20-08-2009

Minister's pledge to property investors

1. News
2. 2009
3. August

Text of the Minister of Housing's speech to the NZPIF Conference on Saturday August 15, 2009

Introduction

Good morning. Thank you for inviting me today. Some of you will have attended meetings of various Property Investors’ groups at which I’ve spoken. It is a pleasure to be speaking to you again.

With more than 68,000 properties owned or managed by Housing New Zealand Corporation, I feel like I have some skin in your game.

As business people your livelihoods depend on the health of the economy.

Many businesses will have taken a hit during the recession but for some of you the downturn may have been a body blow.

I acknowledge the difficulties you face and the effort many of you have put in to survive the current climate.

My first message is: we like you. If you don’t provide kiwis with comfortable housing, the taxpayer has to. You can form the relationships better than we can.

This government stands for free enterprise and the reward that comes with initiative and hard work.

And it is committed to ensuring the right conditions are in place for you and your businesses to reap the rewards.

I want to briefly outline a few of the initiatives this government has brought forward to allow that to happen.

First, for a snapshot on the building and housing market it’s worth mentioning the latest building consent figures. What do they show?

Building consent figures

The jury is still out over whether we have reached the end of the housing slow-down.

Many of you will follow the ups and downs of the housing market closely, including the conflicting commentaries on house price values, and what will drive them, which have been highlighted in the news this week.

But even if you do not, you cannot fail to notice the acres of debate, analysis and plain speculation generated when new housing surveys are published. It’s difficult for anyone to know what might be happening.

But as time goes on, more and more data is beginning to emerge that shows we may be turning a corner.

Strong net migration and lower interest rates are contributing to a more positive economic outlook.

Latest figures from Statistics New Zealand show the trend in the number of new housing units authorised, excluding apartment units, remained low but has flattened in recent months with signs the housing market is stabilising.

And when apartments are included the trend for the number of new homes has increased slightly in the last five months.

The seasonally adjusted number of new housing units authorised, excluding apartments, rose three percent in June 2009, following a fall of just over 3 per cent in May 2009.

But the story is mixed. For the year ending June 2009, consents were issued for 14,175 new housing units, including apartments - the lowest annual number for a June year since the series began in April 1965.

That’s a snapshot of the housing market now. What’s the government doing to bring about the right conditions for the property market and your businesses to grow again?

Government priorities

My priority as Housing Minister is to help encourage the supply of private accommodation and to get rid of some of the barriers that stand in the way of property investors like you who provide homes for almost a third of the New Zealand’s population.

As I said, if you don’t house New Zealanders we have to.

The government will ensure legislation supports private sector rental options and encourages the supply of affordable and decent rental housing.

To achieve this we will:

• Retain the status quo on capital gains tax
• Retain deductions for those whose rental properties run at a loss, as these provisions are also available to a number of other investment types.
• Action has been taken to streamline existing law and to introduce new measures.
• These changes will help the supply of accommodation from the private sector while enabling it to be better managed now and in the future.

Housing supply measures

My ministerial colleagues Maurice Williamson, Minister for Building and Construction and the Environment Minister Nick Smith are steering important reforms to improve the supply of housing.

Building Amendment Act

The first step in reforming the Building Act was passed by MPs only last month.

The Building Amendment Act introduces multiple-use approvals which may, over-time, increase the supply of housing to the market.

The measure allows volume home builders to by-pass individual local councils if they plan to build homes of the same or similar designs at different locations around the country.

All they need is one initial approval and the others will be granted automatically.

The Act may mark the beginning of a shift in the way we build in New Zealand, one which will improve the supply of homes and make them more affordable.

Building Act review

As part of the Government’s regulatory reform programme, the Government will be reviewing the Building Act to drive down the regulatory costs associated with building without compromising building quality. 

I understand the Terms of Reference for the review will be announced shortly. Among other things, the review will:

• Reassess what needs to be consented based on the real level of risk and complexity, to reduce the amount of building work that requires a building consent, and
• Take a hard look at the underlying risk and liability framework in the sector.
• The Review will also:
• Assess how the role of Building Consent Authorities might change if more risk is transferred to builders, designers, engineers and consumers;
• Explore the extent to which building professionals and licensed building practitioners could self-certify their work;
• Examine the role that insurance, including home warranty insurance, might play in such an environment; and
• Remove unnecessary building control regulation.

In addition, the Government will be looking at a number of other non-regulatory ways to improve performance, such as:

• Supporting councils to work smarter using technology and leveraging the same technology to reduce design and building costs and
• Putting a greater focus on information and education, so people make informed choices rather than having them made for them
• Facilitating and incentivising councils to consolidate and rationalise their functions.

As you know, another key priority for the Government is simplifying and streamlining the Resource Management Act.

Resource Management Act

Streamlining the Resource Management Act is an important part of the Government’s programme to streamline unnecessary regulation.

Simplifying processes and removing the ability to make frivolous or anti-competitive objections to developments will help our recovery.

The reforms are intended to provide an appropriate balance between a reasonable level of public participation, protecting the environment and improving national infrastructure.

The reforms will provide new measures to strength environmental protection provisions in the RMA as well as measures to speed up resource consent processes and plan changes.

Residential Tenancies Amendment Bill

I know the Federation is taking a very keen interest in the Unit Titles Bill and the Residential Tenancies Amendment Bill – both of which are continuing their passage through Parliament.

I believe the RTA Bill is important because it promotes personal responsibility and choice.

It updates and clarifies existing rental laws in response to significant changes in the structure and nature of the residential market.

And it adjusts the balance of the Residential Tenancies Act enabling landlords to manage their properties effectively while ensuring tenants have access to stable, good quality accommodation.

The Bill protects some of our most vulnerable people - those living in boarding houses - but addresses risks borne by landlords who provide rental accommodation.

The Bill:

• extends the Act to more people involved in renting - for example those in boarding houses
• clarifies responsibility for outgoings by introducing overarching principles to indicate when landlords or tenants are responsible for charges such as water rates
• introduces clearer and fairer processes for terminating and renewing tenancies - better balancing flexibility and certainty of tenure
• encourages landlords and tenants to comply with their obligations under the Act by increasing the value of existing fines and exemplary damages and introducing new sanctions
• improves the enforceability of Tribunal orders.

You will know by now that there are a number of notable additions to the bill, including:

• the means for decisive action to be taken to deal with assaults, or threats of assault, by tenants' guests or associates, and
• ensuring the Tenancy Tribunal does not become an uneven, expensive and time consuming forum through the introduction of professional advocates.

The Committee is to report to the House by 5 October 2009. I look forward to hearing about the Committees deliberation on the Bill and seeing what, if any, changes it recommends as result of your input.

‘Good neighbour’ principle

The issue of rights and personal responsibility were put in the spotlight a few weeks ago in a case which highlights the importance of landlords dealing firmly with unacceptable behaviour.

The Tenancy Tribunal supported a decision by Housing New Zealand to evict tenants who allowed gangs and their associates to terrorise neighbourhoods with anti-social behaviour.

The Tenancy Tribunal upheld a 90-day termination notice issued by Housing New Zealand Corporation last month.

I was delighted with that decision. It endorses the ‘good neighbour’ principle which I believe is important.

You as landlords will sometimes need to turn to the law in dealing with persistent anti-social behaviour.

People cannot expect to remain in accommodation if they continue to breach the terms of their tenancy agreement.

It is time we curtailed the activities of people who blight peaceful neighbourhoods with criminal and other unacceptable behaviour.

The Unit Titles Bill

The Government is also updating housing legislation in other areas. The Unit Titles Bill currently before Parliament will modernise the way apartment blocks are built and managed. 

This Bill will make setting up unit title developments easier and more flexible as well as streamline and simplify the way multi-unit developments are managed.

The original 1972 Act was designed for simple, small-scale residential flats prevalent at the time and is not adequate for today's large-scale, complex developments.

The way many of us live today is very different to how we lived 30 years ago.

It is estimated there are approximately 19,900 unit title developments which make up about 119,287 units.

It is expected that increasing numbers of people who live in more densely populated towns and cities will choose to live in apartments.

For example, it is estimated that within 50 years, half a million people in the Auckland region will be living in apartments, townhouses and high-rise buildings.

It is important therefore, that legislation in this area meets the needs of people today and in the years to come.

The Bill:

• Allows mixed-used development to be better managed. A block with retail units at street level and apartments above could be managed by separate bodies corporate but be a member of a head body corporate with over-all responsibility for the building.
• Amends the decision-making process. The agreement of three-quarters of title holders' will now be needed for a decision to be made, amending the previous unanimity threshold.  This will prevent holdouts and prevent unit owners who do not vote holding up the process.
• Stipulates that the body corporate will own the common property which means it is responsible for the management and upkeep of all common areas.
• Allow disputes to be dealt with through mediation or adjudication in the Tenancy Tribunal in the first instance, rather than solely through the courts, making resolution faster and cheaper.
• Allow purchasers the opportunity to view body corporate rules, audited accounts and maintenance accounts.

The Social Services Select Committee is due to report to Parliament on its deliberations in September.

Warm-up New Zealand: Heat Smart

Finally, as it’s the middle of winter, let’s end on a warmer note with an update on the Warm Up New Zealand initiative.

The Government’s Warm-up New Zealand: Heat Smart initiative has been well-received by industry and the public.

In fact, the response has been over-whelming. There has been such a big take up that insulation suppliers and fitters have seen their business go through the roof!

More than $320 million will be spent over the next four years to retrofit 180,000 homes with insulation and clean-heating devices - and half a million New Zealanders will benefit as a result.

The scheme provides government grants of a third of the cost of insulation, up to $1300 and a $500 grant for clean heaters no matter what your income.

Funding is tagged to a property and not a person, so this means that landlords can get any or all of their rental properties insulated under the scheme.

Landlords with low-income tenants can qualify for a grant of 60% of the cost of insulation.

What are the benefits?

Landlords as well as tenants benefit from better insulated properties.

Landlords who make their houses more energy efficient make them more attractive to long-term tenants.

Research by EECA has shown that 88% of tenants are likely to stay longer in more energy efficient properties and 83% of tenants are more likely to choose to rent an energy efficient home.

Tenants will benefit from a more comfortable, warmer, drier, and healthier home. And a more energy efficient house can reduce tenant's energy usage for heating and hot water, therefore saving on household power bills.

Research also shows that if low-income homes are well insulated and heated, it benefits not just the householder but the wider public service too.

In fact, it's been calculated that the reduced health costs and energy savings are worth twice the cost of retrofitting the house.

Closing remarks

The Government continues to fulfill its pledge to free the building and housing market of unnecessary red tape and of allowing landlords to provide decent, affordable accommodation to those who want it.

This work will continue. I look forward to seeing the Residential Tenancies Amendment Bill and the Unit Titles Bill through to enactment.

I want to take this opportunity to thank the Federation for its valuable input into both these bills. I am sure the final bill will be a better one as a result.

And I look forward to working with Federation members in the coming months and wish you all a successful conference and prosperous year ahead. Thank you.