Sunday, February 21, 2010

Simple reason why we have "unaffordable" housing

From Granny:
"Scandalous" red-tape charges are preventing much-needed affordable housing from being built around New Zealand, real estate experts say.

Figures released by one developer reveal almost 40 per cent of the $250,000 cost of building a pair of two-bedroom units in Auckland went on a staggering array of bureaucratic fees, consents and permits.

The anonymous developer, who builds in Auckland suburbs with housing shortages, said the fees were blocking new low-cost housing projects.

Of the $93,750 in fees he was charged, $46,000 went to the Auckland City Council as a financial contribution. The resource consent cost $23,000 and an ACC consent, $8500. Water connection was $8300 and an electricity connection fee $5500. Other fees were paid for a right of way consent charge and vehicle crossing permit.

"This is why affordable medium density housing is a myth in Auckland city," the developer said. "It really is a ... scandal."

This was me in August last year:
In one of the most disgraceful and unaffordable policies ever inflicted on ratepayers, the North Shore City Council has increased their development contributions by 150%.

Mr Blincoe expected a $13,000 development contribution bill from North Shore City Council when he built on a Torbay property.

He got a nasty shock when that figure leapt to $32,500 after his house plans were lodged late last month.


The charges have been steadily increasing as the policy has been changed to more accurately reflect the cost of growth, he says.

For example earlier wastewater charges of $800-$900 are now about $14,000, says Mr Cleaver.

Nothing else needs saying. Except this from said Granny article.

But Local Government New Zealand environment and regulation manager Irene Clark defended the charges, saying that they were an "actual and reasonable" cost.

She said they went towards processing applications, inspections and administration costs.

The cost of processing, inspections and administration is the wages paid to council staff to, um, er, process, inspect and administer. Wages are paid through rates.

As an aside, I read the other day that North Shore City Council has removed user pays on Takapuna business parking. The impact on rates was .3%. That's quite significant. Somehow if someone from Manurewa wants to come to Takapuna to shop I, as a North Shore ratepayer, have to pay his parking.

Roll on November.


Lou Taylor said...

Good post Gooner.
We will never have affordable housing in Auckland whilst thousands of bureaucrats are clipping the ticket. i called into Rodney HQ the other day in Orewa and couldn't find a park. Expecting a big queue at the counter I was surprised to find none and have the choice of 3 frontline staff. All the car were obviously for the workers.

I await the news that 5000 council staff loose their jobs under the supercity but I suspect that it will be a long wait.

K said...

"Section prices in Auckland tripled since mid 2000 to mid 2007 Real Estate Institute figures show" quotes commentator Bernard Hickey.
Coincides with the growth in all bureaucracy methinks...

KG said...

Great post Gooner. I've linked to it over at CR.

Anonymous said...

Well if all those that pay rent were made to pay rates as well the situation might change.
The ratepayers would then not have to pay for all the nice to haves and all the trimmings that the elected foist upon the rate payers. In case you can't figure the difference, a ratepayer is the owner of the property, the voter is on the electoral tole and can vote for the politician that gives out the best lollies knowing full well that it is not going to cost him/her a single cent.
Landlords are not allowed to charge tenants for rates other than metered water. Where no meter exists they cannot even recover the tenants living costs from them. Same for rubbish. Council collections as part of rates are free to the voter, but cost the ratepayer.

KG said...

"Well if all those that pay rent were made to pay rates as well the situation might change."

You mean a landlord doesn't factor in the cost of rates when calculating rent??

Ciaron said...

Mine sure as shit does.

Anonymous said...

But rat-payers still keep electing council officials who don't change anything for the better.

Lou Taylor said...

The simple fact is that the type of person who desires to be a councillor doesn't really want to change how things are done. It is in their best interest to keep the status quo.

Plus they are up against council staff who definitely want to maintain the system of cost plus. Their continued pay cheque depends on it.

Anonymous said...

"Development Contribution Levies." These are the fees which, by their very existence reveal that the enormous rating revenues realised by local authorities are insufficient to meet the costs of the stupid programmes self-aggrandising councillors adore.

I have a client building a warehouse on his own land for use by a charity. The building costs are circa $540,000 but the Palmerston North City Council is demanding $48,000 in levies over and above their building consent fees and ongoing annual rates. Check out the 2002 Local Government is a rort!

Local Authorities are a parasitic blight on this country.


Anonymous said...

But rat-payers still keep electing council officials who don't change anything for the better.

That's because - thanks to Hellen - it's not rate-payers who vote: its every looser, bludger, codger over 18 living in the council area. Commercial ratepayers have absolutely no vote on councils.

first fix that - then the rates will take care of themselves.

$250,000 cost of building a pair of two-bedroom units

$125k for a two-bedroom unit - frankly if the council only charges $50 fees on each unit - yes I can see "affordable" housing becoming a reality.
Were I Rodney, I'll make damn sure the fees were up to say 100K minimum.

who the fuck wants bludgers, or codgers, or the kind of scum who can pay only 250K for a house living next-door

that's what Hamilton is for!

Unknown said...

Great article Gooner, Bernard Hickey has similar thoughts in New Zealand Herald on the weekend, also see North Shore Housing Crisis here:

Adolf Fiinkensein said...

Yes, you've got to watch those damned rat payers like a hawk.


Excellent post Gooner, reflecting many of my own thoughts.
As for cheap parking, this can benefit the town centres.
This is the main way mainstreet Hamilton is fighting off compition from The Base.
Certainly the cost of parking in Auckland deters me from popping into the CBD.
Councils have to weight up the costs of expensive parking if it means an empty high street.

Anonymous said...

It never ends.
Weight up

No wonder you have no blog