Discourage real estate as an investment and encourage home ownership for everyone

Capping rents doesnt work never has never will, all you end up with is landlords that let their properties fall into disrepair, The way to fix this problem is to draft legislation requiring all non resident non citizen owners of residential property to sell within 3 years, and limiting rental properties for citizens to 3, banning trusts and business from owning rentals, houses are for people not for profit. As it stands many can pay rent but cant own, where if you can pay rent you really should be able to own, lets get a heart and make some real change in this country that actually makes a real difference in the lives of people that need it.

You could prevent properties falling into disrepair by also having minimum standards for rental properties.

A cap on the number of rental properties is a good option too but why stop at 3 though? If every citizen had 3 rental properties there would be clearly far too many. How about 1 or better still 0? Make it that you need a license to be a residential landlord and only give licenses to not-for-profit organisations that can demonstrate they have the necessary skills to do the job for the benefit of society as a whole.

Yes definitely agree with the comment about houses being for people not for profit.

The ultimate goal should be everyone living in a house which is their own. HIgh rates of home ownership are better for society as a whole as it encourages community.

I would personally create national real estate taxes (rates), that only applied to non-owner-occupied properties. Make it high enough to discourage real estate as an investment. When real estate is no longer a viable investment, and "land banked" properties are too costly to hold, real estate prices will drop, and people will be able to afford homes to live in, but not to rent out to others.

The current system makes it cheaper to own a rental house than own a house to live in. That's backwards. Everyone seems to agree that's wrong. We just can't get agreement on what do do about it.

@marcwhinery I like the idea of a tax on non-owner-occupied properties. It would need to allow for people who own multiple properties for their own use e.g. if they need to travel for work, or have a holiday bach. So should probably only apply when a property is actually rented i.e. not when vacant.

I have changed the discussion title and description to make it more general. Like you say, easy to recognise the problem. Not so easy to come up with solutions. Hopefully can brainstorm some ideas here.

@damonhorrell I know of a number of people who have a holiday bach that they rent out when not using it. It's primarily occupied by people other than them.

So I don't know what I'd do for that. The only people I know with multiple properties for their own use are multi-millionaires who have a house in the city, and a house on the beach outside commute distance for the weekends and telecommuting.

I don't know of anyone outside the top 1% that would even consider two properties for themselves. I don't think we need to make exceptions for those who keep a holiday home in Queenstown in addition to their "main" house in Auckland.

Each family should get one "exception" for primary use. And I haven't solved what to do if two married people want to claim separate homes, as I imagine they would try under this scheme.

Oh, and all real-estate owned by a non-human person (corporations and trusts) would be hit with this fee/tax/rate, unless under active use by that corporation and no other. Though I haven't figured out a good distinction between residential and commercial property, nor whether there should be one.

My favorite part about my suggestion is that the rate could be variable, based on home ownership rates, arbitrary, or a variety of factors. So long as it's not fixed, it would drive out investors, allowing more people to own the home they live in. The risk of the known fee/tax/rate increasing would scare off some investors, even if the rate doesn't change.

So setting up the system for it and not actually charging it would not burden anyone anywhere, and still slow the increase of housing. Make it 10% per year, and the average homeowner will see no increase in cost, but the housing market would drop in half, or maybe more. Though the best outcome is to set goals of home ownership, and start small, and raise it slightly every year until that number is achieved.

Personally I'd rather solve the housing problem with large planned communities on the outskirts of the areas with highest housing prices, integrated with good transport. But nobody wants that.

I know people with a holiday home but it's shared between parents and 3 kids so only 1.25 properties per owner-occupied property. I guess the cost would be small split across 4 households. But probably a CGT would be fairer in this case as then there are no ongoing costs. They worked hard to build the house themselves, travelling 6 hours almost every weekend for a year. I know they have an extra house and some families have none but the policy needs to seem fair to a broad range of people.

I think the idea is to force house prices down (and ideally rents too) but not unduly penalize ordinary people.

One or two of the people in the above family also have rental properties and I think they absolutely should be discouraged from doing that but I see a lot less harm in a shared holiday home (particularly considering the amount of hard work they personally put into it).

Another problem with a property tax is that landlords will just pass it on to tenants by increasing rents.

A CGT may have less of this effect since there is no immediate cost to landlords but it would discourage new people from getting into this market.

Capping rents clearly benefits tenants, plus would reduce house prices by making it less profitable to be a landlord. Would have to combine this with minimum standards for housing. @hugokappes was that your only objection? You implied that it has been tried before? Where and when?

Restricting the number of rentals may not help much since people will just move properties into spouse's or children's or grandchildren's names. Only a limit of 0 would prevent this. i.e. make it illegal to be a landlord unless you're an approved non-profit organisation.

Or another way which would allow limited private rentals and also ensure they're actually liveable is to require the landlords to have personally lived in the property for a period of time before they're allowed to rent it. i.e. must have been owner-occupied for say 1 year before it can be rented for at most 2 years after which time the owner must reoccupy it again. This allows genuine situations of people going overseas and renting their house out but discourages using property purely for profit.

Controlled rent was done in New York,, why are we trying to make this so complicated, introduce taxes and paperwork? just boot out all the non citizen non permanent resident land owners, problem solved.

@hugokappes that doesn't solve the problem of inequality within NZ at all. How many houses are actually owned by foreigners? It's surely a very small amount.

What is a problem though is that many people can't (and never will) afford to buy their own home. A huge part of this is NZer's obsession with real estate as a form of investment that sees our house prices significantly higher than they should be compared to other countries.

Plus I don't believe it should be considered ok for someone to own several properties and generate rental income from them when others can't afford to buy a home to live in.

I'm talking wealth redistribution.

A capital gains tax (as proposed by several parties) is certainly a step in the right direction to addressing this issue but I don't feel it goes far enough.

@damonhorrell

How many houses are actually owned by foreigners? It’s surely a very small amount.

This is one of those issues that are brought up purely to distract us from the real issues. Just like welfare abuse. If we're focused on something stupid like that, we're not focusing on the real issues.

This one is special because it also appeals to New Zealand's xenophobia.

Its a Huge problem there are heaps of houses owned by non resident foreigners and then rented back to us, my neighbor does house maintenance for rentals in Hamilton they look after over 1000 houses over half of which are owned by non resident non citizens, one lady they know from Korea has 17 rental houses in Hamilton,
This is a real issue thats being totaly overlooked.