David Hargreaves argues that what is missing from the Government's Healthy Homes initiative is a long-term plan to modernise all of New Zealand's housing stock

By David Hargreaves

And so the Government's discussion documents keep coming.

Too many in too short a space of time?

Probably.

The discussion documents are mounting up like the advisory groups and working groups.

Too many of them too.

The danger is that with so many things being put up for discussion seemingly at the same time, some things will not get the attention they deserve. And there will be consequences later from that.

Decisions can end up being made without those being directly affected quite realising the consequences.

And I think we are definitely running that risk in relation to the rental property market.

This week, following closely on the heels of the discussion document on reviewing the Residential Tenancies Act saw the release of the Healthy Homes Standards discussion document. I think the healthy homes document is a pretty hard-going read. Quite technical for a layperson like me and not so easy to digest.

Maybe somebody else thought it was pretty hard-going as well, because the Government's also released a summary document, which is better.  

For my own purposes, I then cut-and-pasted the various 'options' cited in the documents - IE what might actually be implemented in terms of new rules and standards - and I share these with you here.

Yes, this 800-or-so Word document is the real nub of the whole thing - and tells landlords and potential landlords exactly what they might be up against.

And I think they should be concerned, because there's some things in those options that would be pretty hard to achieve - and would be expensive.

How realistic is what's being proposed? That would be my question.

I think it's all well-intentioned but probably misses the bigger point.

The bigger point is: How much can you do with a house that was not designed, fit-for-purpose, for cold weather?

It doesn't do the job

That's the reality of a lot of New Zealand's older housing stock. It doesn't do what it should in terms of keeping people warm - because it wasn't designed to. Why that was the case, I do not know. And I've never spoken to anyone who has ever given me a good answer to the question.

But this is the real issue with a lot of the older homes in New Zealand - many of which are in the rental market. They just don't do what it says on the tin in terms of providing a warm and secure environment in winter weather - particularly not as you get further down south in the country.

In terms of what's in the Government's Healthy Homes discussion document, I'll pick out a couple of things that I thought were particularly interesting, and perhaps contentious.

Let's look at heating. The given options here are that landlord be:

  1. required to provide heating in the living room, or
  2. provide heating in the living room AND bedrooms.

And then there is this; that landlords provide heating that must be capable of either:

  1. achieving an indoor temperature of at least 18C, or
  2. achieving an indoor temperature of at least 20C

Now, for my taste and comfort - particularly when just sitting - 20C is much more the ticket, even with woollens on etc. But I reckon you would have a pretty hard time getting the temperature to 20C in some of the older NZ houses in the middle of winter. And who's going to check that anyway? How enforceable is that?

The point is though, just to take those two examples, the worst case scenario for landlords (in terms of costs) is that they might get faced with needing to provide heating in both living rooms and bedrooms AND have to somehow guarantee that this heating can generate a temperature of 20C. That's before we start on the insulation, which of course is a vital part of all this and also much up for discussion in the discussion document.

Who's responsible?

Next point to note here is that, okay, assuming the landlord does these things, the heating is going to cost money. How does the landlord then know the tenant will definitely use it - given that we do know a lot of people don't turn heaters on because they are terrified of the kind of power bills they will get? Who would be responsible?

Anybody who is a landlord or who would like to be one should climb in boots and all and be making submissions. Because I do think there is potential for a recipe of rules that are simply not realistic because the conditions will be too onerous.

This would not help anybody.

There is the potential that housing investors will simply be put off buying and owning these older properties. What happens then?

Okay, I suppose there's then the possibility that the prices of these houses could then be driven down, and people who can't currently afford their own home might be able to buy one of these older properties.

But then we move into another interesting area not covered by this Healthy Homes initiative - what about owner occupiers living in a cold damp house? Are they somehow immune from getting sick? And who takes responsibility for them and their health?

A band aid solution

The Healthy Homes initiative in many respects looks like a bit of a band aid solution to me. It's a kind of short term alleviation of the discomfort, while the underlying condition is allowed to continue.

Longer term, I think there needs to be the whole question of how we, as a country, replace and modernise large parts of the housing stock that just is not fit for purpose and wouldn't be unless you virtually rebuilt it.

Now, maybe that's putting the cart before the horse.

We are, as we are constantly told, short of many tens of thousands of houses in the county at the moment as it is. The Government's trying very hard to get things moving with the KiwiBuild programme. New houses ARE being built, but it would take a long time to catch up from the shortfall.

So, arguably we don't need to be knocking down old houses all over the place!

In the longer term interests of the country though, and the health of the people who live here, there does need to be some sort of a plan.

Incentives to get rid of old houses?

Could there be in future, for example, incentives offered to owners of properties/sections that have inadequate houses on them to either remove or bulldoze the house and build a new property?

Clearly it's not something that could be done overnight.

I would like to see some suggestions though for how such a thing might be achieved longer term.

Sticking insulation on and installing super-powered heating into these inadequate homes is not a long term solution.

Long term, surely if we are talking about sustainability, we need to be looking at the construction of 'passive' houses that require very little heating at all. 

In the meantime, I would urge all landlords and would-be landlords to have a very close look at the Healthy Homes material - hard as it is to digest - because I think there is a danger that without your input you might find yourself facing rules you either can't afford or can't realistically implement.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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70 Comments

How realistic is what's being proposed? Tear 90% down in stages and rebuild what is actually needed (might be a bit less after people decide to leave in the upcoming economic downturn as has happened in Ireland).

Might be a bit like putting lipstick on a pig as someone (....) recently put it...

Bizarre that the price of pork is so high in this country?

I disagree David - an older house with decent floor and ceiling insulation and a heat pump or two (and ventilation if in Auckland or somewhere wet and humid) is probably acceptable. Maybe forcing new windows with double glazing could be a requirement too - it only cost about 25k to do our big house with lots of sliders, I imagine it would be under 10k on a standard house.
None of this is an outlandish investment percentage wise on the 'value' of these houses and associated rent.

It could be pretty simple couldn't it:
- Min one heat pump per 100m2 (I don't think any other heating source should be allowed)
- Modern standards of insulation floor and ceiling (no excuses - pull that ceiling down if you have to)
- Double glazing
- Ventilation

Rent it out without any of these and the renter would be able to claim for a full rent refund - just like any other not fit for purpose product or service you may buy. In fact why not have rent covered by the Consumer Guarantees Act?

Until gas and electricity were widely reticulated and appropriate appliances installed all of the nation's dwellings relied on solid fuel cookers for food (and hot water). Every day of the year. Half the year all the doors and windows had to be open to avoid over-heating.

Fifty years ago it wasn't uncommon to still see Shacklock ranges in older houses even if they were no longer in use for cooking.

And building materials were rationed during and after WWII

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If you are going to create a rental property industry as we have in this country then there needs to be standards for the client or swamp houses will steadily become the norm, even more so as more 3rd world immigrants move into the industry as landlords. A new house 70 or 60 years ago would have been weathertight as it was brand new and well built by timeserved tradesmen like my Grandfather and my Uncle both. The same house 70 years on may have seen several families come and go and if it had become a rental 20 or 30 years ago may have had little or NO maintenance done on it and is most likely not weather tight but essentially unliveable, cold and damp, like the swamphouse. While heating sources were varied and plentiful 70 years ago, not so today therefore heating is simply sidestepped in many houses compounding the problem. What you are waxing lyrical about is in my view a glaring example of the societal crisis that has been engulfing our Country for the last decade or more...which is a direct result of our uncaring society. If we did care about the direction our society was headed we'd all be much much warmer and drier and I dare say suiciding in far smaller numbers.

As anyone who has reno'ed an older house can attest, the core assumptions about 'em have to be threefold:

  1. They aren't level (stumps have sunk or rotted, ring found is cracked or disintegrated in part, there's no found to speak of, floor joists and bearers are rotten or AWOL) - it's a long list of possibilities.
  2. They aren't Square. Often they were built with green timber which has taken a set as it dries out: makes windows, door etc replacement Interesting especially when combined with #1...
  3. They are not rot/borer/rodent free, and this often extends to structural elements. It's common to see an entire bearer, joist, rafter, stud or purlin which is just weetbixed and if the bugs are still active, flitching 'em won't help much either - new food

So starting to clamber around in, under or on top of some of these edifices is, shall we say, not for the faint of heart or weak of limb.

The saying over the ditch is 'it's the termites holding hands that keep this shack up'....

Woohoo, did the test and got 100%.. do i get a prize?

(Luckily its a rental, so not my problem.. except for the water that runs away from the sink in the kitchen)

Friend of mine who bought in Sugar Tree says that first one applies to his new apartment too.

18.5 degrees is the perennial temperature used in British hospitals which must say something. ie Very sick people can handle it.
But it would be pretty hard to achieve this in a high ceiling villa in Wellington or Chch in a cloudy southerly day even with the heating going full bore.
As far as bedrooms go, heating them? What? How rich are you?

20 degrees is the recommended temperature for babies/old/sick.

Every room in my house stays above 20 degrees 24/7/365 and my electric bill is $400/year. No other heat sources.

It’s s standard called Passive House and you can also retrofit to the standard (at a cost).

18 centigrade for living spaces is traditional and comfortable if the occupants can adjust their clothing to suit.
But sleeping spaces have never been well analysed, 16 has been used with the assumption the occupant adjusts bedding.
On that basis it should be possible to heat a single floor conventional home from a central source, as long as the windows arent leaky.
But consideration of leakiness is difficult, too much and bedrooms will be cold, too little and there will be mould.
I think bedroom temperatures over 16 and no sign of mould should be the criteria,how that is achieved is up to the landlord and each house will be different.

20 is a comfortable temperature if you are sitting still. Below this needs jumpers and slippers. Most offices are heated to 20-21 degrees.

I have no winter duvet as the house is not cold enough for one.

A real disgrace that homes are still so unhealthy on these islands in 2018. What were they thinking when they built those in the sixties? And recent housing isn't even much better in terms of building quality.

We finally hit the bottom in the 60,s coal ranges gone, hardwood timbers gone and someone invented view windows.
Never mind, lets add insulation to the roof and later to the cavities...
Houses are rotting ...lets have a Building Code, government will tell us how to build.

A survey? In the room I'm in at home in Ak at the moment its 17 degrees. And humid because I have washing "drying" here. Its OK.

Lounge at home is 14 degrees and 69% RH at the moment. Nobody home, a couple of windows open to air the place out. That'll be a little chilly. 20 degrees and i'm happy in a tshirt, about 17-18 and dressed appropriately i'm okay, but the female half of the equation isn't happy till its 20degrees.

22, im comfortable, partner cold, may need to relight the fire.

I have mechanical heat recovery ventilation going 24/7 so zero condensation and clothes dry overnight

dp

Been in this game my entire life and I can tell you with 100 certainty, having built houses around the world, leakage, lack of venting, poor seal and lack of drainage is the cause of 90% of all housing failures in NZ. Insulation will not perform properly other then look pink without proper seals and proper installation. Shameful that the standards have alway been there but hardly noticed here in NZ.

Even the new "standard" homes we have are crap. The standards are low relative to other countries.
The typical up to standard house is built with:

No central heating.
No air tightness standards or testing.
Very minimal ventilation standards which often result in drafty bathrooms as back draft prevention isn't required.
No insulation required on slab foundations.
Thermal bridging through framing not taken into account.
No insulation values required on window framing.

End result is we pay big bucks to designers, engineers, council inspectors, BRANZ, Fletchers etc for cheap junk housing. There are new houses today with aluminium windows growing mould.

When you look at a new housing in the UK or Canada they are a much higher standard. They seal up air gaps such as power sockets. The windows are made of uPVC and they install central heating. And sometimes they'll even test the actual performance of the house with scientific instruments.

The people at MBIE can't get basic physics right - their maths assumes that a house with R10 of insulation on just one wall would perform the same as R2.5 on all four walls. It's like if the Titanic had two holes and someone decided putting two patches on one hole would fix it.

For insulation standards the MBIE, councils inspectors and BRANZ, etc should all be fired. There should be a performance test once the building is finished to prove that the house holds air and heat and let the market figure the rest out.

We must have paid our architect at least $300 to determine the insulation requirements on our house with some fairly complex maths. It probably wouldn't have cost much more if BRANZ had just specified a high R rating without the needs for calculations.
BRANZ, building code, etc - they are all stupidly over complex on things that really don't matter, and too lenient on the things that do. For a simple residential house the only requirements should be water tight, solid, well insulated/heated/ventilated. You don't need tens of thousands of dollars of paperwork to check these.

We need to move to the Passive House standard sooner rather than later like UK/Germany/Sweden/Ireland/Canada/Spain/Belgium/US.

Aluminium windows are a crime against health.

Actually they are not but like everything it comes down to cost. Not only can you get double glazed glass you can get double extruded frames with insulation in between. The problem is not always about the materials its just as much about the location. If your stuck in a hole in the south side anywhere in Auckland then your screwed. You simply cannot get enough sun so you need to be elevated and North facing and then you can practically live in a tin shed. Humidity is the biggest problem and not the temperature. Humidity is very difficult to control, there are countries that think 30% is high, what a joke I have NEVER seen the humidity that low in Auckland in 40 years. You don't need BRANZ to set building standards, its not rocket science if your an Engineer just design you own house.

If your stuck in a hole in the south side anywhere in Auckland then your screwed.

I suspect that is true just about everywhere in NZ. And the thing is, I suspect that city planners, when considering candidate sites for densification, did not pay much attention to that critical factor?

Being unfamiliar with the UP, I don't know - perhaps that was a major criteria/factor, if so - well done to them.

The thing I find funny is the price assigned to the cold, damp, poorly designed grottos, which means that 2/3rd of our economy supposed first world economy is based on low value junk.

I have made the comments before your time here David that 90% of our housing stock is crap and needs to be bulldozed. Being designer with a bit of Architecture training under my belt I feel somewhat qualified to make that comment. I still stand by it.

In time the true energy cost of heating these homes will lead to the discover that they mostly unsustainable. Same goes for most of our commercial buildings.

For there to be a substantial and timely removal of poor quality housing there needs to be an economic incentive.
For at least the cities this means reducing/removing the density limitations.
Landlord can then either:
- pay the costs to fix the poor quality house
- tear it down and replace it with at least two newer houses

I think it is important to acknowledge the market dynamics that allow some really shocking quality properties being rented out. If renters had options for what they were willing (or more accurately able) to pay, you could have easily expected to see landlords competing with each other to attract tenants (including making their houses more fit to live in). I wonder if regulating alone (without a significant change in the underlying market dynamics) can prove a sustainable solution for rental market.

I have had several technical customers that have fitted my technology to their home and recorded a 3°C rise in average temperature. Just the modest upfront capital cost is all that is required, then ongoing benefits accrue.

We had an old 1960s brick veneer house in Takapuna, piled with wooden floors. We insulated it top and bottom but still froze. Depressing, damp, and all sorts of maintenance issues. Friends have a chilly bin which leaks and has been a nightmare. So take all the old brick dumps, add in the leakers and that's a good chunk of Auckland housing stock that's not fit for purpose.

The question is not what the minimum standards should be, but about funding those improvements. If it becomes a compulsory standard then banks will need to come up with funding lines, maybe similar to the ANZ interest-free loans for making homes warmer. Landlords that don't have mortgages should have funds available or in the worst case scenario can utilise equity.
I would as a sidestep like to see the government tax-incentivise for KiwiSaver funds to enter the rental property market in a controlled way. They are would be a great source of funding more builds and the long-term returns would compliment conservative type funds.

The proposed legislation will see us throwing good money after bad stock. It's an extremely bad idea.

Better to re-value via the ratings valuation system all housing stock based on decade built, cladding type and floor size - and set a mandatory rate of depreciation for all residential buildings that would be factored into all ratings re-valuations. No exceptions - doesn't matter whether a house has had any renovation, re-roof, new kitchen/bathroom, whatever - doesn't matter, not for the ratings valuation anyway. If an owner wants to argue the toss on sale, they can get a private valuation which would recognise those improvements on physical inspection.

The thing about rating valuations is there is no physical inspection - and the government can mandate whatever government valuation system it wants.

Here's a classic example of why we don't bulldoze houses;
https://homes.co.nz/app/listings/6d90b071-89eb-49bd-b648-6696b0886573

Value of the Improvements = $170,000. It should be more like $25,000 because really it needs to be demolished and hence, in reality, it is a liability on the section.

But the owner of that house will continue to rent it out as the value of both the land and the improvements keep going up. And the banks will continue to lend more based on its increasing value. Therein lie the problem.

From its re-set at $25,000 - every three years it ought to depreciate by another 20% (minimum), and yes, it makes perfect sense that eventually it will have a negative valuation on the improvements, as it should, because it is a liability, not an asset.

Here's another example - same neighbourhood.

Value of the Improvements = $250,000.

https://homes.co.nz/app/address/lower-hutt/belmont/7-charles-street/rrqjg

Should be re-set at $50,000 (given it's timber and some of the timbers may be able to be resold/recycled following demolition) - and then depreciated at the same 20% every three years.

It's only a rating valuation - makes no difference whatsoever to the owner if they want to live there and continue to upgrade. And they are welcome to argue the toss via a private valuation if they want to sell.

My point being, if we want to replenish old stock - ratings valuations are the way to incentivise renewal.

And one last point - these mandated re-valuations of housing stock (i.e., value of improvements on the ratings valuation) should be standardised nationwide.

A 1930s, 90m2 stucco house in Auckland is the same value as a 1930s, 90m2 stucco house in Invercargill.

That is not how CV works. The value of improvements is a derived figure after determining market value and land value. VOI may sometimes be minimal where land value is high in proportion to market price

Exactly my point. The way CV works is the problem.

The government does not get involved in the market valuation of vehicles - why should it get involved in the market valuation of dwellings? Dwellings depreciate - and particularly so in our windy, wet and predominantly coastal environment.

No problem with a market valuation being used to re-value land for the purposes of setting rates. But dwellings should be a standard price nationwide, based on age, cladding type and floor area - and they should depreciate in value over time.

Good luck with trying to implement your stupid and impractical idea

ventilation, easy to access under the house, paint ok, no signs of serious leak issues, roof quality ok, (note check for asbestos though in later repairs), one has even easier roof access, cladding check looks ok although the stucco will need a more thorough check and could likely have had poor repairs around recent decades. Windows easy to maintain & repair. One can easily have a HVAC system put in to at a very low price heat the whole house well above 21 degrees in winter & keep a dry environment, the other would likely have a dropped ceiling so could also easily still be insulated & heated. In many ways if the interior is all you care about some new gib and paint will fix that (even the more modern wooden flooring is colder than the carpets offered). Then new fixtures and fittings for bathroom and kitchen is a trivial addition, many rentals just go with a 1980s oven and a shub (which many modern houses do as well). You have to go further back when NZders still had to use out houses & coal burners and no maintenance done on the windows, cladding & roof to let them break and rot, before you get to bad. In which a house of any age, especially from more recent decades can be ill treated and poorly maintained to be unhealthy. In fact the houses of the 90s are the most unhealthy of the lot with the mould issues causing severe immune and neurological failures and even deaths. Where in America NZs mouldy houses would require an immediate evacuation carrying nothing but the clothes you wear, (and later have to trash) and treating the site as if it had been covered with asbestos dust because the health risk is that bad.

Value of the Improvements = $250,000 ... should be re-set at $50,000 .... No exceptions - doesn't matter whether a house has had any renovation, re-roof, new kitchen/bathroom, whatever - doesn't matter, not for the ratings valuation anyway.

Kate that's such a bl**dy stupid suggestion. I don't know if you read the description for the house and its improvements. This is a home that someone loves and has put time and effort into. Maybe you should try doing that with a property.
A. Where would councils get their rates?
B. Who would bother doing reno's. As a female you clearly dont understand this aspect
C. The consumer driven side of the economy would suffer and people would lose jobs.
D. You're talking about homes that owners love and have taken time to make sensible improvements to. It may not be perfect but it is still their home or investment so your comment is plainly ignorant.

We are only talking about a ratings valuation. All houses must have a kitchen, a bathroom and a roof. All these upgrades are not actually upgrades - they are just maintenance and renewal. Additions are upgrades.

As I said, if an owner wants to argue the toss about a $2,000 bathroom fitting - get a private valuer in to do a market valuation!!!!!!!

What I'm talking about are ratings valuations. Nothing else.

A. Rates are simply apportioned across a district based on a value - that value could be 1-1000 for all that matters - and the council could still collect exactly the same amount of rates that they do now. Rates do not need to be set on a dollar value - any type of number would be fine.

But, land value is as good a proxy as any given higher land values tend to be places that have more infrastructure and development and employment opportunities close by - so it makes sense that those properties should pay a higher proportion of the tax burden - as they enjoy easier/closer access to the infrastructure.

Hence why the dwelling component should be standardised. Why should someone pay a higher rate just because they upgraded a kitchen, or re-roofed the house?

The reason this is likely not going down well with you is because you realise that banks lend money based on rateable valuations. That needs to stop. It was never what rateable valuations were meant for - they are not market valuations - they are sight unseen inflationary mechanisms for depreciating assets.

Standardizing the VOI will reduce rates in high value established areas and viceversa increase rates in low value areas and new subdivisions . No doubt you will have people agree with that suggestion like those who live in highly improved and capitalised older suburbs

Not if using land value (LV) as the basis for apportioning the General Rate. See comment below as well.

B. Who would bother doing renos?

People that want to improve their own living conditions.

But you say that renovating is throwing good money after bad stock hahaha

C. Nonsense.

People like fixing up their own houses. We've got DIY in our DNA.

And if you renovate, then you get a market valuation if you want to sell - easy as.

Consumer spend on demolitions/new builds would increase because rental owners would stop throwing good money at bad stock.

My point being, if we want to replenish old stock - ratings valuations are the way to incentivise renewal.

There are so many obstacles to this aim. But really if the CV, which you seem to think is unimportant and is standardized then anyone doing a new build would just do the basic house surely. Oh but they can get a reg valn you say.

ratings valuations are the way to incentivise renewal.

No, they are the way to incentivise debt.

And often that debt is used to buy a new car, go on an overseas holiday, buy a new outdoor patio setting, leverage up on another property... and so on.

Some folks borrow to renovate, but that is not "renewal" of the housing stock per se - in most cases, renovation is more akin to doing deferred maintenance.

Banks do not lend on CVs as such. They only use it as an "approximate value" to establish security value(one of many and various means of establishing value) and as such will lend up to maybe 80% of CV.
Changing how CVs are calculated will not make one iota of difference in lending

If that's the case - no matter - as the real reason for changing how CVs are calculated relates to the issue David raised in the article - that being, there is no long-term policy action presently to promote renewal of our housing stock.

The best way to my mind for government to promote that renewal is for its valuation instrument to recognise that dwellings in the built environment depreciate in value. As per how Houseworks explains above, the way CV metrics work is all wrong - and VOI fails to reflect that depreciation (rather it inflates VOI).

I don't know how many properties we have looked at over the years where the house really needed demolition. It (the dwelling) was a liability, not an asset. Pouring money into it to try and make it a comfortable, liveable home would not have made financial sense - at all. What we'd have wanted to do is bowl it and build new. So, we would walk away (as the price we offered reflected the fact that the house was a liability, not an asset) but sure enough some slum landlord would snap it up.

That is the mentality of our rental housing market. People are housed in properties that should be demolished as putting any money into them is spending good money after bad.

Lending up to 80% of CV (a sight unseen non-market valuation) is a recipe for disaster.

D. The rating valuation makes not one iota of difference to the owner that loves their house! They will renovate it because they can afford to and they will understand that its market valuation will increase based on the renovations.

The government valuation will not - aside from land value.

Maybe you should try doing that with a property.

Been buying, improving and selling for nearly 40 years. We're in our 12th home presently.

Far out, for an old woman then you should know that buyers always look at the CV. The CV value is stated on homes.co.nz which is what you refer to as well. Your idea is a dumb one but good luck trying to get it implemented kate

Yes, homes.co.nz is a perfect example of why people pay ridiculous prices for over-valued, poor condition stock.

The website derives a "market value estimate" based on that CV which is not a valuation/appraisal of the property itself.

Worse, when a property sells it (the website) automatically updates its "market value estimate" in line with what was paid for the property.

We recently bought a property and paid well above the then current homes.co.nz "market value estimate". We had already sold our place (and so were living on our sons couch) and we wanted a property within walking distance to his house (this one we bought was 4 doors down).

What did the homes.co.nz site do? It updated its midpoint "market value estimate" of the property to $6,000 above what we paid!!

But the thing is, what we paid has nothing to do with the value of the house to the general property market.

And what will the local council do? Yep, you guessed it, they will similarly raise the CV to around what we paid on next revaluation - and likely the entire neighbourhood will be assigned a similar percentage rise in value too.

All because we wanted to live a few doors down from our son for the convenience of taking the grandkids to school in the morning. They can walk down here to catch the 'school bus' (us).

I understand the homes.co.nz process, but I can't see the logic in the argument that they cause people to pay ridiculous prices. They give a range of possible prices, so big you could drive a bus through them. The price you pay should be a function of the relative value of all the options you have in front of you. What's more sobering as an owner of a well renovated property (full insulation, gas central heating, retro fitted double glazing, heat pumps in all rooms etc) is that someone might think that is included in the homes.co.nz estimate. None of it would show up on the records and the last sale was nine years ago.

They cause people to pay ridiculous prices because they set the seller's expectation - and in a seller's market, regardless the appropriateness of the homes.co.nz estimate, some 'greater fool' will pay that - AND they (the purchaser) can expect homes.co.nz to revalue the estimate on the property (as they did with ours) to reflect what was paid (and more! in our case!).

I'm also guessing that if one pays under the homes.co.nz estimate, and/or better yet, under the CV - they don't devalue the estimate. I'm guessing the algorithm is a one-way street.

We had just that happen in the house we purchased prior to this one - we paid $40K under CV and on revaluation the CV still went up.

Good on ya buying another home and I hope it's a nice one. A place to settle down and make interesting comments for interest.co.nz. You usually have some good comments Kate

Kate, no doubt the old stock is overvalued. However councils set their rates based on land + improvements. Wouldn't your proposed changes make rates unfair? Someone who builds a nice warm house would pay even more rates while someone sitting on a rotten hovel would pay less.

Why would you want to punish people for adding improvements?

I don't see what the point is here - do banks and buyers really care about CV anyway?

To encourage more and better housing rates should be based on the land value alone.

I agree that land value (LV) rating is indeed the way to go for the most equitable apportionment of the public good (i.e., non-rival and non-excludable) services/functions of a council.

Hence, if LV were used as the basis of the general rate, changes in VOI would not make a material difference.

I believe that the trend by most councils toward CV as the basis of their general rate has made local government taxes more regressive. And the introduction of a UAGC (uniform annual general charge) was also a regressive move.

Laughably there would be far more houses in the 1980s-2000s being bulldozed due to poor building practices and leak damage while those built in the 1950s and prior would have more value due to the character features (especially the extensive craftsmanship & materials in the 1920-1910s and earlier places). It is ironic but newer builds have a bad rap in NZ for shonky building while the classics at least have got the bones right and often have been regularly renovated to be insulated, upgraded, new heat systems added and new features. Only bad or poor owners don't regularly upgrade & renovate. However with the increased subdivision the houses may have no value, no matter their historic significance or modern build, as the land is far more valuable for subdivision for pokey slapdash small houses and sections, or the hazard insurance risk is significant.

Thank you for a balanced report DH. The proposals are pushing the boat out too far and too fast for houses that may not even be able to handle it. Everyone wants better, healthier homes, in the long term. The impractical anti-investors just curl their lips and snarl at the suggestion that properties facing extra costs will ultimately cost more to rent ... as quality and capital values increase ....

Here is my take from reading the comments. To qualify, a property is a parcel of land which can be owned and carries a range of valuations depending who you ask. Said property may, or may not, have "improvements" on it such as buildings of any type which will also be attributed some value according to their utility. Total value is notionally the sum of both. Unfortunately the greater portion of folk just call the whole package a "house" and cannot grasp that the two components can, and should, be viewed separately. Some folk, like Kate, have realised that the current CV regime is deeply flawed, it normally overvalues the improvements and undervalues the bare property. This is simple to figure out if you were to consider what the "property" would be worth if the "improvements" were removed. Try asking a vendor to remove a house from a site, or offer them the land value only less cost of removal of any "improvements" you don't want.

The nett effect is that, in any area, older improvements are overvalued, newer undervalued to achieve the same CV in order to satisfy the box tickers, market makers and banks valuers that just stick in the number that takes it up to the buyers offer in order to qualify the loan amount. That clearly deters renewal of dwelling stock.

Sooner or later the buyers will catch on that the beautifully renovated villa beside the passive house might look lovely, but really does not provide the same utility and therefore should be worth less as "improvements" and there should be a way of clearly conveying this built in to the valuation process.

I find it surprising that this is not clear to all as it works for all other well maintained assets which depreciate over time and is worse for those not maintained. If you bought "property" without considering this you may be holding "improvements" worth less than you believed.

Thanks, spinach1 - a much better explanation than mine - and yes, that is exactly the net effect and it does deter the renewal of dwelling stock. I like how succinctly you put it!

*12 - Freehold, but the price does not match the property's Capital Value.
e.g. When the sale price is more or less than 20% (percentage may vary for different councils) of the Capital Value the sale is classified as S12. This is so that unusual sales do not affect the calculations for general valuations.
https://deskportal.zoho.com/portal/homesconz/kb/articles/what-is-a-non-s...

You missed a cut and paste of an important part of that information, that being;

*12 Classifications are temporary classifications requiring reviews.

Our recent purchase is classified as S11 - yet we paid well outside that 20% range - so our council must use a higher percentage metric, I assume? Or perhaps the sale price has been "reviewed" and the indicator changed from S12 to S11. Do you know what agency does that "reviewing" of S12 sales?

The zealots are proposing a WOF for rentals.
Why not a WOF for all houses.
Why does a home that is unhealthy for tenants to occupy suddenly become healthy for owner-occupiers to occupy?

So if it fails the WOF we give the owners a fine? How is that going to help exactly? Or do you think the govt should sell the house out from under them for being bad home-owners...

Seriously, I start to wonder how some of the posters on here dress themselves in the morning...

Interesting, do we want to pay the higher costs of medical treatment with long term lost productivity & poor health or do we want to pay the lower cost of offering optional subsidies of certain products for a base house standard, those products could be by preference from NZ companies so it will be win win. Many past governments went with the second option and yet we still have landlords who drag their heels past the point the years of subsidies finished. At that point the next stage is the stick, the carrot got ignored when it would benefit those investors financially so there is hardly any chance of appealing to their better nature.