Housing: National vs Labour

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Pondering where to cast your vote this year? Here’s our run-down of what National and Labour had to say on housing issues at this week's Auckland Property Investor Association (APIA) election debate.

Friday, July 14th 2017, 2:30PM

by Miriam Bell

There has been no abating in public disquiet about housing related issues and now, in the lead-up to the election, poll after poll is showing that housing is a dominant concern for many voters.

For investors, voting decisions might be complicated by the fact they have been targeted as a part of the problem by a range of political players.

So, earlier this week, APIA hosted a pre-election match-up between Building and Construction Minister Nick Smith and Labour Party housing spokesperson Phil Twyford to showcase what New Zealand’s two major parties have to say on the housing front.

It’s worth noting that Smith and Twyford essentially agreed on the root cause of New Zealand’s housing related issues.

Both pointed to a severe shortage of housing supply, particularly in Auckland, which has been exacerbated by inefficient land use.

And they both said that New Zealand needs more housing of all types – including social housing, private rental properties, and affordable properties for first home buyers.

Where they differed was on how best to address the lack of supply and the housing market problems which have resulted from it, as well as their position on investors.

Here’s our run-down of where each politician, and their respective Party, stands on the heat-generating issues of the day and the policies needed to address them.

Boosting supply

Both National and Labour have policies aimed at significantly increasing the amount of dwellings being built, particularly in Auckland.

National has its Crown Building Project which has a target of 34,000 new dwellings, over the next 10 years, for Auckland. Labour has its Kiwibuild policy which would build 100,000 affordable dwellings over the next 10 years.

Smith said he didn’t think Labour’s Kiwibuild policy was realistic or achievable. He made much of the Special Housing Areas (SHAs) that National has established, but Twyford said that, to date, they have been unsuccessful in increasing supply.

Both noted construction industry constraints – including a lack of skilled tradespeople and building material costs – were an issue on the supply increase front.

Smith said National would boost apprenticeships, although he didn’t provide details, and remove restrictions on building materials coming into New Zealand.

Twyford offered up more on this front. First, Labour’s Dole for Apprenticeships policy would subsidise employers to take on about 4,000 young people for on the job training in areas like building and construction.

He also said Labour would introduce government procurement and bulk purchasing of building materials, mandatory warranties for building work, and increase the Commerce Commission’s power to investigate building market rorts.

Cutting through red tape

An excess of planning red tape and bureaucracy is widely considered to be one of the causes of the supply shortage. Smith and Twyford both also agreed with this.

National is tackling the issue by reforming the Resource Management Act and planning regulations, Smith said. Additionally, it has introduced the National Policy Statement on Urban Development Capacity which directs Councils to ensure land supply for housing keeps pace with growth and will be establishing Urban Development Authorities.

This week’s Housing Infrastructure Fund allocation announcement was another aspect of the way the government is approaching these issues, he added.

Twyford said this was not enough. Labour wants to radically reform planning rules, abolish the use of urban growth boundaries by Councils, remove density and height restrictions, establish an Affordable Housing Authority to cut through the red tape, and look at different ways of funding infrastructure.

Addressing demand

While both politicians noted high demand, they have very different interpretations of it. Smith views the demand for property as a sign of New Zealand’s economic success and appeal as a destination.

But Twyford sees it as a problem which needs to be reigned in. To this end, Labour has, notoriously, focused on the impact of immigration and foreign buyers, as well as investors, on the market – and has policies aimed at this group.

Under Labour, immigration would be curbed further, foreign buyers would be restricted to purchasing new builds rather than existing stock, and investors would see negative gearing removed and the bright line test period extended to five years.

Smith disagreed that foreign buyers have the degree of impact claimed by Labour, and pointed to the LINZ data on foreign buyers as evidence.

He was also opposed to Labour’s tax plans on the ground that tax policy should be consistent and neutral. “It shouldn’t demonise groups like landlords – because that leads to unfairness.”

The two also had different views on whether first home buyers were at a disadvantage to investors. Twyford believes they are: “They don’t have the capacity to leverage and can’t offset costs of property against other taxes as investors can.”

But Smith said that first home buyers have the Welcome Home Loan Scheme and KiwiStart in contrast to investors who have to contend with much greater LVRs.

Landlords vs tenants: the rental market

Tales of disreputable landlords providing less than quality rental accommodation regularly hit the headlines. Hand in hand with this, goes the campaign for greater tenant rights.

Labour is firmly on the side of tenants in this area. Twyford said they want to introduce minimum standards to make sure that rental properties are warm and dry. To this end, they will offer $2,000 grants to support retrofitting insulation and a Winter Energy Payment for low income households.  They also want to do something about security of tenure.

However, Smith believes that the government is already addressing the issue of warmer, drier rental properties. He pointed to the government’s reforms to the Residential Tenancies Act.

These have already seen smoke alarms and insulation made compulsory in rental properties and the establishment of MBIE’s tenancy enforcement team. Changes in the RTA Bill No.2 aim to ensure better management of meth contamination, liability for careless damage and the tenancy of unsuitable properties.

Smith said National’s view is that there is a small amount of disreputable landlords out there – and there is now a unit to go after those landlords. “The alternative is to have an expensive, bureaucratic minimum standards body which will results in costs falling on the tenants. But my door is always open to sensible reforms that will work for both landlords and tenants”

Views on investors

For Labour, investors clearly remain a group which is a concern on two fronts – as property buyers competing against owner-occupiers, particularly first home buyers, and as landlords who may not be providing good quality rental properties.

For National, investors are clearly a group that should be courted. Smith said they were opposed to “the demonising of developers and landlords” several times. He also said: “If you want more houses, you need property developers. If you want more rentals, you need people to invest in the residential sector.”

Read more:

Election 2017: what investors need to know 

Labour’s negative gearing policy “regressive” 

Challenges ahead for Govt build project

Build more bloody houses – Little 

« National sales volumes plummet

24 properties & a 4-hour work week »

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