How Special Housing Areas are failing & the immorality of land bankers

It's time to call out land bankers and require urgent action, because Auckland's lack of houses is driving people in their cars

If it had come from a less reliable source, I'd find it hard to believe. Sure, it's anecdotal and it's an estimate, but it also leaves you asking what we've come to in this country. One in ten garages in South Auckland, says the Salvation Army's Alan Johnson, is being used as a home. And he knows his stuff. 1 in 10.

It's one of several striking details revealed by Mike Welsey-Smith in his report today into the hidden homeless. When we talk about homelessness it's usually about the individual living rough on the streets, maybe a group squatting under a bridge.

But what social service agencies are now reporting is a growing - yes, growing - group of Kiwis living in their cars or renting garages. Social workers in South Auckland to a person say they can't remember it being this bad. Rents have risen 25 percent in five years and emergency houses are full. 

If you can't afford the rent, there's nowhere to go. Except your car, or perhaps someone's garage.

And this isn't just extended families bunking down in a garage while they wait for a house, as we've seen for years. This is a new rental property market; people paying strangers to live for months, even years, in a garage. You won't see it on TradeMe, but we're talking about $300 or more a week. One family had been living in a garage for two years and are paying $380/week.

Wesley-Smith was taken to Bruce Pulman Park in Takanini by Manuaku East MP Jenny Salesa, where families and individuals can be found most nights near the public toilets, sleeping in their cars. Salesa says one car-dwelling family a week turns up at her office seeking help; half aren't engaged with the Ministry of social Development.

Now there are many and varied reasons why people end up in this plight, but it's no exaggeration to draw the line between the glee of those of us lucky to own property in Auckland and the misery these folk are enduring.

As house prices keep rapidly rising - and I'm one whose home earns more per annum than I do - investors are encouraged to borrow and buy. The capital gain's just too easy. But as growing demand and limited supply drive prices up, the more you have to borrow. And the more you borrow, the more you charge in rent.

When wages have only gone up 10 percent in the same time those rents have risen 25 percent, you can see why some can't keep up and are forced into those cars and garages.

So it's time for mum and dad property investors to ask themselves a few hard questions. If the cost of your borrowing is forcing people to pay rents they can't afford, maybe you shouldn't be in the landlord business. Even if you are only one stone in the mountain, have you borrowed too much to morally justify your investment?

But even more in the gun are the property developers, especially those who are land banking in this market. It's time to call out those land bankers and say enough.

Financially, it's a no-brainer for them. Especially if they're lucky enough to own land in a Special Housing Area with all the privileges of accelerated consents and greater intensification attached. You're quids in, the government has put a premium on your land and land values are skyrocketing. So why go to the risk and hassle of actually building?

The answer: Because your land banking is making kids sick. It's driving families into their cars. It's increasingly immoral to fiddle while Auckland burns.

Auckland desperately needs houses and if you're a developer sitting on land, then you're putting your own finances ahead of the need of families to have a roof over their heads.

Housing Minister Nick Smith denies that land banking is a problem in his Special Housing Areas. He's right when he say the sections are being created, but sadly there's a disconnect at the next stage because the vast majority those sections are standing idle.

SHAs have been going for two and a half years in Auckland, creating 56,000 sections. Great. The government and council have got the ball rolling.

But the tragic fact is that 'the market' is stopping that ball in its tracks, and no-one's doing anything about it.

In two and a half years, only 1000 homes have been built on those special housing sections. Yep, 56,000 sections, 1000 homes. Not much of a return for all the privileges granted to owners.

Smith says it's not land banking, that massive earthworks are under way and building rates are increasing. Those last two statements are true, but the first is nonsense. And I suspect he knows it (he's called land banking "offensive" and "the biggest problem" facing Auckland housing in the past), because he conceded on The Nation today that he's starting to send some stern letters out to developers who aren't bothering to develop.

The government's own figures show nearly 4,000 consents have been granted on those sections. That consent means a house has to be built within two years. But that's the extent of action. Most owners are sitting on their hands... and their lands.

Clearly this market is broken. It's time the government put a time limit on those special housing rights. It's time to require those land owners to 'use it or lose it'. And before you say that's interfering with the market, consider the fact that it's government policy that has put a premium on this land in the first place. Where's the quid pro quo?

Of course this is only one small part of the housing problem. There are other solutions to try, such as banking restrictions, a capital gains tax, government building programmes, foreign buyer restrictions, maybe putting an end of negative gearing and forcing rental properties to really wash their own face.

But the government's and council's key plank in growing housing supply in Auckland
(SHAs) is clearly being hijacked by developers. And those developers are laughing all the way to the bank while families pull out the sleeping bags, push back the seats and prepare to spend yet another night in their car. It's time to act. Urgently.