The establishment of affordable housing zones

In cities the Government could consider applying our own local model of the United States concept of rent controlled buildings although it appears the jury is out on its success.

Horowhenua is a good case study because land and property developers have moved into the district in droves due to favourable legislation introduced by the former Government and very favourable treatment by Horowhenua District Council.

Historically Horowhenua has been regarded as “affordable housing” area, by default rather than design, because citizens (even those on low and fixed incomes) could afford to enter and – most importantly – afford to stay in homes in urban residential areas of the district.

Many of these homes are on historic lot sizes of between 500-900sqm and council has signalled an intention to change District Plan rules allowing houses between 500-900sqm to be subdivided within an inch of their life to 250sqm; smaller even that Auckland.

Land and property developers have access to equity and financing options no ordinary citizen wanting to buy an affordable house can compete with. One property locally with a Registered Valuation of $165,000 was sold to Wayne Bishop Investments Ltd for $968,000, one of three land and property development companies owned by deputy mayor Wayne Bishop.

Also, the intention by council to allow much smaller lot sizes in urban areas means existing house prices rise and rental accommodation stock diminishes. The real estate pages of Horowheua newspapers contain advert after advert of landlords listing residential properties for sale. Horowhenua already has a shortage of good rental properties.

Setting aside areas of existing housing as affordable housing zones also protects the heritage and character which will otherwise disappear under the wrecking ball as land and property developers move into provincial New Zealand in their droves.

I witnessed one land and property developer trying to offload two sections that were not selling by advertising them as an “affordable land and house package.” The next week I saw they had both been purchased by another land and property developer.

Locally lifestyle new builds in Horowhenua are selling for $500,000-$600,000. New builds in residential urban areas will no doubt sell for anything from $400,000 to $500,000 which is two to three times higher than traditional house prices.

More equity needs to be restored to the housing landscape. Land and property developers are not social service providers even though the last Government appeared to think they could be according to Community Housing legislation it introduced.

All that meant was big players in land and property development like Willis Bond could buy the former pensioner housing portfolio from a more than willing council for a fire sale price of $5.2 million. Furthermore Willis Bond is only required to provide community housing for 12 years during which time they qualify for rates rebates.

Setting aside affordable housing areas throughout New Zealand is one innovative solution that could stop this landslide of ordinary citizens being permanently locked out of the housing market. One big argument in favour of creating affordable housing zones is the housing stock already exists and doesn’t have to be built.

Read the story on Scoop here.