Speeches

Developments in Housing

Chris Carter

31.05.2006

Ladies and Gentlemen,

Thank you for the invitation to join you this evening.

The last time I spoke to a Property Investors Association meeting was as the Minister of Building Issues. Now, I'm the Minister of Housing, with direct responsibility for social housing and a kind of supervisory role over all the government's work in the Housing sector.

It’s a role I have a great deal of interest in as both MP for Te Atatu in Auckland, where social housing is hugely important to the local community, and personally, as a property owner and landlord in both the Wellington and Auckland housing markets.

There are two reasons I'm here this evening. Firstly, I want to update you on what is a foot in the Housing area from a government perspective, particularly our work on the development of a private rental market that provides stable, quality housing. And secondly, I'd like to get some feedback from you on housing issues, and have a bit of a discussion about where housing is heading.

Let's get started then.

As you are no doubt aware, New Zealand’s population is larger and more diverse than ever before, and our housing needs are changing rapidly.

Fluctuating migration, population and economic growth, and high property prices have produced an inflated property market, which has put homeownership in some areas beyond the means of low to middle income earners.

Homeownership rates have dropped, leading to increased pressure on the private rental market.

The demand for more housing in high growth areas means that higher density property development is increasingly looked to, especially in Auckland, to accommodate the rising demand for more residential properties.

The New Zealand Housing Strategy, launched in May 2005, sets out the Government’s priorities and a programme of action to deal with these and many other housing issues over the next decade.

The Strategy’s vision for housing is that all New Zealanders have access to affordable, sustainable, good quality housing that is appropriate to their needs.

To achieve this, Government is working with industry, community, iwi, local government and investors to:
reduce unmet housing need,
reduce inequalities in housing,
improve the quality of New Zealand’s housing, and develop a housing sector that encourages appropriate provision of, and investment in, affordable housing.

Seven areas of action have been identified as being vital to achieving the vision encompassed in the Strategy:

· Sustainable housing supply
· Assistance and affordability
· Home ownership
· The private rental sector
· Housing quality
· Sector capability
· And the ability to meet diverse needs.

I'm not going to run through all of these areas, but I will update you on progress in a few of them.

First, Sustainable Housing Supply

The Government’s interest and role in housing supply relates not only to the amount of housing but its type, location, and fit with local infrastructure and economies.

A recent analysis of New Zealand regional housing markets between 1981 and 2004 shows the extent to which inflating land prices (a 286 percent increase in real terms) has fuelled the increase in house prices (105 percent) over the period.

Research is underway to find solutions to the problems of housing affordability, workforce accommodation and regional development in the Nelson, Tasman and Marlborough regions.

Officials will provide me with a final report next month, which will focus on practical solutions specific to each of these regions. Outcomes of the research are also expected to be of benefit to other regions experiencing similar problems.

Work is also underway on the affordability of new housing and to find out if the Resource Management Act 1991 and Local Government Act 2002 are constraining the supply of affordable land. If this is happening, we want to know how legislative or planning changes could help resolve this.

Second, Assistance and affordability

Most New Zealanders can successfully meet their own housing needs through the housing market. However, some households need help to find and stay in adequate housing. This Government believes the State will always have a role to support those unable to meet their own housing needs.

State houses have been an important feature of New Zealand’s housing landscape since the late 1930s and will remain at the core of government assistance. Good progress is being made on the modernisation and expansion of the state housing portfolio. Between December 1999 and 31 March 2006, state housing has increased by 5,974 units.
But state housing is not just about government. Private landlords have an important role to play in the provision of state housing as well.

In addition to building and buying, Housing New Zealand leases properties from the private sector, such as investors and iwi. About four percent of the Corporation’s housing is leased (2,412 units). This is projected to increase in coming years, with an extra 400 new home leases planned for the next financial year.

The programme provides several opportunities for investors. Housing New Zealand guarantees rent for 52 weeks a year, and covers any damage caused by the tenant that is not insurable by the investor.

Tenant selection and tenant-related issues are also looked after by Housing New Zealand, so the arrangement provides a ‘hands free’ way of owning residential investment, without the high level of management that is often required.

The review of the Accommodation Supplement is another area of work pertinent to ensuring housing remains affordable.

The Accommodation Supplement is the instrument by which the government preserves access to the private rental market for low-income people. It operates essentially like an income top up, and it is due for a review of its effectiveness.

Housing New Zealand and the Ministry of Social Development are in the early stages of this review at present. Public consultation will occur later this year.

Stakeholders such as yourselves will have the opportunity to be involved in this consultation. Your views will help us develop a comprehensive picture of the issues with the Accommodation Supplement and how we could improve financial assistance to meet housing costs in the future.

Third, the private rental sector

The Government recognises that not everyone wants to or is in a position to own their own home. We know that an increasing number of New Zealanders rent their homes, with rental housing increasingly provided by you, the private sector landlord. Without a substantial improvement in homeownership affordability, many more households will remain in rental accommodation in the long-term.
We want to work with private sector investors and landlords, and with tenants and advocacy groups, to foster the development of the private rental sector and strengthen the place of renting as a tenure choice.

The government is committed to developing a private rental market that provides stable, quality housing to those who choose or need to rent their homes. We recognise that to achieve this, landlords need to be able to manage their rental properties effectively.

The New Zealand Housing Strategy identifies several pieces of work for the government relating to the private rental sector—primarily the work focuses on the review of the Residential Tenancies Act 1986 (RTA) and government services around the Act.

As you know, the RTA is the primary legislation governing the residential rental housing market. It defines the rights and obligations of residential landlords and tenants, sets out dispute resolution procedures and establishes a fund into which bonds are paid and held in trust.

When it was introduced 20 years ago, it was designed to strike a balance between the rights and responsibilities of landlords and tenants. Since then there have been significant changes in the structure and dynamics of the residential rental market.

The Department of Building and Housing is currently undertaking a comprehensive review of the RTA. The aim of the review is to improve the effectiveness and efficiency of the Act in regulating the residential tenancy market.

It’s good to see that landlords took the opportunity to contribute through the submission process. About 80 percent of attendees at public meetings were landlords and of the 574 written submissions that were received, 466 were from landlords.

The review is nearing completion, and proposals are being developed to:
· provide greater clarity around the rights and obligations in the RTA
· increase landlords’ and tenants’ awareness of their rights and obligations under the RTA
· increase landlords’ and tenants’ ability to uphold and enforce their rights and obligations in a quick, affordable and cost-effective manner
· ensure there is proper enforcement for breaches of the law
· improve the capability of the sector to deliver quality rental accommodation
· allow for people to have stable and secure living arrangements.

From late June there will also be changes to the delivery of tenancy services, with services soon to be available in more towns across the country. These changes will allow people in small towns to access services in ways that are easier for them. Specific changes you will see include:
· a new Tenancy Tribunal application form
· the ability make an application online
· extended hours for phone advice
· a new service to resolve simple disputes within 24 hours through phone mediation
· more places to access face to face services by appointment.

The Minister for Building Issues is expected to make announcements about progress of the review shortly.

Four, Housing quality

Housing quality is of particular concern to the Government. The long-term social and economic costs of poor quality housing means that investing in good quality housing has wider benefits, such as better health outcomes.

Work is already underway to improve the quality of new housing through the review of the Building Code, which governs standards for new building work, and implementing the Building Act 2004.

Work is also underway on issues related to the quality of, and standards for, all existing buildings. This includes setting reasonable minimum requirements for both rental and owner-occupied housing.

The adequacy of people’s housing affects all aspects of their lives. Our homes influence our well-being, our sense of worth and our ties to our families, communities and work.

If we live in stable, quality housing we are more likely to benefit from good health, better educational outcomes and better paid work. In addition, environmental outcomes are influenced by the location of houses, their materials, design, use and maintenance.

To conclude….

The New Zealand Housing Strategy sets out the Government’s vision for housing policy for the next 10 years. It guides the broader housing market and is our response to housing markets under stress.

The success of the strategy requires us to work together. That is already happening, and I hope it continues. Your participation is vital in providing all New Zealanders with access to good quality, affordable and sustainable housing.

I am very much looking forward to the realisation of this vision. Anyone with an interest in a thriving property market, and the general social well-being for New Zealanders, will also be watching closely.

Thank you for the opportunity to be part of your meeting tonight.

OTHER REGIONS +NORTHERN