State(ly) homes in nz

Tenants of state houses will shortly be given an opportunity to buy them in New Zealand. Housing Minister Phil Heatley has announced that houses will be offered to tenants at market valuations from September and Housing New Zealand will use the money to build new houses...

This news has been greeted with predictable disapproval from Labour, the Green Party and various advocacy groups who claim to be concerned for people in urgent need of a state house. Their preferred solution seems to be to spend whatever it takes to house everyone who cannot afford to buy a home. But since that would be an open-ended liability it is plainly impractical. So what else would the opponents of state house sales suggest?

One obvious solution would be to force tenants to give up a state house when their circumstances had improved to the point that they could afford to buy. Most state tenants on market rates of rent are probably in this position, or would have been before the housing boom earlier this decade put prices beyond easy reach of first-home buyers.

But historically, Governments of all stripes in this country have baulked at forcing comfortable state tenants to forsake their homes. These people are often elderly and settled and it would be cruel to uproot them. Since Labour and the Greens agree with the Government about that, why do they not support the gentler course of enabling these people to own their homes?

There is no suggestion in the announced policy that anybody would have to buy their home in order to keep it. Nor would Housing NZ have to sell a house if it wanted to hold on to it for any reason. Sales would be purely voluntary and, with the market at a low ebb, the price should be favourable to buyers.

This perhaps hints at the critics' real concern. As the Greens' Sue Bradford put it, "Houses which are sold can be back on the market quickly, with investors and developers reaping profits. This happened in the 1990s," she said, "and I'm sure it will happen again now."

The Left does not like the idea of any property becoming a source of private profit, and Ms Bradford has the gall to accuse the Government of "ideology".

Actually, the scheme outlined last week would delay the resale of any homes sold. Former tenants who bought their house would accept a condition that they must retain it for three years and could not qualify for another state house within that period. The purpose is obviously to prevent their cashing in foolishly and throwing themselves on the mercy of the taxpayer again. But a three-year wait should work in their favour if house prices still have some distance to fall.

If this is a good time for tenants to buy their house, it is also a good time for Housing NZ to use the released capital to build more houses. Builders are available and the cost of building is still below the cost of buying an existing home.

The critics complain that the new state houses are likely to be on cheaper land on city fringes, but where would they build all the additional stock they want? "Pepperpotting", the practice of sprinkling state houses imperceptibly through older communities and new developments, remains the corporation's policy though it is not always well accepted. Witness the previous Government's plans for Hobsonville.

The sale of state houses could be a form of pepperpotting for older, public rental estates. Ownership makes all the difference to the care of property and if a critical mass of established tenants can be encouraged to buy, the care they take can be contagious.

The policy looks to be good for the tenants, good for their neighbourhood, good for those waiting for a state house, good for the taxpayer, the building industry and the economy. Good for everyone, in fact, except those who live on constituencies of state dependence.

Source: www.nzherald.co.nz