Providing council rental housing

The Problem: Many people and families on low incomes are struggling with unaffordable rents which are taking up to 70% of a household income. Christchurch is over 400 council rental houses short of what it had before the earthquakes and the city has a waiting list of close to 1000 for state houses and council rental housing.

Solution (scroll down for details):

    1. Build 1,000 affordable council rental (and rent to own) homes in the next term of council
    2. Delay plans for a multi-purpose rugby stadium till every child in Christchurch has a warm, dry affordable home to live in.
    3. Require property speculators and property developers to pay the added value of land they own when council zoning changes raise the land value (“betterment” charges) This would provide tens of millions to be invested in additional affordable, high quality council rental (or rent to own) properties
    4. Establish a “Bill of Rights” for Christchurch tenants in rental accommodation
    5. Pressure the government to allow Christchurch City Council to impose rent controls while the city rebuilds its council rental housing.
    6. Require new developments of more than 10 homes to have a minimum of 50% of affordable homes in the development. The benchmark for affordable means rent or mortgage at no more than 30% of a person’s income.

1) Build a minimum of 1,000 affordable council rental (or rent to own) homes in the next term of council.
What would this look like?

    • Affordable public housing is a core responsibility of local government. Christchurch City Council owns many hectares of land much of which would be suitable for housing. Other land would be acquired as needed. These 1,000 homes would be built by the council utilizing cheaper rates for borrowing, cheaper building supplies through bulk-buying arrangements and reduced compliance costs. These homes would set the standard for affordable living in Christchurch.

What would it cost?

    • Approximately $200 million which would be paid back by council tenants through rent, or rent to own, payments. This income would also fund reinvestment for building additional affordable rental homes. The $200 million would come from the government’s promised $300 million for Christchurch to spend on our priorities.

Why don’t we just leave it to the private sector?

    • The private sector has failed to provide the homes Christchurch needs. They have built no affordable homes (in the sense that those who need homes can afford them) in the city for the past decade because developers make bigger profits building large houses ($500,000 up) on small sections (eg Wigram) which are well out of reach of most tenants or families wanting to rent or buy.

What are the benefits?

    • Christchurch City is already thousands of houses short for its existing population. This program will directly address this need as well as having the flow-on effect of bringing down rents across the city as the supply of affordable rental properties increases.

2) Delay plans for a multi-purpose rugby stadium till every child in Christchurch has a warm, dry affordable home to live in

    • This would be a simple realignment of the council’s capital spending priorities

3) Require property speculators to pay the added value on land they own when council zoning changes result in increased land value
What would this look like?

    • Currently property speculators and developers buy land on the city’s rural outskirts and within the Christchurch urban area and “land-bank” it while waiting for the value to increase through council zoning changes. This policy would mean that any increase in the value of the land through changes to council zoning would be charged to the developer as “betterment fees” when the land is developed.
    • Note: Before 1953 betterment fees were charged regularly at 50% of the increased land value and were pivotal to housing development. They were used for example to develop almost the entire Hutt Valley in the decade following the Second World War. We can do the same thing for the housing crisis facing low-income families in Christchurch now.

What would it cost?

    • Nothing. It would do the opposite, bringing in additional revenue to council.

Why not leave the profit to the speculator?

    • The speculator or developer has done literally nothing to justify receiving the unearned income which accrues as a result of a council decision to rezone land. Christchurch Council residents should benefit rather than speculators or developers. “Betterment” fees are commonplace overseas and were compulsory in New Zealand till they were abolished by National in 1953.

What are the benefits?

    • This would collect tens of millions of additional funding each year for further council investment in affordable housing.

4) Establishing a “Bill of Rights” for Christchurch residents in rental accommodation
What would this look like?

    • This would be drawn up in consultation with tenants and the wider community. It would cover issues such as tenure; rent and “Warrant of Fitness” standards. For example Christchurch Council could draw up WOF criteria, rate rental properties A to F (as we do for commercial food outlets such as cafes) and publish the results on-line with listed improvements required as appropriate.

What would it cost?

    • No extra cost – to be accommodated within current council work priorities.

Why not leave the market to itself?

    • Families are at the mercy of “the market” because of the dire shortage of affordable rental housing. The market loads costs onto low-income families whose income is constrained not by the value of their contribution to society but by having their work valued by “the market”. “The market” will only provide a cardboard box under a bridge for some tenants.

What are the benefits?

    • Encouraging better housing for families and lower rents where these are desperately needed.  Better housing means better health for children and families with better educational outcomes etc.

5) Pressure the government to allow Christchurch City to impose rent controls till Christchurch’s housing affordability crisis is over
What would this look like?

    • Rents in Christchurch are too high with families across all parts of the city paying more than 30% of their income in rent. These high rents are caused by a shortage of affordable rental housing across the city. This policy would require the council to set a rentals policy and allow tenants to request a council evaluation of the rent they are being charged. The council would have the ability to reset the rent if it is outside the council’s rental policy guideline. This policy could reduce rents in Christchurch by up to 20%.

What would it cost?

    • No additional cost. To be accommodated within current council budgets.

What are the benefits?

    • This would allow tenants to receive an independent evaluation of the rent they pay and have it fixed in cases where it is too high. This would also drive many “property investors” out of the housing market which in turn would lower rents and the price of houses themselves. Currently approximately half the houses sold in Christchurch are bought by property investors rather than first home buyers.

6) Require all new developments of more than 10 homes to have a minimum 50% affordable homes in the development
What would this look like?

    • Requirements like this are a typical feature of areas overseas where affordable housing is an issue.

What would it cost?

    • No additional cost.

Why not leave it to market forces to decide the affordability of property?

    • The market is the problem. It has produced no affordable houses in Christchurch for at least the past decade.

What are the benefits?

    • Self evident.