Tuesday, June 28, 2011

A Great Land Price Rort

CERA chief, Roger Sutton, has expressed concern that the Price of subdivision sections ready to build on are beyond what a relocating refugee from the "red zone" can afford.

YES, ever rising "costs" of planning, resource consent costs, reserve contributions and all the other bureaucratic red tape involved in presenting a "new" section in much of urban NZ is inflated by ticket clipping add-on costs. He also suggested that some developers had raised prices following the "solution " announced last week, a direct consequence of the "managed" rezoning policy of council. His problem, the owner of a wrecked house on land valued at around $100 000 now is looking at a section priced at over $200 000 to relocate.

Local authorities have regarded these subdivision charges as an income stream and preserved that income by seriously "managing" the supply to artificially create demand.

During an ill-advised foray at Community Board level, the potential of this funding stream was presented to us by officials.
A very accurate portrayal of socialism at work in the form of an airhead wannabe politician suggested we raise the reserve contribution from 10% to 25%, it was just that simple to her fundy socialist mores.

How can land zoned rural at City's boundary, @ $25 000 per Ha suddenly be valued @ $5 million per Ha (20 sections of 450 sq m @ say $250 000 each), I know, very simplistic but near enough for an example.

Heres a little of that why.
1 Rezoning often over the objections of local bodies, nimbys and other assorted professional protesters often driven by no more than pure envy and or greed.
2 Can go to the Environment court with an army of lawyers maintaining their income stream.
3 Compliance with the rules that will have the developer meeting standards higher than existing infrastructure of the local bodies, yes plural, local and regional plus central government's always sticky fingers. Treaty issues consultation (solved with Koha), environmental issues real and imagined, social issues mostly imagined or made up to suit for and against positions.
4 Ignoring practical solutions for sewerage, water supply, and stormwater that don't fit with the rigid rules developed by experts with pieces of parchment from a University maybe half a world away, that completely ignore composting toilets, rainwater collection, allowing stormwater to run to waste along existing waterways and utilizing modern septic tank systems and only requiring the 'Council" to deal with the liquid effluent.
5 Another round of appeals as these rules require infrastructure that passes or crosses land not involved.
6 the ubiquitous "reserve contribution" that started life as a source of funding for parks, pools halls etc whether appropriate or not but has now morphed along with profits from consents, as Income for the Local Authorities.
I wont have covered them all and others will have a better grasp of what inflates exponentially the land cost from around $1000 for a 450m section to $250 000 that of course includes a reasonable profit and risk cost. BUT THAT MUCH.

I am for ever in support of the market, free enterprise and buyers and sellers arriving at an agreed price but once the elected, most of whom would not recognise commercial reality if it confronted them in their living room think of it all as a way to legally collect the means for them to assist their appeal to a gullible electorate and to reward the army of those who administer the monster, Mr Sutton's problem manifests as the natural consequence.

1 comment:

Anonymous said...

This is a national emergency. One solution is for Government to acquire to at the market value prevailing before the quake. Another could be acquire under the Public Works Act (if it still exists) Sections could then be sold at prices equivalent to the rateable land value component of the compensation being paid by government and EQC.

What about long term leases?