Collision course on Auckland housing

Property

Auckland Council set to demand change to new legislation giving the Government wide powers to control housing development

10th Jun 13, 12:45pm by David Hargreaves

<a href="http://www.shutterstock.com/">Image sourced from Shutterstock.com</a>

The Auckland Council is set to demand that the Government remove provisions from new legislation that would allow central planning and control of housing development in Auckland and potentially other regions.

The council has taken particular exception to "over-ride" provisions in the new Housing Accords and Special Housing Areas Bill.

As interest.co.nz recently reported the bill gives the Government wide powers to designate certain areas for fast-track housing, and to approve such developments without any reference to the local council. See here for all our stories on the Auckland Housing Accord.

Housing Minister Nick Smith said on Radio New Zealand last week that there was no way the Government would be removing the new over-rule power it would give itself through the legislation.

“It is absolutely crucial. The Government cannot take on this massive issue and risk around house prices without those residual powers,” Smith said.

The legislation, which was rushed into Parliament after last month's Budget, is currently being considered by select committee.

Council rejects

In a draft submission that is to be considered by Auckland Council's Auckland Plan Committee tomorrow, the council says it "rejects" outright the clauses in the bill giving the Government the right to over-rule and intervene in the Auckland housing market "and requires that [the clauses] be deleted".

The accord agreed by the Government and the council would target 39,000 new homes within three years. However, the accord will not be ratified till it is approved by a full meeting of the council. This appears very unlikely at the moment.

If neither the Government nor the council backs down on their current positions then outright confrontation between central government and the largest local authority in the country seems inevitable.

In the meantime, question marks would hang over what would happen to address Auckland's current housing shortage, with estimates that about 30,000 homes are needed to make up for a shortfall in building that has seen only around 4000 houses a year built in recent times.

Further complication

A further potential complication over the legislation is that the council's Independent Maori Statutory Board, which will also make submissions over the bill, has an issue with the fact that Maori were not consulted over the drafting of the Auckland Housing Accord.

"As a preliminary point, it is important to record that the IMSB was not involved in the development of the accord and this presents an issue in itself, which is still to be fully investigated and rectified," the board says in its draft submission.

The board makes a number of recommendations on the bill, including that there should be Maori representation on the governance and decision-making bodies under the accord and the bill.

Meanwhile the council itself has made an extensive list of recommendations for changes to the legislation, with the removal of the "over-rule" provisions being the most significant but by no means only major changes.

Other recommended changes include various issues around the RMA, introducing clauses into the bill requiring all the decisions enabled by it to give effect to the accord as well as the purpose of the bill and introduction of Auckland-specific provisions into the bill.

Strong words

But the strongest words in the council draft submission are reserved for the over-ride clauses.

"These clauses do not respect the principles of local democracy or those that underlie the establishment of accord agreements," the submission says.

"...Accords are based on mutual trust and partnership between the parties involved. The over-ride provisions undermine this principle by making it impossible for councils to negotiate the terms of an accord on an equal footing with the Government.

"...Auckland Council therefore rejects these clauses outright and requires that they be deleted."

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31 Comments

by Keyser Söze | 10th Jun 13, 12:58pm 1370825931

I have near on nil tolerance for Auckland council. The councils have done nothing for years, and are now dragging their feet, and in fact stomping their feet like children. Well good on the government for then treating them like a child!

They can either take strong bold immediate action - or have their authority taken away from them so others can get the job done.

In any scenario - good riddance to Auckland council.

by bob | 10th Jun 13, 1:12pm 1370826766

"done nothing for years, and are now dragging their feet" - they have written the Unitary Plan and want to make it operative ASAP - except the government won't let them. So they have done something and it's the government that's holding it up.

The government are the isdiots - demanding sprawl in spite of their own DBH report explaining that sprawl doesn't provide affordable housing.

You must have had a bad childhood experience with Council?

by Matt in Auck | 10th Jun 13, 4:08pm 1370837311

Bob the council ARE idiots.They brought in a MUL then hardly did any meaningful upzoning - surprise surprise we have the current housing disaster.

by bob | 10th Jun 13, 4:55pm 1370840136

Council have somewhat come to their senses over the last few years and Unitary Plan does have upzoning in some areas (although wierdly many MU and CBD properties lose density under the UP - so much for apartments springing up everywhere). There has been a MUL or equivilent for decades - they didn't 'bring it in'.

The government are greater idiots - like they just graduated from planning primary school.

by bob | 10th Jun 13, 4:57pm 1370840274

A simple question:

Say you have a cheap suburban sprawl house and a CBD apartment of the same value. If the apartment rents for a much higher amount than the house which is more desirable? what does this indicate the market wants?

by Ms de Meanour | 10th Jun 13, 5:38pm 1370842694

If they rent for different amounts, on what basis are you saying that they are of the same value?

by scarfie | 10th Jun 13, 9:01pm 1370854911

Thanks for the laugh, much appreciated.

by bob | 11th Jun 13, 10:12am 1370902340

A $300K Hugh house versus $300K CBD apartment - if one has far greater return what would that indicate about what the 'market' wants?

by bob | 12th Jun 13, 12:10pm 1370995831

You might, but you're not an affordable housing developer. Developers in that market will build the unit type that has the greatest return because the greatest return equates to more potential purchasers and best chance of feasibilty working.

by Ms de Meanour | 11th Jun 13, 10:57am 1370905038

Unless you can show that this is actually happening - ie properties with a similar sale value but very different rental returns - then this is a pointless hypothesis. One might as well say "if three-legged racehorses could run just as fast as four-legged racehorses, what would that say about the value of having four legs?"

However. Suppose it were the case that there were two properties, both with the same market value for sale purposes but with different market values for rental purposes. The conclusion would be that there is something wrong with one of the valuations, for the potential for higher rental returns ought to drive up the sale price. Either the buyer of the house with the higher rental return potential is getting a real bargain - good for him, and more fool the seller - or alternatively, the buyer of the house with the lower rental return potential is paying too much - more fool he, and good for the seller.

by Ms de Meanour | 11th Jun 13, 12:03pm 1370908983

What you're showing is that there is no such thing as an absolutely-determined, objective "market value". The "market value" of any thing depends on a coincidence between what a buyer is prepared to pay and a seller is prepared to accept for it. Both the buyer and the seller will have different individual viewpoints, preferences, opinions about the future etc that they will take into account and that will influence their choices.

Thus, you can't say that the market price of anything is "too cheap". Unless all of the sellers of something are consistently really stupid, or remarkably charitable, or under duress, things will be sold at the highest price that the seller is able to obtain for them. If a seller really thought that something was worth more than the price being offered for it, he wouldn't sell it for that price.

It may be "too cheap" from the point of view of achieving a particular policy objective. You seem to be implying that it would be desirable for apartments to be as attractive to buy as landed properties, and therefore that it would be desirable for the price of landed properties to go up. An alternative way of achieving that would of course be for the price of apartments to go down, so you might equally on the same logic state that apartments are "too expensive". But again - "too expensive" for what? Why do you want apartments to be as attractive to buy as landed property?

by bob | 12th Jun 13, 12:36pm 1370997380

For some reason people will pay a premium for brand new apartments. So they can sell even if a bit more expensive than exisiting stock. Also there probably isn't anything else in that price bracket similar in that location - probably the only new build for $250K?

There are scales of economy building more units.Earthquake engineering won't be anything to do with losing 4 floors (new build earthquake design is not an issue). Most likely they needed to reduce heighth to to get a Resource Consent (if it doesn't have one already)?

by bob | 12th Jun 13, 12:19pm 1370996395

Look at Trademe rents and for sales. 3 bed cheapo sprawl houses (say Clendon Park - which is exactly what Hugh advocates) versus CBD apartments. The apartments have better returns. Maybe, as you suggest, the houses have a slight premium which reduces their return, however developers will still want to build what has the best return - as that will lead to sales.

My affordable housing clients always end up building apartments/higher density. My sprawl clients always end up building bigger expensive houses. It's just how the numbers work. I also have some clients that build very expensive apartments, but I don't have any that build low density affordable - because they would make a loss.

by waymad | 10th Jun 13, 1:36pm 1370828182

ACC 'require' the deletion, despite being themselves a 'creature of statute'.

ACC (and more particularly, their staff) are wedded to the revenue streams from DC's, fees, and rates on capital values which themselves are inflated by MUL's, Council foot-dragging, and other TLA-created economic distortions such as the CG conferred on a lucky few by said MUL's in particular, and by zoning in general.

ACC are painting themselves into a corner, from whence they will only be able to watch and fume as the Gubmint does - um - whatever the Gubmint finds it possible to do in practice.

ACC wail about the 'loss of democracy' which is technically correct in a TLA sense, but forget that Gubmints are 'democratically elected', too.

ACC should ask themselves 'who voted for a Median Multiple exceeding 5?"

by Keyser Söze | 10th Jun 13, 3:33pm 1370835216

hurrah!

Well said.

by bob | 10th Jun 13, 5:03pm 1370840599

"The local politicians are simply the bureaucrats parrots."

The local politicions are voted in. They therefore respond to the voters in LB elections. In Auckland the bureaucrats are quite responsive to the direction given by the politicians.

by kin | 10th Jun 13, 2:11pm 1370830275

"These clauses do not respect the principles of local democracy or those that underlie the establishment of accord agreements," the submission says.

The Auckland council has the cheek to talk about local democracy....wonder how much "democracy" they gave the local residents in the Unitary Plan....If Len Brwon was not shocked by the outright negative feedback from the discussion, the Plan would have already been rammed through.

" impossible for councils to negotiate the terms of an accord on an equal footing with the Government....."...So now the Council thinks they are on the same footing as Parliament ..

Does arrogance knows no limits with these people ???

Auckland Council has by any measurement failed to provide affordable housing for aucklanders....Even if their plan for more density prove workable and desirable (a big IF), They have still failed to address the affordable issue...unless they consider paying 8 to 10 times annual income as desirable and affordable.

They have proven to be a miserable failure...So please move out of the way for somebody who can do the job better....

by goNZ | 10th Jun 13, 2:37pm 1370831836

Lenin Len needs to let go if he wants Akl problems sorted.Just like 1951 wharfies , the special interests are going to have to learn the hard way not to hold up NZ. Same as Forest and Bird trying to kneecap the new mine for Denniston, Rimu logging etc , its time the govt got proactive if we want to avoid stagnation.. Go NZ !

by powerdownkiwi | 10th Jun 13, 2:50pm 1370832600

Gonzo - can we raise the game a little? There has been comment made hereabouts, about rhetoric, mantra and nonsense. If you're going to claim that wealth is based on resources, you'll find me in agreement. If you're not going to ask 'what is wealth after they're extracted?', and 'when is that?', then you won't.

I suggest you attempt to quantify stagnation - but you can start with my suggested definition:

Future generations who find themselves resource-poor, inherited-pollution rich, and overcrowded.

by bob | 10th Jun 13, 4:08pm 1370837307

Come on. Australian mining companies have to get rich somehow. Why can't we just them them destroy our environment and take our resources? Look at all the awesome stuff we get in return - jobs for a few digger drivers and more patronage at the Westport dairy.

by Wordsmith | 10th Jun 13, 2:38pm 1370831931

I'm sure the lack of focus on the community as a network of living, breathing, working human beings is at root of the problem. Self interest serves no one, but the individual, while the "fight" for an equatible society fails and the treatment of the constituients, that apathetically vote in these parasites, continues to deteriorate in the name of vested interest.

by powerdownkiwi | 10th Jun 13, 2:41pm 1370832082

Kin - the Council was elected, so was Brown, and it is very telling that John Banks wasn't.

But the Council are nothing to do with the 'cost' of housing. That is the result of the whole capital'growth system. Folk are urged to compete, and the marker is consumption. Naturally, you chew up resources doing that. Naturally, you tend to want to think your own 'wealth' is optimal. Naturally, for most folk, that includes the 'value' of their house. So you get rules which remove yurts, require cavity walls, covenant minimum sizes.

The joke is that you can still build for stuff-all (but those who purport to champion this aren't interested). The joke is that if you reduced housing costs, you'd reduce 'values', and middle new zealand would squeal like stuck pigs. You'd also have a wee issue with the banks, and their LVR's.

What we may well be seeing, is the beginning of the end of central govt. Those of us who look ahead without prejudice, think that globalisation and corporatisation have to collapse in the absense of growth - and that the final point of that trajectory, in say 20 years, is local local local. Local food, living, transactions. This may well, in hindsight (and even though LG exists at the legislative whim of CG) be the first step on an inevitable road. Sorry, track. :)

by kin | 10th Jun 13, 4:26pm 1370838372

Local councils (of which Auckland City Council is one) are elected for Local resources management....Roads, waste, water etc etc...If your hypothesis holds, it also means :

1. That we are stuck in high housing cost forever....with house owners paying 60 to 70% of their incme to service their housing cost, whether in way of mortgage or rents.

2. That our economy is held hostage by "existing owners" who cannot afford to lose value of their house....what about the young startup families and workers ?? do they not deserve a house as well ??

3. That our Bank's interest takes precedent over our social responsibilities of providing affordable housinf for our young families??

4. Why do our Parliament has a Minister of Housing?? if our Goverment in Wellington has no say on affordability of housing in Auckland ??

by bob | 10th Jun 13, 5:29pm 1370842147

1. Probably right

2. True

3. absolutely

4. Minister of Housing looks after the Department of and Housing - Building Act (Building Consents). Presumably the Resource Management Act is more Ministry of the Environment which is Minister of the Environment Amy Adams - Nothing to do with the Minister of Housing?

by powerdownkiwi | 10th Jun 13, 5:51pm 1370843480

Kin - our Governments, even if they wanted to make things happen, are beholden to the banks which 'loan' them 'money'. Given that it's spun into existence, and then rented out to Govts, this is a pre-tax by the banks. Nothing more, nothing less.

If Govts spun their own money into esistence and charged no rental, we wouldn't all live under that permanent vacuum-cleaner. LG's are under the same sucker - the very reason I argued that the DCC shouldn't go into Stadium debt.

Acting on behapf of the vacuum-operators, are 'ratings agencies', and overseers like the IMF and the World Bank. A Govt has to have a good 'rating', or it has to pay more for renting that spun-into-existence scrip. It's a rort. A resource-suck on a resource-suck.

And the advice - how Govt / LG should get a good rating - is to privatise everything that is 'commons' so that the hoovering can proceed apace.

I'm no leftie - far from it (Marx just imagined a different spread of beneficiaries) but if you said 'no' to that system (and it's message which comes to you via neo-liberal doctrine) you'd be well on the way.

by Cheese | 10th Jun 13, 5:59pm 1370843958

Here is the math for a rural development in Auckland

$25k for 1/40th share of a 4Ha block

$196k for House

$19k for sewerage, greywater & stormwater

$9k for water

$6k power

$4k earthworks & driveway

$259k Total

These figures are based on an actual recently completed commissioned build within walking distance to the train, school, shop etc. The house is 169m2 Brick and tile profile, 4 double bed plus study, master ensuite & walkin robe, 2 car int access gge.

included consents, $3.6k carpet, $3k extra elect, plus other extras.

The modern multi-chamber onsite sewerage system processes the waste until it is clean enough to be dispersed within the topsoil of the section.

The water was priced on 2 x 30,000litre tanks, pressure pump, first flush diverter and all other parts fully installed (I have used this price as the actual build already had water onsite so was less expensive).

by Cheese | 10th Jun 13, 8:48pm 1370854091

Whoops just noticed the bottom of my post missing.

The important thing to note here is the land was not subdivided, no new lots created as the district plan does not allow it. The house was built as a second dwelling and the price of the land is based upon the CV of the existing 4ha block CV divided in 1/40 shares.

Driveway was gravel only finish, power came from the road both overhead and underground.

by Chairman Moa | 11th Jun 13, 11:28am 1370906895

ACC council asked for some feedback little while ago on their people feedback panel. I emailed them but has no email back.

I am no planning expert but what is wrong with both sides giving in a little? Auckland can still grow out and up.. ?

by Cheese | 11th Jun 13, 2:01pm 1370916112

I believe both should be done in a carefully planned way, leaving the people to decide where they want to live. But if affordable housing is the desired outcome then the development has to be done by a non-profit government organisation (local or central) otherwise the product will be sold at how much the market will pay rather than the true cost.

When say "Mr Smith" who has never been to NZ can ring up and buy 10 or so properties through his agent with no questions asked then it all becomes a bit pointless, don't you think?

by Andrew Atkin | 11th Jun 13, 10:18pm 1370945933

Let's all try to remember how much blood Auckland has on its hands. An entire generation financially ruined, compared to where they should be.

If central government wants to create provisions that stop these councilors from killing the wellbeing of young people, then maybe that's a good idea.

Do you really believe Auckland council cares less about affordable housing? If they did then they would never have created this mess in the first place. OF COURSE central government must make provisions to hold these people to account.

Believe me - you ask a jerk to fix a problem that they never should have created, and they will almost certainly find a way to stuff it up all over again. Stupid people are morbidly consistant.

by Steve-o | 19th Aug 13, 4:05pm 1376885131

I suggest that the local governments are, in fact, just NIMBY parrots, if anything. Brown-nosing the NIMBYs keeps them elected. The bureaucracy and the red tape pays their solid wages for doing very little - oftentimes doing nothing at all.

I suggest much of the Govt vs AKL Council conflict plays out a bit too much like a TV reality show. There is a bit too much overdramatisation for any realism to exist. The current government will not do anything substantial enough to hurt the banks' collaterals via considerable negative equity as a potential side-effect.

In a nutshell, there needn't be a conspiracy for everyone with any lobbying power to be on the same page. What you rightly see as a problem Hugh is what almost everyone else quietly views as a desirable long-term outcome. New Zealand has just two substantial industries. One is farming. The other one is the Residential land Ponzi. Choking the land supply is one of the main means to that end.