Category: rent

Breaking news: Occupations extremely likely to be property speculating

Cartoon by Vincent Konrad for Socialist Review - used with permission

Cartoon by Vincent Konrad for Socialist Review – used with permission

I have undertaken cutting-edge statistical analysis of the Register of Pecuniary and Other Specified Interests of Members of Parliament, which has revealed some shocking information.

People of the following occupations are all extremely likely to own real property beyond the family home and Māori land interests:

Labour MP: 50%

National MP: 76.27%

Green MP: 50%

NZ First MP: 58.3% or 61.54%*

United Future MP: 100%

These rates are all extremely high – far higher than any ethnic or national group, for example. It is clear what we must do to curb property speculation and solve the housing crisis: Ban MPs from buying property in NZ.

*Info not available for new MP Ria Bond.

National’s big housing announcement: tinkering for the middle-class, hand-outs for the rich

One-word summary: Pathetic.

Scoop cartoon housing crisis I’ve blogged before about National’s staggering denial of the housing affordability crisis. It seems they’ve now woken up somewhat, as they’ve released a housing policy as the flagship policy announcement of their campaign launch.

They claim to have “overhauled” the existing scheme (introduced by Labour in 2007) whereby you can withdraw from your KiwiSaver savings for a deposit on your first home, and many people can get a government top-up too.

In fact, they’re only making a few changes to the scheme:

1) They’re increasing the house price limits – you can now buy a house worth more and still be eligible for the top-up. This is good and necessary, given our skyrocketing house prices. But it will be generally wealthier people gaining eligibility.

2) That’s even more true for the second change: Currently, the top-up is $1,000 for every year you’ve been in KiwiSaver, to a maximum of $5,000. National will double these amounts, but here’s the kicker: only for those buying or building brand new houses.

3) Aside from the top-up, you can currently only withdraw your employee and employer contributions for your first home deposit. National propose to let you withdraw your annual government contributions (max $521/year) too. I’m actually 100% behind this, and don’t know why it’s not already the case – but, again, the people with the maximum government contributions will usually be wealthier.

4) In October, the Reserve Bank introduced Loan-to-Value ratio restrictions, meaning most buyers now need a 20% deposit for a home loan. This has slowed house-price inflation, but also priced poorer people out of the market. Under National’s proposal, first home buyers will now only need a 10% deposit. This will certainly help, but it’s only a partial backing-away from the Reserve Bank’s policy.

I agree with most of the above, and I’m glad the government have stopped ignoring at least one aspect of the housing crisis.

But there are at least five significant problems, which mean this policy completely misses the mark:

Firstly, it’s pretty small-fry. A lot of it is good, but “tinkered” or at best “expanded” is more accurate than “overhauled.” A couple with maximum eligibility will be able to draw $7,294 more of their savings for their house deposit. If they can afford a new house, they’ll also get $10,000 more from the government. They’ll also probably benefit from being able to buy with a lower deposit – let’s round up the total benefit to $20,000. But that’s still only how much house prices inflate in Auckland and Christchurch every few months. (If you’re buying on your own, all these amounts will be halved, except the house cost/inflation of course.)

Secondly, it helps the better-off the most. “Maximum eligibility” does not correspond to maximum need, but maximum privilege. This is already a flaw with KiwiSaver and the home withdrawal scheme – the people with the most to withdraw are those who’ve earned the most since 2007. But it’s compounded under National’s proposals.

Even more significantly, while the proposed expansions let normal buyers withdraw more of their own savings, they give an extra hand-out of $5,000 per person free money to those who can afford to build or buy new houses. How many people do you know who can afford a new house, let alone for their first home? If you can think of anyone, I’m guessing they either have parental assistance, inherited wealth or very high-earning jobs (you can earn quite a lot and still be eligible, btw). Acknowledging that even these privileged people need help buying homes is admission that our house prices are out of control. But it’s disgusting that the less-well-off are denied this generous and much-needed hand-out.

Thirdly, National’s numbers look impressive by themselves (90,000 helped! Thousands of $ of support! Only costs $218 million!), but if you actually whip out your calculator and analyse them, you’ll notice that only the 10,000 luckiest will be eligible for the big bucks, their mortgages will still be officially classified as 150% unaffordable, and even with these big benefactors pushing up the average, the average assistance is only about $2,000 per home-buyer.

Fourthly, this only helps people buy their first home; it doesn’t do anything about the investors with multiple homes, crowding the market and pushing both rents and house prices sky-high. Unlike in most other countries, you can still “earn” tax-free passive parasite income off other people’s poverty, and unlike Mana, Green and Labour, National don’t see a problem with this (not surprising, since many of them are property investors themselves).

Fifthly, the best National can offer is modifying an old Labour idea, which speaks volumes about their lack of vision. Labour thought up KiwiSaver in the first place, and now they, Green and Mana actually have new ideas to help people into home ownership – and, unlike for National, the most emphasis goes to the people that need it the most.

Housing crises are great for Brownlee’s net worth

10041146Graph from The Press

A quick recap on the NZ and Christchurch housing affordability crises:
– 80s-present: NZ housing affordability worsens throughout the neo-liberal era (p. 13-14, 68-70).
– 24/1/2011: Auckland, Christchurch, Wellington and Tauranga house prices assessed as “severely unaffordable.”
– 2010-2012: Canterbury earthquakes reduce housing supply and increase rental housing demand.
– 20/3/2012: National and Gerry Brownlee decide to leave the market to sort out the Christchurch housing crisis.
– 18/6/2012: Brownlee suggests rent rises in Christchurch aren’t “astronomical” compared to other cities.
– 29/6/2012: Brownlee and John Key deny there’s a housing crisis in Christchurch.
– 7/7/2012: Brownlee says he can only see positives in Christchurch’s skyrocketing rents.
– 29/10/2012: John Key rules out a capital gains tax like most countries have, simultaneously showing just how out of touch he is.
– 27/8/2013: Housing is now less affordable in Christchurch than Wellington.
– 14/5/2014: Christchurch rents projected to hit Auckland levels in January 2015. Housing Minister Nick Smith suggests “the real problem” is not enough rental accommodation for tourists.
– 15/5/2014: The Budget offers a pittance and cuts for housing, and worse for Chch.
– 19/5/2014: An OECD report finds New Zealand has the most over-valued houses in the developed world. Key, true to form, disagrees with the OECD, and tries to spin the news as a positive as more people are entering the “housing market.”

A consistent theme emerges in the current government’s attitude to these developments: (a) there’s no crisis – if anything it’s a good thing, (b) if there is a crisis, the market will sort it out by itself (because dog-eat-dog individual selfishness systems are great for the vulnerable, eh).

It’s tempting to say they’re simply idiots, but it’s better to ask which groups in society are they representing, and which aren’t they?

For most groups in society, the above information amounts to a housing crisis nationwide, and particularly in Christchurch. But for one group, rapidly rising rent and house prices doesn’t amount to a crisis, but an opportunity for increased profit. This is the group that treats housing as an investment, not somewhere to live: rental property investors.

Gerry Brownlee and many other National MPs are in this group of people. Most of Brownlee’s rental properties are in his own Ilam electorate, where rents in one suburb (Aorangi) rose by 51% in a year. I think this is a pretty important conflict of interest at the best of times, but even more so amid the housing crisis Brownlee and his party are determined to ignore.

I recently wrote to Brownlee, essentially asking him to clarify the question I asked in an earlier blog:

How much passive income does Brownlee get for his properties, and how much has it gone up since 2010 and him subsequently “letting the market sort out” the housing crisis?

If you’re interested, here’s Brownlee’s response. My attempt to name-drop the Official Information Act backfired – it turns out this info isn’t available under the OIA because it’s not government info. So the public don’t get any more detail than what’s listed on the register of pecuniary interests. I asked if he’d answer my questions anyway, as a goodwill gesture to one of his constituents… I’ll let you know if he replies.

If National win this year’s election, it will be because of personality and PR. If they lose, it will be because of housing. It’s the biggest issue in Brownlee’s electorate and the country. While National are denying, blaming and doing nothing, Labour are making supply-side and demand-side action on the housing crisis the centre of their campaign.

Landlord, local MP, regional czar, next-door-neighbour-to-my-doctor, guy-who-took-a-photo-of-me-once

Brownlee property ownership 31/1/2013 - http://www.parliament.nz/resource/0000262069

Inspired by comments on the Standard, I checked out the Register of Pecuniary and Other Specified Interests of Members of Parliament here. I was particularly interested in Gerry Brownlee’s* four** properties in his (and my) stomping ground of northwest Christchurch.

In ensuing Facebook discussion, a few questions quickly presented themselves:

  1. How much passive income does Brownlee get for his* properties, and how much has it gone up since 2010 and him subsequently “letting the market sort out” the housing crisis?
  2. How is someone whose decisions have such a massive impact on the Christchurch housing ‘market’ allowed to own potentially millions dollars’ worth* of properties here?
  3. Is it even ok to be both landlord and local MP for several houses’ worth of people?
  4. Is he a ‘good landlord?’ Are his properties part of the 44% of NZ’s rental housing assessed as in poor condition?
  5. Who’d like to become one of his tenants? (there are ways of finding out the addresses.)

* It’s possible that Brownlee only has a small pecuniary interest in the listed properties. The Register doesn’t declare other owners, if any.
** As at 31/01/2013. Apparently it’s become five since then.

Rhetoric and reality

I’ve been noticing an unusual phenomenon over the past few weeks – National MPs drawing attention to the plight of the poor, the greed of corporates and the illusory nature of private property.  Are we living in an upside down world?

~~~

It all started when I found myself in the unusual position of agreeing with Paula Bennett on the plight of poor beneficiaries.

Bennett drew attention to “absolutely sub-standard” yet “well over priced” housing, and landlords taking advantage of vulnerable people who couldn’t find housing elsewhere.  She asked such landlords to “have a good look at themselves”, provide housing they’d live in themselves, and show a good Kiwi “element of fairness”.  She even said she was looking at ways of “helping people towards home ownership”.

The funniest part about the whole thing is that she was responding to comments by Annette King on the accommodation supplement… so we have Labour criticising the welfare state and National pointing the finger at the propertied elite.

Of course, Bennett’s rhetoric falls flat when we remember that her party is entirely sold out to an economic system and worldview where the propertied are the good guys, individual self-interest is the universal incentive, and any fairness or concern for others is an optional extra.

So in criticising a few ‘bad apples’ among landlords, she’s actually endorsing the ideal of a ‘good landlord’, charging fair rates to their poor tenants even while getting filthy rich off them.

And any vague attempts to “help people towards home ownership” will be upstream rowing at best so long as they rule out ever taxing the proceeds of owning other people’s homes.

~~~

A similar phenomenon happened the other day with Gerry Brownlee pointing the finger at private insurance companies for avoiding and delaying pay-outs in quake-hit Christchurch.  Although risk management/status quo protection is something that “the private sector claims it can do so particularly well”, Brownlee points out that it’s failing to do so – in fact, EQC, of all Kafkaesque government bureaucracies, is doing far better.

But is he really doubting the National party line that everything is better when owned and operated by private profit-maximisers?

When we look at another instance where the private sector is failing Christchurch, housing, his response was considerably different: Let the market sort it out.

So what’s the difference?  Well, firstly, as the minister in charge of EQC, Brownlee has a horse in the race.  But it’s also interesting that in an insurance crisis, it’s the property owners that suffer, and he’s taking umbrage.  But in the housing crisis, only the poor and ordinary people suffer, while the rental property owners prosper – and Brownlee can only see positives there.

~~~

The worst example of this phenomenon, of course, has been John Key’s recent refrain that “nobody owns water”.

Key’s arrogance has reached new heights in this casual dismissal of traditional, Treaty-enshrined Māori rights.  Like a dog to its vomit, the Māori Party have returned to the fold after an assurance that National won’t legislate against Māori rights or claims – but you don’t need to legislate against something if you’re just going to use your legal prerogative to ignore it.

But Key’s use of the phrase “nobody owns water” to misrepresent Māori water claims is just as bad.

He’s portraying Māori as money-grabbing “opportunists” trying to take a vital natural resource away from ordinary New Zealanders, by referencing what we all instinctively know – that it’s wrong to be selfish and greedy, that nobody can really ‘own’ what belongs to everyone/nature/God, that property is ultimately theft because the world is everybody’s and nobody’s, etc etc.

But once again the reality belies the rhetoric when we see that he is using this line of thinking to dismiss Māori stewardship of public waterways, so that he can smoothly transfer hydro-electricity generation into the private hands of rich investors.

The fact is, the selfish opportunists are the very people National holds up as our role models, and the very people to whom they want to sell our power companies.  Key affecting an opposition to private property is a joke.  His party thinks everything should be private property – including water when it suits.

As Tim Selwyn put it, “Interesting how the Nats suddenly start espousing anarcho-socialism when Māori property rights are involved!”

In reality, as Tapu Misa eloquently explains, Māori rights surrounding water are far more in keeping with these anarcho-socialist ideals than the Pākehā/capitalist concept of private property.  Māori “ownership” means caretaking and free public use of everything that National wants to carve up, commodify and sell to the highest bidder.

~~~

The consistent thread in all these stories is the way that National are co-opting quasi-socialist rhetoric to further their capitalist causes.

It’s hilarious, as well as worrying, that while the Labour leadership are still scared of sounding too much like a Labour party, even National can see the populist appeal in leftist language and the universals of fairness and co-operation it touches upon.

To paraphrase Slavoj Žižek, the only proper reply to such shrewd ideological manipulation is: “if you really believe in social justice and sharing the world, then why are you doing what you are doing?