Running the ruler over housing policies

14 August 2019

4. Kirk HopeThe last election, sharply focused on housing, brought us several new policies to address the housing crisis.

We’re past halfway towards the next election and now is a good time to assess those policies.

As the last election underlined, house ownership is important for everyone.

It’s especially important for business.  We are a nation of small business and mortgaging the house is how we get new enterprises started.

House ownership affects how well we live, as lack of affordable housing is recognised as the biggest factor contributing to poverty and inequality.

Housing policies introduced or proposed since the election include an overseas buyer ban, capital gains tax, KiwiBuild, urban development authority, ‘build to rent’ and a vacant land tax and others.

How are those housing policies working out?

The ban on overseas buyers has reduced house sales to foreigners, but Statistics NZ now says these were never more than three percent of total sales anyway.

The proposed Capital Gains Tax, aimed at helping more people into housing, has been ditched.

The KiwiBuild policy is being reset.  After missing milestones towards its 100,000-house goal, it’s uncertain how it might build more in future.

The Urban Development Authority is on its way - a new agency able to build large housing developments and rent them out as a public housing landlord.

Also in the wings is ‘build to rent’ – a policy to get more apartment blocks built.  The plan is for the Government to sell Crown land to developers on easy terms, to help achieve more rental accommodation.

And a vacant land tax is proposed to persuade landowners to either develop vacant land or sell it, to free up vacant land for house building.

These big policies are mostly about the Government ‘doing stuff’ in the housing market.

Are they effective?

Rather than ‘doing stuff’ in the housing market, perhaps removing its roadblocks might be better.

The main roadblocks in the housing market are well-known - housing regulation and insufficient funding for housing infrastructure.

Housing regulation – eg zoning, urban growth boundaries, restrictions on what can be built where - increases house prices and reduces the number of houses that can be built.

In 2017, research unit Superu found housing regulations are responsible for around 50% (or half a million dollars) of the cost of an Auckland home.

The other roadblock – not enough funding for housing infrastructure – occurs in places where rapid population growth outstrips councils’ ability to fund the infrastructure for new housing development.

These two roadblocks result from two pieces of legislation, the Resource Management Act (RMA) and Local Government Act.

The RMA gives guidance to councils on their planning regulations and lets council write regulations that make it difficult and expensive for people to build new houses.

The Local Government Act gives guidance to councils on their powers and spending, letting them spend ratepayer funds on unnecessary purchases, while not requiring them to first invest in housing infrastructure.

Simply changing these two Acts would be a gamechanger for housing.

The RMA could be changed to require councils to reduce unnecessary regulation.  It could forbid the ‘presumption of no development,’ requiring councils to let people build unless council specifically says no (rather than forbidding any development until it says yes).

And the Local Government Act could be changed to require councils to spend ratepayers’ money differently: disinvesting in unnecessary ownership of things like ports and airports, and investing in housing infrastructure instead.

If these roadblocks were removed, then the other big housing policies might not be needed.

Let’s see them fixed so we can build the housing we need.

 

Kirk Hope | Chief Executive | BusinessNZ | www.businessnz.org.nz

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