as they’re limited to who they can rent to

    • I think accommodation supplements were something this government inherited from previous administrations. They probably feel they are stuck with them, at least for the time being.

      I think this government inherited accommodation supplements from previous administrations and feel they are stuck with them, at least for the time being.

  7. Does anyone know whether the waiting list numbers are they number of people, applications, families or something else?

  8. Landlords deserve the accommodation supplement because we take risks by homing the poor. We are doing NZ a favour but never get any thanks?

    • What risk?
      If landlords/speculators didn’t own rentals, it’s most likely a first time buyer would buy the place. So you are most likely stopping people getting on the first rung of the ladder.
      UNLESS you are creating/building new houses to rent out you are mot likely PURELY speculating, using tax breaks (I can’t fault you for that desire) and especially if you’re running ‘it’ as a loss.
      I except a large professional run rental organisation would be a useful ‘thing’ in NZ, but sadly only a badly run Govt agency fits that build.

    • You take the risk to make a profit, why do you deserve thanks again? Isn’t making a profit enough of a thanks?
      If you rent for free then you deserve thanks.

    • If you can’t operate profitably without having to rely on accommodation supplements then you don’t have a viable business. You’d do better to sell up and get out.

    • What risks what nonsense!

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      Gary shares his passion in real estate, to follow his journey and empower others to getting out of the rat race, to live a life of freedom.

  9. Seems to me we have a problem and a solution. People need to save for their retirement but returns are non existent and uncertain. People need to borrow money at a fixed rate over decades to buy a house but no such product exists. Perhaps the government could set up a savings account that pays savers 3% and provides fixed rate long term mortgages at 3.5% (that leave 17% profit to cover expenses). Obviously we need more state housing to stop house price inflation but it could be part of a wider solution.

    Of course the real problem is that this housing crisis is not by mistake or incompetence but by deliberate plan: Enslave people with debt and also help the balance of trade by selling over inflated land (maybe even with a house on it) to foreigners.

  10. Boss, the government,say, it ok me join the Union, what your contract say. Your being say, knowing. Boss, what you say, you your choice me doing that, what you goin to do.

  13. Yes there are some really shit landlords, however there are far more shit tenants out there. I had to relocate for my job and rented my house out, will all was well for the first 3 months and then no rent paid and the dwelling thrashed, lawns not mowed, rubbish just dumped out the back door. I had to involve the tenancy tribunal, which took 6 months to resolve, never received the rent arrears and I paid for the property to be cleaned up and reinstated.
    I was paying rent as well as the mortgage, I sold the property as being a landlord was a horrible and financially taxing experience, which I will not repeat.
    I use to contract to the Housing Corp, undertaking maintenance , will that was an eye opener. Floor boards removed and burnt or nailed over a broken windows, dirty nappies dumped in and outside the dwelling, appalling and disgusting.
    To have a great tenant would be a blessing, but hard to find.

    • You have just provided an appealing solution to the landlord problem. If all tenants did a similar number on all rental properties, landlords would all ditch their ‘investments’. Voila – a massive surfeit of affordable houses on the market and the end of rent-racking.

  14. I guess it comes down to as far as politicians are concerned as to which side of their bread is buttered. Politicians are always very keen to talk about the lack of money for the things they purport that they want to carry out in order to fulfill the promise that they have made. But every politician seems to avoid where the origin of where the stuff comes from. I.E. That is us of course in the goods and and services that we have that we have to produce in order that our politicians and their corporate buddies can pocket what we earn. Money is supposed to represent the goods and services that we provide but a good look at the practices of our bankers activities along with our so called government representatives show that they together are incurring massive debts at our expense for what we as the community produced . The fair trading refers to this practice as production of false promissory notes. (section 24 I think). Government cannot be held crimenally to account for such an act but they can be held to account by our high court if it so decided. This seems most unlikely given the persuasion of corporate activities about our exchange system. When you consider the massive debts including ours to foreign entities such a practice could be considered as treasonable acts as provided in the crimes act at least from a legal position. The practice of usury is an old term that use to be used. Described in the dictionary the use of excessive interest (however you wish to interpret that .It is what it is) Their is a formula by the way fort such a practice. i.e. !+ a number.
    It is called appreciation of assets for lending.

  15. between 1945 and 1951 the government built 20,000 state houses. Over 3000 per year. Our economy now is about five times bigger but the government is only building half the number of state houses per year.

    This is not just a National dunnit, it is both parties. Both of which are dam useless.

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