Ring Fencing Matters

[Bobsyouruncle]

Labour and TOPS. Is that you Gareth? Any cats left in your neighbourhood??

[Courham]

My point is that in recent years, especially in Auckland, landlords have been locking an increasing portion of the population who would like to own their own homes, out of the market, and they're simply being non-productive rent-seekers in doing so. Overall it's bad for society.

We're a low-wage, low-productivity country with very high private debt. It's because too many people are investing in housing, which is unproductive - hence the high debt, low productivity and low wages. It's too hard / expensive for businesses to access capital in this country because of the way the playing field is tilted in favour of property.

This I agree with. We are a low wage economy but if you can't stand the heat get the hell out of the kitchen! I have shaken my head for the past 15 years at Auckland housing prices wondering how the hell young families can ever get a house there and yet prices have gone up and up and up over that time (well with the occasional dip. If you can't afford to buy there but want to own a home then leave and look elsewhere and move to/buy where you can afford.

Many regions have lower unemployment rates than Auckland, incomes almost the same in the provinces but costs (including housing) a hell of a lot less. Let the market do its thing, if Auckland continues to remain unaffordable no one is holding a gun to people's heads saying you must stay. Auckland has been a drain on the economy of the country for years, and having one congested, poorly designed megacity is bad for the NZ economy and the country as a whole yet little is being done to invest in the regions and encourage migrants to move- instead more and more migrants are stopping in Auckland, pushing wages lower and lower while house prices keep going up and adding to its ghettoisation. It is utter madness!

Affordability data out today from interest.co.nz (http://www.interest.co.nz/property/8...-affordability)
Here’s how much of their take home pay a couple where both are aged 25-29 and earning the median wage for full time work in their region, would need to set aside each week to cover the mortgage payments ion a lower quartile-priced home in their region:
Northland 23.7%, Auckland 48.4%, Waikato/Bay of Plenty 25.0%, Hawke's Bay 19.0%, Manawatu/Wanganui 14.2%, Taranaki 18.4%, Wellington 28.3%, Nelson/Marlborough 24.9%, Canterbury 22.7%, Central Otago/Lakes 40.1%, Otago 17.2%, Southland 10.2%, All of New Zealand 22.0%.

As for unemployment rates (From stuff: http://www.stuff.co.nz/business/8896...to-52-per-cent)
Canterbury has the lowest unemployment rate of any region in New Zealand at 3.7 per cent, followed by Otago at 4 per cent and Nelson, Tasman, Marlborough and the West Coast at 4.1 per cent. Gisborne and the Hawke's Bay has the highest unemployment rate at 8.1 per cent, followed by Northland at 7.3 per cent and Taranaki at 6.8 per cent. Auckland's unemployment rate, at 5.1 per cent, was unchanged on a year ago, while unemployment in Wellington is 5.6 per cent, up 0.3 percentage points on the end of 2015.

Seems to be a correlation there between where the unemployment rate is lowest and houses are most affordable, at least in the South Island- and there are definitely shortages of skilled workers down here. In the North Island cheaper houses seems to also mean fewer jobs though If you are going to work in a poorly paid service sector job why the hell would anyone do it in Auckland?

Craig

[Perry]

Not the same as any other business type, because other businesses exist to productively serve society. Once again, I am answering the question "why should landlords be treated differently than other businesses for ring-fencing losses". My answer is that they aren't the same as other businesses.

Of course they aren't. Neither is a hire centre the same as a cake shop. Or a shoe shop the same as a lawyer. Or a tyre shop the same as a gymnasium.

I repudiate your idea that - because I provide living accommodation to tenants - I do not productively serve society. An appeal to authority logical fallacy wont change that. Sticking your head in the ground and denying the obvious does not change it, either.

I regard your perception and opinion as an eloquent sophistry, but a sophistry, nonetheless.

I'll agree to disagree with you.

[Perry]

Puts Moderator hat on . . .

It would be helpful if the debate remained measured and free from personal insults and snide remarks.

Take a few deep breaths and if you still can't keep it seemly, please either don't post or unsubscribe from this thread.

Perry

[Lanthanide]

Of course they aren't. Neither is a hire centre the same as a cake shop. Or a shoe shop the same as a lawyer. Or a tyre shop the same as a gymnasium.

Those are all different types of productive business. Many landlords are not productive businesses - they aren't producing anything. If their (cashflow positive) house was sold to the tenant, the tenant would not somehow be missing a service that was provided by the former landlord owner.

Again, as I've mentioned many times, this doesn't apply to landlords who actually construct properties, renovate them, or are renting a house to someone who doesn't want to or can't buy a house.

I repudiate your idea that - because I provide living accommodation to tenants - I do not productively serve society. An appeal to authority logical fallacy wont change that. Sticking your head in the ground and denying the obvious does not change it, either.

Ok, so how is renting a house to someone who wants to buy that house, productive? How are you adding value for that person? What service are you providing them? If the government made landlording illegal tomorrow, how would that tenant be worse off?

[Lanthanide]

If you are going to work in a poorly paid service sector job why the hell would anyone do it in Auckland?

There are a multitude of reasons why people end up in service jobs. For a lot of people, it comes down to bad luck. Others never gained appropriate skills for whatever reason.

As to why people do it in Auckland - because when you're on the bones of your arse, with an existing support network in the place you live, and family commitments, moving to another region without guaranteed work is incredibly foolish and in many cases simply financially impossible.

The government had an amazing (they thought) initiative where they'd pay beneficiaries $3,000 to move out of Auckland. Very few people took them up on it, because they all did the sums and knew that $3,000 wasn't nearly enough to cover all the costs involved and make it a rational choice.

[Bob Kane]

Nope, you can't shorten it to that, because you're missing out all the detail that actually matters.

I think I can shorten it to that - all that detail is just a confusing smoke screen.
It appears you are contradicting yourself.

[Lanthanide]

I think I can shorten it to that - all that detail is just a confusing smoke screen.
It appears you are contradicting yourself.

Nope, not contradicting myself at all.

Saying you want to ignore the actual meat of my argument because it's "a confusing smoke screen" simply means you either don't understand it, or don't want to acknowledge it because you don't have any response.

[Bob Kane]

If anyone steps up and agrees with you would decide if there any meat in your argument.
I think there flaws in your argument and you are playing the devil advocate just to tease everyone.
Fair enough. It's working.

[Lanthanide]

Nope, I don't play devil's advocate.

I figure this is a heavily right wing forum, and no one here is going to defend labour policy, so I might as well step up, since I generally agree with Labour's policies.

If you can clarify what you think are flaws in my argument, I'd be happy to discuss them.

[Perry]

Ok, so how is renting a house to someone who wants to buy that house, productive?

Plurium interrogationum. Your hypothesis presumes a desire to purchase and presumes the ability to do so, as well as over-simplifies the problem.

Define productive across the range of businesses which we have used as examples?

Many landlords are not productive businesses - they aren't producing anything.

Neither is a hire centre: it's renting equipment. Neither is temping agency: it's renting staff. Neither are prostitutes: they are renting their bodies. Neither is a bank: it's renting money. Well, maybe a bank is productive. It's producing debt.

If the government made landlording illegal tomorrow, how would that tenant be worse off?

At its simplest: the tenant would have nowhere to legally live. (Reductio ad absurdum)

As I observed before: I regard your perception and opinion as an eloquent sophistry, but a sophistry, nonetheless and I agree to disagree with you.

[Lanthanide]

Plurium interrogationum. Your hypothesis presumes a desire to purchase and presumes the ability to do so, as well as over-simplifies the problem.

You have to start with some assumptions if you want to argue anything about anything.

Of course there are people who are living in rental houses, who would like to buy houses. We know this by the fact that they have a name - first home buyers. Such people do in fact exist in reality, so it's not a "presumption" to consider these people. Similarly, many of these people would have the ability to buy houses, if it weren't for landlords out-bidding them when it comes to auctions. There are many many stories of families in Auckland who got pre-approval for lending up to something like $650,000, and they turned up to auction after auction in their chosen suburbs - they just wanted ANY house to buy and live in, only to repeatedly miss out, sometimes by only a few thousands of dollars. After several months of that, there weren't any houses in their chosen suburbs that were worth even turning up to the auction for because house prices in the city had been rising so quickly, so they had to turn to less desirable suburbs.

Part of the reason that landlords can out-bid owner-occupiers, is they get a subsidy from the government for any losses they incur on the property, to the tune of 30-33% against their other taxable income. Owner-occupiers don't get that advantage, when paying the same size mortgage on the same property.

Define productive across the range of businesses which we have used as examples?

A business, that if it didn't exist in it's location and place, the service wouldn't be provided. So if a hairdresser didn't exist, then no one could get their hair cut at that location (yes, obviously, other hair dressers exist at which you can get your hair cut).

If property 44 High St was owned by a landlord, then someone can occupy that house. If the property 44 High St was owned by an owner-occupier instead, then someone can occupy that house.

The ownership status of the house doesn't change the fact that someone can live in it.

Neither is a hire centre: it's renting equipment. Neither is temping agency: it's renting staff. Neither are prostitutes: they are renting their bodies. Neither is a bank: it's renting money. Well, maybe a bank is productive. It's producing debt.

Those are productive services. Someone wants to rent equipment. If the hire centre didn't exist, the equipment wouldn't be there to hire. A temping agency charges an overhead for streamlining the matching of employees with employers, a service that employers obviously find valuable or they wouldn't pay for it.

At its simplest: the tenant would have nowhere to legally live. (Reductio ad absurdum)

The only person carrying out reductio ad absurdum is you. This is a thought experiment to demonstrate that landlords aren't providing productive services to people who want to buy houses, and otherwise would be able to if it weren't for the landlords locking them out of the market. If the government outlawed supermarkets tomorrow, that would be a massive inconvenience for a lot of people - we'd all have to go back to the butcher, the baker and the general merchant instead of it all being under one roof. If they outlawed landlording, then where is the inconvenience for the people who want to buy a house and otherwise would if landlords weren't buying them all first? Certainly, there is a big inconvenience for the people who have no interest, or any real capacity to own a house, but I am not talking about those people, as I have already acknowledged, landlords provide a productive service for people who fall into those categories.

If landlording were made illegal, all rental houses would not be demolished, they'd continue to exist and be able to serve their actual primary purpose - housing people, not generating profit for others (that's what productive businesses are for). The houses would be sold to owner occupiers (or possibly weirdos who like to collect houses as keepsakes, I guess).

[Bobsyouruncle]

If landlording were made illegal, all rental houses would not be demolished, they'd continue to exist and be able to serve their actual primary purpose - housing people, not generating profit for others (that's what productive businesses are for). The houses would be sold to owner occupiers (or possibly weirdos who like to collect houses as keepsakes, I guess).

Actually the immediate outcome would be homelessness on a grand scale. The government can't afford to not have private landlords, they provide an incredibly productive service to the nation, housing those who don't own their own homes.......

[Lanthanide]

If they outlawed landlording, .... Certainly, there is a big inconvenience for the people who have no interest, or any real capacity to own a house, but I am not talking about those people, as I have already acknowledged, landlords provide a productive service for people who fall into those categories.

Already addressed.

[Perry]

If landlording were made illegal, all rental houses would . . . . be able to serve their actual primary purpose - housing people . . .

So now you're implying that a house that a LL is renting to tenants is not serving the house's primary function of housing people. What then of Housing New Zealand? That aside, your assertion is illogical, being based on an hypothesis that's so unlikely that it's not even a remote possibility.

You said you favour Labour's policies, so perhaps politics is a calling you could consider?

After all, Blenglish used similar logic to yours when - in 2010 - he said that it made no sense to allow depreciation on buildings which appreciate in value.

What's scary about that, is that we (real people) know that the buildings are still wearing out and that they are an asset that will need to be replaced at some stage. What's even worse is a Finance Minister who doesn't know (or lies about) the difference between inflation and value.

The houses would be sold to owner occupiers.

Only if they wanted them and could afford them and maintain them and pay the rates and pay the insurance, etc., following purchase.

I've been told that, many years ago, the government of the day decided it was not appropriate to be a large scale LL, so it encouraged private enterprise into providing residential rental accommodation. Something that - if true - it has obviously forgotten.

Renting buildings is the same as any other renting business. And for tax purposes generally, the same as all other businesses.

Your sophistries do not persuade me.