I noted in the lead-up to the New Zealand General Election, held on 23 September, that Labour had an excellent housing platform that addresses both supply and demand distortions via negative gearing reform, banning foreign buyers of existing homes, tighter capital gains taxes, removal of urban growth boundaries, plus bond financing for infrastructure. Its plan to reduce immigration by around a third is also sound, and would help to relieve chronic housing and infrastructure pressures, especially around Auckland.
Earlier this month, New Prime Minister Jacinda Ardern gave her ‘speech from the throne’, which confirmed that the Government would pursue its housing reforms in-full. And over the weekend, New Zealand’s new housing minister, Phil Twyford, gave the above interview on Interest.co.nz explaining the timeline of how these housing reforms would be implemented.
First, Twyford noted that legislation to ban foreign buyers from purchasing existing dwellings would be implemented over the next few weeks.
Twyford then noted that the policy requiring capital gains to be taxed did not require a change of legislation and could be introduced quickly. This policy would not be retrospective and would apply to investment properties sold within five years of purchase. Any capital losses that arose if investors sold at a lower price than they purchased for would also not be tax deductible.
With regards to negative gearing, Twyford said that ‘ring-fencing’ legislation preventing losses from residential property being applied to regular wage/salary income would be introduced shortly and would apply to all property investors (i.e. both prospective and retrospective) from day 1.
Twyford also outlined his plans for the new Affordable Housing Authority, which would work with private sector developers to build 100,000 “affordable” homes over 10 years (dubbed “Kiwi build”), with half of them in Auckland. Apartments and townhouses in Auckland would be available for under $500,000, whereas standalone houses would be available for $500,000 to $600,000. Twyford also noted that the Affordable Housing Authority would have compulsory acquisition powers with the ability to bust cartel-like behaviour by land-bankers.
While this interview didn’t discuss these issues, Labour has also previously confirmed that it would abolish Auckland’s urban growth boundary (also in a bid to bust cartel-like behaviour by land bankers), as well as introduce infrastructure bonds to deliver housing-related infrastructure.
Labour’s reforms are clearly a huge improvement on the former National Government’s do-nothing approach. Australia’s delinquent politicians on the fake left and right should take note.
