Industry leader urges everyone to ask "why"
With elections looming, political parties are talking about the housing crisis and their solutions to fix it.
According to Tim Horsbrugh (pictured above), executive committee member of the New Zealand Property Investors Federation and president of the Wairarapa Property Investors Association, there is a need to ask “why” four times, so we can get to the bottom of the issue and start talking solutions.
In an article, Horsbrugh noted that all parties acknowledged the lack of housing supply, which, alongside the high cost of providing housing, resulted in higher rents.
“Rent controls, new taxes, extensions to the bright line test, new RTA rules, lower LVRs and tougher CCCFA lending criteria are all topics that put restrictions on supply and make the attractiveness of providing a rental property rather unattractive,” he said in the article published on the NZPIF website.
The first “why” the NZPIF executive said needs answered is: “Why do we have a housing shortage in NZ and why are rents so high?”
The answer, Horsbrugh said is because of the high cost to provide a house, whether it’s for a rental property or for homeowners.
Again, why?
To this, he answered: “High cost to build, high land cost, high consenting cost, high insurance, high rates, high cost of finance, high risk with less control over tenants, low ROI, high taxes, lack of supply, and unpopular to be a landlord.”
Again, Horsbrugh suggested to ask “why” to each of these headings, then repeat the process again, to help define the actual problems and determine the appropriate solutions.
“Political parties can then help implement these solutions to make positive change over time,” he said. “Solutions can be many things like creating more competition in the building material supply market and less restrictions and controls around what we can do on our land to create affordable sections.
“Think about this, if we can build a tiny house for $130k, but it costs $250k for the land and $50k for services and consents, our cheap house has just become expensive. We do need to look at the RMA to help our councils cut red tape and get on with infrastructure, as the more we regulate, the greater the cost.”
Horsbrugh said there is also a need to look at the banking sector “who want to lend and are restricted.” Why?
“Just ask any mortgage broker or developer about the tighter rules around gaining finance,” he said. “Just imagine if every builder, developer, landowner could get government-guaranteed finance to build one, two, or three spec homes.
“The loan gets repaid once each home sells in an agreed timeframe. This will create movement in the property market, potentially an oversupply so the banking industry may not be happy.”
To wrap it all up, Horsbrugh said the key to helping Kiwi renters is to “build new homes with cheaper materials, on cheaper land, with less fees.”
“If we have more supply, this eases demand and the need for rent increases. Property prices will stabilise, this is the only way to help our tenants,” he said. “I challenge the next government to sit down with developers, council planners, bankers, property investors, and tenants to brainstorm the ‘why’ and come up with workable solutions together.”
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