Funky Cold Metiria and Housing Holly go Vote Hunting: Green Housing Policy

Poor wee petals who can’t get a toehold in the inflated Auckland property market have been bleating on to Herald editor Simon Collins about the unfairness of it all:

“When looking for a first home, it’s hard enough having to contend with all the other young families wanting their first step on the property ladder.
But it’s all that much tougher bidding over a property an investor has bought, done up and wants to flick on for a profit.
That’s the experience of Georgia Wilkinson and Dylan Ewing, a young couple looking for their first home in Auckland.”

God give me strength. Journalism in New Zealand these days seems to be all about who is doing it the hardest. And it is almost always more ‘spin’, than reality.
What this achieves is unfathomable. It’s gotta be the buzz of a mass moonie type Kumbaya fest.
But sitting on the pity pot is, and has always been, good for stuff all.Working your arse off to save a deposit or tapping your family for a loan is far more productive.

At certain points of the property cycle, owning property is the domain of the “well off”. The rest of us have to sit and suffer until Mom and Pops’ generation frees up a meaningful amount of stock. A property bubble often happens. The nature of politics means the oldest in society are the strongest voting bloc and their property rights are well protected. No voting bloc is ever going to elect a government that will impact on their built up wealth that is stored in their house. If they’re lucky, they’ll have at least one other property as an investment and some extra toys. It’s the four B’s. Boat Bach, Beamer and Brick & Tiles.And we all get our turn. In about five years there is going to be more stock available to the younger generation as the X’s kick their kids out of home and downsize.
And despite the intellectual hand wringing from the left on how we should all share and care with our taxes, it is wasted ideals given the fragility of life.

But that won’t stop them from ruining our capitalistic fun:

The Greens have today released their housing policy in order to buy votes in the next election:
“The Green Party has released a bold set of housing initiatives that will put home ownership within reach for tens of thousands of Kiwi families, and modernise tenancy law to ensure renters have the right to higher quality housing and more stable tenancy.
The package, entitled Home for Life, contains three new policy planks:


Big Big Big mistake. Yes, plenty of other countries have a blanket CGT. But they’ve got something else that New Zealand doesn’t have – a shite load of desirable land that isn’t better used in primary industry.
A property investor facing a CGT is a property investor who will hold onto his property until the value of money changes or he can recoup  the tax from the sale.
As a property investor, you are well aware of the capital costs you’ve put in to the property over the years and the tax consequences of the sale. If you don’t have to sell then you won’t.
This will decrease supply and increase demand. Prices will rise. Home ownership will become less attainable and renters will suffer:
From Coleman. Victoria University:

1. The Long Term Effects of Capital Gains Tax

The welfare implications of capital gains taxes
The above analysis suggests that capital gains taxes raise rents, increase home-ownership rates, cause a substitution towards smaller houses, and improve the net foreign asset position because they reduce the distortions caused by the interaction of inflation with the tax system. Whether capital gains taxes raise welfare, however, will depend on two things: the extent to which inflation reduces welfare, because of its negative effects on credit-constrained owner-occupiers; and/or the extent to which inflation enhances welfare because of its positive effects on credit- constrained renters. In the parameterisations of the model studied in this paper, the welfare losses to the renters exceed the benefits to the owners, for there are more young renters than young owners. In this case, a capital gains tax will tend to have negative welfare effects as it raises rents, although this need not be the case. 

So CGT sucks for renters and home owner wannabees alike. But that won’t stop the left from trying to tax the rich wankers. A policy that worked so well in 1999 it shrunk the tax base and incentivised the Trust formation industry. 

Make targeted property subject to capital gains tax if sold within ten years of acquisition. Any property bubble is generally caused by people wanting to move to a more desirable location. Money might more readily go into existing stock if there was an impediment to sell on and upscale.

Policy plank #2:

The people going into the ‘wrapped’ (rent to own) properties should be legally protected. What happens if they pull out after putting $20,000 of their own money. They then forfeit this equity. 
 And what about the 3 D’s that affect the outcome of home ownership and the value and desirability of properties? Death, Divorce and De Paedophiles.
Fucking paedophiles are more common than one might think. As a property investor, if it’s not paeds that I’m dealing with it’s under-aged prostitutes.
Say you get a paedo buying a house alongside a family with young children. All of a sudden they wanna get the hell out of the house they’ve lived and built up equity in. Where is their protection?

  Normal families are very mobile and won’t want to hang around for the thirty years it takes to get title. 
Average ownership of New Zealand properties is seven years.
 Most people don’t have kids till they’re over thirty these days. That means Bill and Mary are approaching retirement when they’ve paid it off and are no longer restricted in their movement. What happens if they end up with a disabled child or want to move for any of the reasons that cause families to want to sell and move on. 
The cost implications of a scheme like this are profound. 
1. Cost of legal advice: enormous
2. Cost of property management for thirty years to ensure the governments asset is protected. Astronomical. 8% of monies into coffers.
3. Cost of repairing the house to a resalable asset when the dodgy skinhead has punched holes in the wall and unreliable purchasers have shot town. Priceless

 policy plank #3
This is the most bizarre. 
1. Most landlords will get a building inspector through to make sure the property isn’t a complete lemon. Every property transaction requires legal advice which should flush out environmental LIM issues.
And in any case, no-one is forcing a tenant to stay. If it sucks, move on. If your kids are unwell and you think the property is to blame, WHY THE HELL ARE YOU STILL IN IT? That’s bad parenting more than bad landlording.
A lot of properties are partially lemons. After buying a property you have to wait a while to recapitalize to add value. One of mine just emptied. Has real issues. Part of it wasn’t consented  initially and it’s damp as, in the bedrooms. But the young family with kids the same age as mine enjoyed their time (seven years there.) They coped with dehumidifiers and the house was dryer than my own. They got a two bedroom house for $158 weekly at the rental maximum because I couldn’t justify market rates.I put in a fireplace.Great relationship. 
If  I’m forced to get a WOF, more than likely it’s getting bulldozed and I’m waiting for the land cost to rise. 
This means supply decreases, demand increases and rental rates rise
2. It’s price fixing if anybody or anything other than the market tells me how much I can charge for my product. The rules are already weighted towards the rights of the tenant.
There’s a lot of ways around that price fixing scenario. And anyone who is smart enough to buy a rental property then they’re smart enough to work around this one. 

The main reason why I think the Greens Housing Policy is tits:

It tells us we are weak females who couldn’t possbly get into the housing market without the help from the government. 
Stuff that. Funky Cold Metiria and housing Holly should know better.

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