Too many people do not have a home to call their own simply because they can’t afford one. Something needs to be done now. We can’t wait for new houses to be built. Besides, it is generally acknowledged that the problem is not a shortage of houses, but a shortage of affordable houses. New housing developments to date have only provided a fraction of the affordable houses needed.
The quickest and easiest fix to the affordable housing crisis might be for the government to take a leaf out of the land bankers’ book and start their own land bank, with a twist – a public land bank with houses on it.
The government could offer first homebuyers the option of choosing a house that suits their needs then buying the building only, while the government buys the land. The land could be leased to the homeowners at a peppercorn rate e.g the cost of annual city council rates. The owners could sell the house, but ownership of the land would be retained by the state. There could also be an option where existing homeowners could buy the land off the government at market rates at a later date, when they could afford it. And the government could have first option on buying the house if it was on-sold if it needed to increase its stock of affordable rental housing. The government could even include an option that if the house is sold by the owners the government can sell the land alongside the house. That way it can regulate how much land is in the public land bank, according to need.
The public land bank option could also be offered to tenants in state houses that the government wishes to sell. And to homeowners in average priced homes struggling to meet their mortgage payments. The only proviso needs to be that the houses are for the owners to live in. They must not be rented out.
It could be offered immediately on whatever properties first homeowners choose. The values of house and land are already separated on registered valuations. The government has Kiwibank. Kiwibank already offers home mortgages and could work in conjunction with Housing New Zealand, which owns the states housing stock.
The public land bank should dramatically reduce the cost of mortgages for first homeowners, making home ownership affordable to many more people and freeing up rental accommodation. It would also provide the government with a substantial portfolio of assets and offer a more cost effective option than trying to quickly build very large numbers of new houses or providing ongoing accommodation subsidies to private landlords.
Such a measure would need to be accompanied by legislation to deter speculators who, sniffing the potential to make quick buck, would no doubt immediately flood in from anywhere and everywhere to buy up large, hoping to on sell to the public land bank scheme.
It would need restrictions on the sale of private homes to New Zealand residents only. It would need a decent capital gains tax on all but the family home. And it would need a rigorous rental housing warrant of fitness code for both private and publicly owned rental housing, both to ensure rental houses are warm dry and comfortable and to drive out landlords whose only motive is maximum profit at any cost.
The public land bank would buy the government time to proceed with a building programme for more state owned rental housing that is high quality and appropriate to the needs of people requiring low cost rental housing. So that we can avoid the trap of cheaply constructed ghettos and disasters like Grenfell Towers in Britain. And stop wasting large swathes of public money on private investors’ substandard rental accommodation.
As a purely voluntary scheme it should surely be a vote winner. Accompanied by the subsidies for home insulation, which are already in place, public land banking should quickly ensure that all New Zealanders have a warm dry affordable place to call home.
It’s just a thought, and not an original one, but surely worth serious consideration if we actually do want to do something about our housing crisis. There are many such public/not-for-profit owned land banks in municipalities around the world. Even in New Zealand, Queenstown Lakes Council is considering such a scheme on a very small and restricted scale to provide affordable housing for workers in the resort. If it could work in Queenstown it could work anywhere.