Housing Minister Phil Twyford in talks with developers and officials over making public land available for private developers committed to building long-term affordable rentals

Housing Minister Phil Twyford in talks with developers and officials over making public land available for private developers committed to building long-term affordable rentals
Housing and Urban Development Minister Phil Twyford

Housing and Urban Development Minister Phil Twyford is seeking advice from officials and talking to developers about the government getting involved in build-to-rent schemes.

He wants the government to incentivise developers to invest in housing - apartments in particular - built with the purpose of being rented out long-term.

He told media the idea wasn’t to provide developers with subsidies, but rather to help those eyeing long-term rental yields as opposed to capital gains, to get their projects “over the line”.

How exactly this would be done was still up in the air, but Twyford said the government could make Crown land available to developers, allowing them to defer payments for the land until their developments were completed.

He was also interested in seeing whether Crown-owned “transit land” around train stations could be offered to qualifying developers on a deferred payment basis.

The ultimate purpose of such build-to-rent arrangements would be to increase the supply of long-term affordable rentals.

Twyford said: “I’ve been approached over the last year or so by a handful of really significant commercial investors who are taking a cue from similar debates that have been going on in the UK and Australia about a modern build-to-rent market.

“It’s not a market that by definition requires subsidy. It’s about a commercial proposition. So we might be able to help some of those developers get over the line with new projects.”

Collins: What about mum and dad investors?

National’s housing spokesperson Judith Collins wasn’t opposed to build-to-rent schemes, saying she’d likewise talked to developers about them.

However she was concerned about government assistance for big corporate developers creating an uneven playing field that would disadvantage mum and dad investors.  

Collins was also worried about locking people in to being renters, when there was a possibility of them being able to buy their own homes.

“I am a big proponent of home ownership,” she said, noting how renting also restricted people from being able to access capital, secured against their homes.

Rental affordability in focus

Twyford’s comments to both the media and the Social Services and Community Committee he addressed on Wednesday morning about funds allocated to housing in the Budget, inferred he was broadening his focus from increasing the supply of affordable houses for first-home-buyers to increasing the supply of affordable rentals (in addition to the supply of transitional housing).

He told the Committee: “The market has changed and we need to consider the ramifications of that.”

Twyford said wages were growing faster than house prices for the first time in quite a few years, yet renters were suffering from rent increases.

He made similar comments to interest.co.nz in a video interview just over a month ago, saying: “KiwiBuild was first designed at a time where people were very, very focussed on first home buyers in the expensive markets like Auckland. That’s changed now.

“One of the striking things about housing in New Zealand now is the stress on renters in a number of different parts of the country.”

Twyford at the time told interest.co.nz he expected to reveal more about his “KiwiBuild reset” - which would actually be a complete “housing and urban development policy reset” - in mid-June.

However, on Wednesday he couldn’t confirm whether his proposed reset would go to Cabinet before a three-week parliamentary recess begins on July 1.

Collins: Twyford’s policies have caused rents to spike

Collins in the Committee grilled Twyford over why rents were rising.

She blamed the Government's tinkering with the market. For example, it introducing new Healthy Homes Standards, restricting foreign ownership of houses, extending the bright line test, and soon likely requiring rental losses to be ring-fenced.

However, Twyford said the fact rents had gone up to varying degrees in different parts of the country and across different suburbs, suggested price increases were caused by supply and demand issues, not policies introduced to reduce speculative behaviour and improve the quality of rentals.

Collins is of the view the key to improving housing supply is making more land available for development by reforming the Resource Management Act. She's due to release a discussion document, that'll feed in to a draft bill, on her proposed changes. 

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That would be fantastic if thought through well

Unfortunately Twyford doesn't inspire confidence in executing an idea…
Quote from the article above:
"How exactly this would be done was still up in the air" translation: I have a nice idea but I have no clue how to make it happen

Don’t worry the sham has got it sorted

Don't worry, Jacinda will organise another Working Committee stacked with expensive consultants to determine how to do it. Although, when they report back she'll ignore it.

Why organise and pay for a working committee, float the idea using social media and wait for the wonderful ideas from the self-opinionated commentators

Ah so Phil wants private capital to provide housing rental stock.

How is this different from what we are doing right now ?

He made similar comments to interest.co.nz in a video interview just over a month ago, saying: “KiwiBuild was first designed at a time where people were very, very focussed on first home buyers in the expensive markets like Auckland. That’s changed now.

“One of the striking things about housing in New Zealand now is the stress on renters in a number of different parts of the country.”

Totally disingenuous, Phil.

But I do like the build to rent idea. As I've said here many times, there needs to be much more focus on affordable rentals.

Affordable housing/Affordable rentals, they are all underpinned by the same principles. For it to work on rent yield alone, ie without any capital gain, you need a residential yield circa 10%. For this to happen, sales price/value has to come down.

Since they are not opening up the rural boundary to allow land prices to come down, the only way this will happen is they over build relative to demand and property prices crash.

Good point.
Easy enough to hit 6-7%, but 10% is challenging.

Like, f'rinstance, waiving GST on the build? There's 13.0435% off the GST-inclusive ticket price straight away.....$84,783 off the $650K KB price as an example.

Yeah... but lots of lost tax revenue

How much tax revenue is spent on....tax? How much does it compound along the way?

If the Government were to take a hit on the GST for Kiwibuild/Kiwirent construction, then further on down the chain they might end up paying less in emergency motel accommodation or accommodation supplements?

But why is it good enough to waive the GST on their own schemes, giving institutional investors the break, but not allow it for anyone else?

They need to take it off the real culprits, for everyone, ie by lowering rentier land prices for starters.

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Two articles sit next to each other record migration/ rental stress. What a sad little country we have become. Let me see, how could Mr Twyford solve this problem.

Yeah.
It's all so dim-witted, you have to laugh (or you will cry)

Especially since Blind Freddy could have told you that if you stop immigrants from buying houses, you force them to become renters instead. Sigh. Just another example of how this Government have zero comprehension of basic economic principles. Or those of physics - for every action, there is a reaction.

Well put

Eh??????????
Immigrants can buy houses.

And foreign buyers can buy new builds / apartments, can't they?

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Govt involved in building houses to rent out.. hmm, so State houses, but with market rents? So no need for YASHPWABOPPGITW*

*Yet another silly housing project with another bunch of pencil pushers getting in the way.

Phil needs to sit down with Grant R and tell him to stop the war on landlords. Phil is trying to incentvise long term rentals while Grant shafts him big time at every turn with things like rental tax ring-fencing. And while Phil trys to incentvise property development, Grant and a few million other morons want to increase tax on property. What a shambles.

As an aside, Phil is MIA in the transport portfolio, and people in the industry have started referring to the associate minister as 'Minister Genter'.

I was recently in Malaysia looking to expand my rental portfolio having decided that Singapore was not my cup of tea. The Malaysian government faced a very similar issue to ours, they halved tax on income derived from rent and as a consequence everyone wanted to be a landlord. This in turn created a building boom with developers getting very creative due to the amount of money to be made. The end result was a massive oversupply if rentals which drove rental prices through the floor.

I guess we could also solve our low income problems by removing income tax and our high price problems by removing gst and company tax. Or is it just property investors that need tax subsidies?

If you want to disincentivise something or make it more expensive, tax it.

Other businesses aren't tax ring-fenced, so why should rental businesses be? Rental businesses are just a businesses like any other. They don't currently have a tax perk that other businesses don't.

They are in fact penalised by the removal of depreciation allowance on buildings and by the demonisation of landlords. The problems in housing are entirely due to stupidity in the political and bureaucratic classes. Thinking about the wrong things is the problem. Make house building and renting more profitable and the private sector will get on with the job. Put up barriers to profitability and the private sector will find something more interesting to do.

Agreed 100%

RW,

I want to be polite,but I can barely believe that you posted such rubbish. landlords(and I am one),have been treated much more favourably than say,stockmarket investors(and I am one) for many years.
Has it escaped your attention that we have a disgracefullly poor housing stock,with all too many landlords more than happy to expose tenants to shoddy,unhealthy living conditions while ripping them off? Perhaps you have also failed to spot that the private sector has been happy to construct many thousands of leaky buildings,knowing very well what the consequences would be? How many lives have been blighted/ruined by this national scandal?

War on Landlords.

*facepalm*

Great argument. Your ability to wield facts and evidence to point out logical inconsistency and make your case is impressive beyond measure.

"Kiwirent" anyone?

Actually, why not? If it can provide long term leases that mean even renters can call somewhere home, then I would be all for it. It would give the current way houses are rented in this country a kick in the guts, which it desperately needs. Here's hoping. At least they are trying to do something about the parlous mess that housing was left in by the previous lot.

Yes BUT the govt need to build and manage them.
This lame public-private stuff doesn't work - witness Exhibit 1, Kiwibuild

No, that's not public/private not working, that is Kiwibuild not working now that house prices have started to drop, it would have done better if house prices were going up like they were when the idea was come up with. I am not saying it was perfect, it was only ever a part solution, aimed at a fairly small part of the market, but would have gone some way to alleviating things for some, if, as I said, house prices were still going stupid.

I am for Kiwi-Rent. The housing crisis is a car crash that only a few have walked away from unscathed.

Only focusing on the pretty 'first time buyer's for first aid and treatment is not good triaging.

There should be some housing crisis policy 'treatment' for the group who sit between state housing and home ownership.

New policies providing affordable Kiwi-Rents could fit that demographic.

" Kiwirent " could not help but smile at this comment ...........well done

Gosh he looks like a tired harried man.

He looks like Comical Ali after the Yanks have crossed the frontier.

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He looks like he's exhausted from taking fully justified, harsh criticism over the past few months.
He's the one that made all these big, poorly thought out promises (not just KB, how bout his 'RUB' busting, And choo choo trains left, right and centre).
He hasn't listened, and I know because I was not far removed from some lobbying of him about a year back.
He needs to be put out of his misery and relegated to the back benches, for his sake and the country's sake.

When in opposition he would talk all day and night how that govt was not doing anything and didn't have the solutions. So easy to just stand and find fault eh

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People can hate landlords all they want but someone has to provide rental accommodation to tenants. There will always be renters and the idea that tenants will buy their landlords houses to become owners themselves is just not reality. So if the government creates enough obstacles for landlords so that there are less of them…someone needs to provide accommodation to tenants. I've been saying for about a year that the government will be forced into becoming a landlord because it's making things more and more difficult for private landlords.

By that argument the government makes it difficult for all businesses by imposing standards and safety requirements and tax. Would you prefer a third world style government? Or is it just property that should have third world standards?

I would prefer a government that doesn't think it can do better than its people, I prefer personal entrepreneurship to constant government intervention, I prefer to have freedom of choice over being told what to do by the government

We would all prefer that, and we could have it, if everyone truly lived the old "do unto others" philosophy, but they don't, do they? There are always some selfish, greedy or power hungry nuts who go and ruin it for every one else.

Agreed

Governments that make it difficult for businesses to do business, by imposing onerous standards and safety requirements and tax, find that those businesses quickly relocate to countries whose Governments do not. The only difference between between business and housing is that housing investors cant pack their houses up and move them. However, they can sell them and move their money. Just like business people with capital choose the best country in which to invest their funds.

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People can hate landlords all they want but someone has to provide rental accommodation to tenants. There will always be renters

Yes, but it doesn't need to be 1/3 of the population.

and the idea that tenants will buy their landlords houses to become owners themselves is just not reality.

Not for all of them, but for the majority of them it could be.

So if the government creates enough obstacles for landlords so that there are less of them…someone needs to provide accommodation to tenants. I've been saying for about a year that the government will be forced into becoming a landlord because it's making things more and more difficult for private landlords.

Good, there is no need for a huge number of private landlords, a selection of large scale corporate entities with decent management would do much better IMO, with the govt (state housing) dealing with the dregs.

The real problem is the total number of houses lagging behind the population growth (excessive immigration), and the LGAs & NIMBYs hindering development.

large scale corporate entities"
Would these be foreign owned entities, most other nz corporates are. At least by having mum and dad landlords the capital growth gets spread around and retained in the country

Spread around? I thought your business model was leverage up... wait, leverage up some more..

"He (Twyford) wants the government to incentivise developers to invest in housing"
translation
You and I will give money to the developer (through our taxes) to help him make it happen

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Stuff the 'Mum and Dad' investors. In the vast majority of cases, they don't increase the supply of rental housing. They use the massive equity increases in their own homes they bought when property was affordable to crowd out first home buyers, raising prices and forcing them to keep renting. Anything that brings some balance to this exploitative rort is most welcome.

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That was my main issue with what Collins said. Mum and Dad investors aren’t going to do a damn thing. Developers can build dozens of dwellings in a single project. A more efficient use of resources too.

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Collins is awful. A disingenuous Rottweiler.

The name 'Phil' and the role of 'Housing Minister' just don't gel.
Remember ole Phil Heatley????

I’d rather the government just got on with it and built lots of appartments and sold them on the open market. Take a big chunk of public land in centralish Auckland, build 5000 appartments with pubs and cafes and shops, and sell them off. Rinse and repeat every year until job done. Forget about stand alone housing, our small developers can handle that.

No, get the govt (central and local) out of the way of the developers, and let them build to what the market wants. The only houses the govt should be involved in building are the ones it intends to retain an ownership stake in for the long term.

No, it can’t happen with land and build costs.
There’s market failure and the govt needs to intervene.
Auckland has one of the most liberal planning regimes in the western world, yet even then the market is failing to deliver.

Liberal planning laws in the western world? WTF?

I built some apartments a few years back. I can tell you they were anything but liberal.

And I'm not the only one. Many, many developers have either been stopped entirely in their tracks, or left so disillusioned they'll never do it again.

'A few years back'.
Yeah but in 2019....
the unitary plan liberalised density across more than 85% of Auckland's urban area. I have worked in urban development in Australia and the USA and hand on heart it's a very liberal plan.
Of course it's implementation is not perfect...

Yes, it's definitely liberal when the Council's own wings are blocking apartment projects along an expected LRT route.

And the land and build costs are high because of the tooth fairy? Or because of the various arms of govt have strangled available supply of land.. RUB, zoning restrictions etc., and the cost of building.. where are the costs.. is there huge costs in getting various bits of paper before you even get to turn soil?

Zoning restrictions? See above. The Unitary plan is, by plannings standards, very liberal.

The Unitary Plan at its heart still has the standalone house as the default setting. Even in Auckland's most liberal Terrace and Apartment zoned areas standalone housing is protected by set back rules and shade plane rules. Downtown Houston and all of Tokyo it is possible to use the full width of the lot and build straight up three, four and five stories as of right.

Yep doing those things would help housing delivery, although it could generate some nasty shading effects. Personally I think the trade off is merited though. It's really a bit futile trying to be ultra urban AND protect things like sunlight.

Exactly!
They can borrow, and will pay back quickly through sales
They can take off the typical 25% developers margin, and bingo housing at below market price.
Not rocket science

JJ have you not heard, the government is building 100'000 affordable houses !

That joke is no less old, tired and worn out when it comes from you Yvil.

It wasn't funny when Phil said it, it ain't funny now :)

Then you end up with a proliferation of cheaply built apartment blocks that quickly become slums. You only need to look across the ditch to see the problems with open slather apartment buildings - over 4000 buildings built with flammable cladding, new buildings with crumbling foundations, massive capital losses on resale.

China style high rise. 50-100x 1-200m² apartments in 25 stories on 1 hectare land with underground parking/storage and green space all around. It's high quality and relatively cheap, and if cluster 20-100 of them on one site (Unitech?) it can support all the support services + schools + frequent public transport as well.

Kiwibuild is dead... its main supporter and key advocate pulls out.... tells you everything.

Another election promise abandoned.

What’s happened to his promise to ‘bust the RUB’?
Oh yeah he can talk the talk in front of a bunch of neolibs ( NZ Initiative) but nothing beyond that.

Gee looking at that summit there’s plenty of phoneys on show

https://www.buildnz.com/summit/about/

Excellent news.. maybe they've come to their senses and are going to quietly distance themselves from it and let it sink from sight.

Hmm... solid idea.. just needs a name.

Kiwirent... nah.. too close to Kiwibuild... got to distance ourselves
Kiwihousing.. nah.. still too close.
GovernmentHousing.. nah.. too confusing with Government House.

I know.. 'State Housing'... why didn't I think of this before....... no?

Stately Housing.

They may be for poorer people, but no reason they can't be stately!

Why not a Te Reo name? Preferably one nobody understands. It is fashionable.

Whare Tutaekuri....

Its even better when no-one can pronounce it either, because then they stop mentioning it altogether for fear of being called a racist for mispronouncing the word.

JUST UNDERWRITE MORTGAGES ALREADY AND USE YOUR BALANCE SHEET TO MOVE MONEY INTO THE SYSTEM

The bubble is deflating, man the pumps?

Why? Private developers need to make money as do Mum and Dad investors. Where does the money come from? People who can't afford to buy, and more recently can't afford to rent, increasing accommodation supplement payments. How does this proposal ensure low rents? It does enable developers a means to make more money.

I think the fact that Kiwibuild has failed is really really telling in terms of the 'health' of the housing development sector.
In theory develooers should have been flocking to Kiwibuild. Being underwritten by govt.
Also in theory developers should be hitting the KB price points easily. Remember that these are prices that a higher than average income can only support.
The fact is, most developers can't hit the KB price points. Or, they can for one bedroom apartments - but the demand for these is low.
The only way to address these issues is for the government to build housing. That way you can take out the 25% developer's profit margin. Makes a huge difference to the prices.
Under David Shearer KB was actually set up as a govt house building programme. Not as it has played out.

Or you build on Government owned land, offer the houses as leasehold, and charge nominal ground rents on 999 year leases indexed to inflation. Problem solved.

Yep another clear option.
It really isn't rocket science but the govt is making it look like it is !

One of my relatives got his first house on government leasehold land via a new builds ballot opportunity. One of the array of means previous governments used to increase Kiwis' access to home ownership. They are well off now yet don't run around trumpeting at younger generations how they "did it all on their own two feet". They are not oblivious.

They should just keep building state houses. It's something we know that reduces demand pressure off rentals, and reduces rents across the board.

He's right that we need large-scale residential rentals that are not Mum&Dad.

In fact, Mum&Dad investors are, contra Judith Collins, an absolute nightmare for renters. They often have little idea of rental law and can sell up at any time if their personal finances are shaky. It doesn't matter if you're a good tenant, you can be out on your ear with basically no recourse. As a renter, I'd much rather deal with a faceless corporation than someone who sees me as an existential threat to their one substantial asset. I would love to rent a place knowing that I could stay there indefinitely, have kids, whatever, rather than being turfed out with six weeks' notice by lovely old Mum&Dad.

I can see how this might help avoid the problems with state housing (which we do need more of) too - like ensuring there is some incentive for tenants to look after the place.

Can we have the May REINZ stats already?

Well blow me down ............... so the Housing Minister and his delusional band of bootlickers now want private capital to provide housing rental stock?

These fools have finally clicked that many people will simply never own a house in Auckland on a quater acre section and someone needs to provide housing because the Government cannot do so

How is that different from what John Key did for 9 years ?

..............now we have gone full circle and right back to square one .

Why did Labour try to confuse the $#!*!* out of voters in the first place when we all knew the only way to house everyone is though the free market and and the deployment of private capital

That's patently wrong.
The government could borrow, build and then sell affordable housing.
Or build and rent out. With market rental of maybe market rental less 20% they would pay off their borrowing in 20 years.
The market simply can't deliver mid priced housing in Auckland, and nothing (save a land value crash which would create other issues) will change that.
Improved regulatory processes would help, but it's marginal improvement and its not fundamental enough to turn things around.

Last I saw house building prices (not land) had gone up something like 50% in last 5 years, that is mostly due to regulatory costs - both laborious paperwork, added cost of regulatory compliance on materials and greatly increased hours it takes to do the build. 50% is something like $1-200k per house, a big chunk of change, and I would argue that improvement in building standard is not remotely worth the cost.
https://www.interest.co.nz/opinion/96936/rodney-dickens-says-real-proble...

Improving building standards is fine. If the materials improve but you are getting them from entrenched players with little prospect of competition, it is a perfect storm.

Phil should have called in the Marines. "The 3D printer was used to build a basic barracks hut measuring 500 sq ft (46 sq m) in just 40 hours."
https://newatlas.com/marine-corps-systems-command-3d-printing-barracks/5...

In the first four months of its existence, the ministry responsible for KiwiBuild has spent just shy of $5 million on external consultants and contractors.
So instead they could have just loaned 7 people 700K instead. Those people could have purchased 7 houses from Builders/developers. Probably a good chance that the borrowers would pay the money back with a bit of interest as well. So it costs the government nothing.

What we haven't had mentioned, is the possibility of less people.

That would require less housing.

Which would require less money.

Which would give everyone more space

Just another stupid idea from Mr Twyford.
Needs to go as a minister for anything!
Seriously, what private investor wants to borrow money to build property for low income tenants without the likelihood of capital gain?..
He is in cuckooland once again!!
It will be as successful as all the other promises that this lot campaigned on!
Nothing they campaigned on has actually happened!!,