National and Labour might deny it, but they have a surprising amount in common on housing. But they also have some big differences, and neither of them seems to really understand what to do about state housing. Why not?
Both parties pledge to build more affordable homes, expand the social housing stock and shelter more homeless people. We all know these are valuable outcomes if we are ever to drag ourselves out of our debilitating, shameful and seemingly intractable housing crisis.
But the debate hots up around what politicians identify as the most effective approaches for reaching their goals. Some of the hottest debate, in the media and on the streets, is around the emotive issue of whether the government should be selling state houses.
National plans to reduce the role of government and, as part of the Social Housing Reform Programme, wants to offload thousands of state houses to charities, churches and iwi. Labour, on the other hand, says it would end the state house “sell-off”.
So it’s presented as a case of to sell or not to sell. Yet, as with so many pieces in the great housing jigsaw, arriving at the right answer and doing the right thing aren’t that simple.
There are more than 60,000 state houses in New Zealand, and they can’t all be looked at in the same way. Let’s look at some of the questions policy-makers are routinely confronted with:
- What should we do in those parts of the country where not so many people want state houses anymore?
Currently in many parts of the country, especially in small towns, there is an over-supply of state houses and some of them are sold to first-home buyers. The alternative is to leave them empty. Simple logic (some would call it “common sense”) suggests selling is the right thing to do in this instance – particularly as it helps first-home buyers.
- What should we do when we have too many state houses of one type and not enough of others?
Three-bedroom state houses used to serve a great purpose. But we don’t need nearly so many of them anymore. The demand today is for more one- and two-bedroom homes, and for four bedrooms plus.
This highlights the major challenge facing any large property portfolio owner, which is to ensure you have the right mix of properties to meet demand. So, depending on the location, it makes sense to sell or redevelop some of the excess three-bedroom houses and use the proceeds to buy or develop housing that matches current demand more effectively.
- What should we do with state houses in poor condition?
Once again, a sustainable property strategy is driven by demand. If there are old houses in poor condition in areas where there is high demand, they could be renovated or demolished and new, fit-for-purpose housing built. If there is no demand in the area, they could be sold and the funds reinvested in those parts of the country where there is high demand.
- What should we do with state houses in areas of high value?
This is another hot potato. Do we continue to hold one house which might be worth $2 million, with just one family in a conspicuously expensive area, when if we sold it we could build three or four in a less expensive area and house three or four times as many families? Your call!
- Should we sell housing to support the growth of the Community Housing sector?
This comes back to a fundamental question: should the government be the main provider of social housing? The question goes both to practicalities and to ideologies. Or do we follow the trend in some parts of the world, where growth is being stimulated through the community housing sector? Predominantly comprised of church and other charity-based groups, the sector provides specialist support services to people in need. And these days the definition of “need” definitely includes housing.
There is no blanket policy that will work for such a large property portfolio. Which means debating the issue as if it’s a black or white “sell or not sell?” proposition turns out not to be very helpful. And when it becomes a political football, that almost certainly enhances the risk of not making the most of the large property portfolio the taxpayer owns.
We need is a clear and transparent masterplan so that the individual decisions become much easier.
Rather than contorting ourselves around one or other of the “sell” or “don’t sell” propositions, let’s try to manage our property portfolio in a manner that is both socially aware and business-like.
And, since you asked, this is not about sitting on the fence. It’s about making sure we get the damn fence built! So why don’t we do this:
- Provide houses that are right for what tenants need.
- Make a sensible decision for each property – whether it be selling and re-investing funds, renovating or redeveloping.
- Adopt a clear set of objectives about “what success looks like”.
- If we are selling assets, be clear about our reasons for doing it, when we will do it and whether we sell at market price or discount the price to achieve a desirable social objective.
It’s not really that hard, is it?
Leonie Freeman has worked in property in the private and public sectors, at central and local level. She was the strategic property adviser in the setup of the Auckland Council, has been the general manager of development for Housing New Zealand and has led a strategic government review of social housing. Find out more about her proposals for housing in Auckland at thehomepage.nz
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