By Bernard Hickey
It's time the Reserve Bank found a way to rein in New Zealand's biggest landlords, who are pouring plenty of fuel onto Auckland's housing market again.
It's true the High Loan to Value Ratio 'speed limit' imposed in October last year did cramp their highly leveraged style somewhat, but it was even more restrictive on First Home Buyers, who usually have less equity to contribute.
Now mortgage brokers are reporting the fixed mortgage rate reductions of as much as 50 basis points to well under 6% in the last month have fired up the investor market again in Auckland.
The election result removing the prospect of a capital gains tax for the foreseeable future was the final green light.
It's no accident that single level brick and tile units are fetching record sums in suburbs like One Tree Hill, often double the capital values assessed just three years ago.
The 30-40% increase in prices in many Auckland suburbs since the last rating valuation has built up the equity needed for rental property to get back on the leverage wagon, even if it less than the 80% threshold deemed to be high LVR by the Reserve Bank.
An NZIER analysis of CoreLogic data that was published in July found 45% of buyers in 2014 were rental property investors, while 28% were owner-occupiers moving into another home and just 19% were first home buyers.
Westpac even changed its mortgage marketing team this year so it could better service the growing rental property sector. That was reflected in Westpac's annual results, which showed its mortgage lending grew by NZ$1 billion in the last six months, faster than other banks.
This surge in rental investor borrowing in Auckland is often happening through mortgage brokers because investors tend to use brokers more aggressively to get the best deal.
It is even encouraging BNZ, which has not used brokers for more than a decade, to look at using brokers again.
In 'normal' inflationary times the Reserve Bank would simply put up interest rates to cool down the market, or more usually, wholesale interest rates would rise naturally and push up fixed mortgage rates.
But New Zealand's inflation and interest rates are far from normal, and neither are the rest of the world's.
Central banks in Japan and Europe are ramping up their efforts to pump more zero percent cash into their economies, which in turn is helping flood the rest of the world with cheap money.
The Reserve Bank couldn't use its interest rate tool last year because inflation was so low and the New Zealand dollar was so high, which prompted it to invent its high LVR speed limit. This 'macro-prudential' tool was designed to reduce the risks to the financial system of too much highly leveraged lending into a housing market that international experts judge to be anything from 20% to 40% over-valued.
This year the Reserve Bank jumped ahead of its fellow central banks to put up its Official Cash Rate to slow inflationary pressures it thought were galloping over the horizon.
Unfortunately for the Reserve Bank, annual inflation has been surprisingly subdued at just 1.0% in the September quarter. This forced the Reserve Bank last month to pause its rate hiking plans for the foreseeable future and some economists are even suggesting a cut some time in the next year.
The Reserve Bank is expected to update everyone on the future of the high LVR speed limit at its half yearly Financial Stability Report on November 12.
The limit was supposed to be temporary. The bank has previously indicated it could be eased towards the end of this year.
But there are few signs that finance companies, which are exempt from the rules, are getting around the speed limit to corrode its effectiveness, as some had feared.
That gives the bank the option of leaving the limit in place until well into next year to keep at least a small rein on the investors.
But it could do more.
Last year the Reserve Bank proposed a new rule that would force banks to put aside more capital to back loans to rental investors with more than five properties.
It was supposed to apply from July, but was initially delayed until December so banks could work out how to comply with the rule.
The banks argued it would be difficult to know which investors had more than five properties, given they often spread their loans around various banks and properties may be owned by more than one legal entity.
They also said such a rule would increase costs for borrowers, given higher capital requirements would force the banks to charge higher interest rates to maintain their profitability.
This week the Reserve Bank quietly delayed implementing the 'five properties' rule again until the first half of 2015 while it did more work with bankers to make it practical.
The regulator should keep pressing to get this control in place before the heat simmering in the Auckland market fires up again. The rest of New Zealand already can't afford to keep paying Auckland interest rates and coping with an Auckland-powered currency.
Neither can the Government, which faces mounting budget pressure to pay higher accommodation supplements and rent subsidies as rents inevitably rise to follow rental property prices.
The humble brick and tile units in Greenlane, One Tree Hill and Onehunga look set to be the Reserve Bank's and the economy's next nemesis unless it can rein in the investors.
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A version of this article was first published in the Herald on Sunday. It is here with permission. The NZIER report is here.
82 Comments
This week the Reserve Bank quietly delayed implementing the 'five properties' rule again until the first half of 2015 while it did more work with bankers to make it practical.
How do you capture the regulator? Pay them to look the other way? View page 37 (39 of 100)
A good example is exposed here.
Officials tapped by the Obama administration to lead the Trans-Pacific Partnership trade negotiations have received multimillion dollar bonuses from CitiGroup and Bank of America, financial disclosures obtained by Republic Report show.
Stefan Selig, a Bank of America investment banker nominated to become the Under Secretary for International Trade at the Department of Commerce, received more than $9 million in bonus pay as he was nominated to join the administration in November. The bonus pay came in addition to the $5.1 million in incentive pay awarded to Selig last year.
Michael Froman, the current U.S. Trade Representative, received over $4 million as part of multiple exit payments when he left CitiGroup to join the Obama administration. Froman told Senate Finance Committee members last summer that he donated approximately 75 percent of the $2.25 million bonus he received for his work in 2008 to charity. CitiGroup also gave Froman a $2 million payment in connection to his holdings in two investment funds, which was awarded “in recognition of [Froman's] service to Citi in various capacities since 1999.” Read more
Sure when the Obama administration appoints figures from within the establishment, they come with a clear agenda.
However, what does that have to do with the Reserve Bank of NZ and page 37 of that report?
I don't think the RBNZ paying it staff to do it's job, and giving them training opportunities is evidence the regulator has been 'captured'. How are the RBNZ staff to be paid if not by the RBNZ? Or have i completely misinterpreted page 37?
In your endeavour not to understand you may wish to reconcile the difference in payscale for that which is presumably paid to the RBNZ Governor (page 37) and that to the chairman of the US Federal Reserve.
The Congress sets the salaries of the Board members. For 2014, the Chairman's annual salary is $201,700. Read more
How does BIll English paying Wheeler his large salary, show that Wheeler is 'being paid to look the other way'?
"The remuneration of the Governor is set by the Minister of Finance on the recommendation of the Board’s non-executive directors, who also determine the remuneration of the Deputy Governor. The Bank’s remuneration policy is to pay all staff on the basis of performance on the job, while having regard to prevailing market conditions based on salary surveys and assessments made by an independent remuneration consultant."
Hmmmm, indeed
Bill English has clearly been absolved of the allegations against him in terms of whether he has broken the rules. But there are two wider issues that are raised by a reading of the Auditor General’s report – whether English has acted ethically, and how Ministerial Services came to have such defective rules. I’d argue that that a system of ‘corruption management’ has essentially led to this situation, whereby all political parties – rather than just Bill English – are using the financial resources of the state to maximize their personal and political advantage Read more
One is common - especially if someone moves house and doesn't sell. Or buys a uni house for their children. Also common in cases of inheritance. or a bach/crib.
Two is a simple double down, and is like having one + crib or inherited property.
Three is pretty successful.
Four is plenty.
Five is therefore when you're talking in the serious "I'm a professional PI/rentier" level. It's not just a retirement place or two, or an investor getting underway. At five you're got serious capital tied up and a lot of leverage, AND you can afford to bid high using that leverage. At five properties the person has made a serious commitment, and has a warping effecting from the whale of their business size; whale enough to discourage new-entrants to the market.
Get real !!.
If someone risks putting their money on the table to supply rental housing , why on earth should we stop them ?
Some people are in the business of supplying houses to let , just like a transporter who owns 5 trucks to supply transport sevices , or the manufacturere with 5 machines making stuff
Besides , if they dont do it who will supply houses to let ?
Housing New Zealand already has a backlog of 4000 houses so it cant cope .
To further restrict supply is the most stupid thing we could imagine doing ...........
If someone risks putting their money on the table to supply rental housing , why on earth should we stop them ?
That is a fine sentiment - but when banks lend a greater amount of other people's than the property investor to supply that shelter we have another situation, more so in New Zealand, when it is clear the RBNZ expects all unsecured bank creditors,depositors included, to go along for the risk ride.
APRA, the Australian bank regulator has other ideas and hence the risk position is not skewed to the unwitting, under rewarded funding providers even though the dominant bank protaganists are the same.
We require banks to have capital because they make their money by taking risks using other people’s money. That is not intended to sound improper; the financial intermediation provided by banks is critical to the efficient functioning of the economy. However, as very highly leveraged institutions at the centre of the financial system, investing in risky assets and offering depositors a capital guaranteed investment, we need confidence that banks can withstand periods of reasonable stress without jeopardising the interests of the broader community (except perhaps for their own shareholders). But what degree of confidence do we want? Read more
They are not putting their money on the table so much as the banks money, which in turn is not so much the banks money as the depositors money.
All of society will pay to bail out that bank when it fails because of a property price drop that see's overleveraged PIs go bust. Hence it is the regulators job to protect us all from the greed of the PI and Banks.
Westpac even changed its mortgage marketing team this year so it could better service the growing rental property sector.
Sure did - the speculators must have faced a liquidity crisis - insolvency next?
Westpac's new 30-year, interest-only mortgage has been decried as irresponsible and likely to fuel property investor speculation.
Details of the new loan product were discreetly fed to mortgage broker channels in recent weeks. The offering is a major shake-up to the market, with the term three to six times as long as the maximum allowed by rival banks.
Wellington mortgage broker Simon Rule said the three-decade loan had surprised brokers and rival lenders, and was "disappointing" to see.
"You're basically encouraging borrowers not to make any principal repayments on their mortgage whatsoever," he said.
Once the term is up, borrowers can either repay the loan in full or switch to a standard mortgage, implying a total length of 50 years.
"You can get 50-year mortgages in America which mean you pretty much have a mortgage for life, which is not responsible at all," said Rule. "I certainly would not be recommending customers do any more than 10 years interest-only."
Westpac's chief product officer Shane Howell said owner-occupiers were eligible, but not the target market.
"It's really specifically geared towards investors . . . to give them the best opportunity to take advantage of the tax benefits," he said. Read more
Encouraging negative gearing, to allow the higher paid public servants to remain in the game?
Oi. It's a pretty broad church here; close to "meaning of life" at times. All part of the charm.
I myself have managed to slip some Latin in, reference the Greek Bronze Age and still stay on topic.
Anyway the "mort" in "mortgage" came via Old French not straight from Latin. What does cowboy know?
If an investor today bought 5 auck rentals he would need a massive income to pay the close to 100k losses each year due to neg gearing.
Although an old investor whos portfolio has become profitable could do this to absorb profit and minimise tax on the gamble that prices will continue higher
no because the same gearing is available on all investments/businesses.
It's that RBNZ is resting it's well padded butt on the inflation based on a few numbers, whle real inflation caused by waymad's hydra of expenses and things like rates, power, tax burden rising are deflating the buying power/earning power.
thus with money devaluing, and inflation not being permitted to keep it in check, only "anchor investments" will hold value. these are also termed "dead capital" investments because they directly provide service/needs rather than work through the failing value of money.
RBNZ & guzzlement are causing a double whammy, because while they're choking the visible effects of devaluation/inflation, they are penalising the very places and people which needs stimulation.
Basically the RBNZ and gubbermint are making the financial tide go out (via interest, overheads and taxation), so only solid low maintance holdouts keep value. But the jobs and money velocity we need to have more jobs and more company revenues is being stopped (or globalised offshore). The biggest danger is development of such opportunities and expansions require free funds which can be afforded to be risked - in NZ's economic attitude this has always been hard and getting worse. I've been flicking through the non-Auckland job lists...not much out there that gives good discretionary income, let alone enough to risk on business startups and pay less than perfect producers (which is what you have to do if you want a national economy)
You have defined our version of a banana republic.
Hmm, interest rates are too low, inflation is too low. Is inflation low because Bill English is trying to balance the budget when he should be running a deficit of 2% or more? If he ran a bigger deficit by say temporarily cutting taxes we could have more inflation and the RBNZ could put up interest rates a bit more. Personally I think there is a case for a 12% corporate and income tax for all with no deduction for interest, and make GST payable on interest too while you are at it; but presumably that is far too radical (and who knows what unforeseen trouble it would cause).
The base of the economy is agriculture and business......and they should not be paying higher interest rates than residential housing.
Allowing residential housing to continue having lower interest rates is stupidity.........there is no recognition of the base of the economy........The RBNZ and the banking industries risk assessment policies are faulty models.
Arse about face...........is the problem!!!!
However that is the free market at work, the OCR is neutral. Meanwhile houses are preceived by banks as low risk with an asset backing them, businesses as far more un-secured risk.
Hence why we have the LVR as the RB tries to correct taht a bit, and you object to that on rights grounds, classic case of having your cake and eating it.
regards
Cutting taxes is a poor way to stimulate on 2 grounds, a) it isnt temporary, where capital programs are hence inflationary. b) So targetted programs such as public capital works in a recession fill the space left by lack of private demand, give public works at a lesser price and dont crowd out private demand, they also have an end date and hence tend not to be inflationary over the long term.
Tax cuts would also tend to allow spending in uncontrolled ways, eg pouring yet more money into housing, the last thing you want.
regards
Why then if "If he ran a bigger deficit by say temporarily cutting taxes we could have more inflation" isnt the USA have huge inflation? Why didnt this occur result under Bush who cut taxes for the middle class?
"think there is a case" well justify it please, lets see the reasoning, because I dont think there is myself. Temp Govn spending, yes probably.
regards
Bernard, good article.
I agree, National need to restrict investors. The situation will only deteriorate further if they don't make changes. However, if you look at National's track record in Government, they are very hesitant to implement measures against investors because they are a good proportion of Nationals voter base.
You may recall the Tax Working Group from 2009, which fleshed out debate on tax reform, such as land taxes, capital gains etc. National implemented the change for depreciation, which was helpful but more is needed.
I believe that when the Tax Working Group report was released, National would have carried out polling to gauge interest in the various policies. The poll results would have indicated that it was too risky to move against investors. As result, National has shifted their focus to addressing supply instead of demand (e.g. investors).
Following this, they then requested the Productivty Commission to prepare their report on housing affordabilty, and in my view, they were told by the Govt to not encourage policies against investors. This report didn't highlight investors as one of the reasons for unaffordable housing, and this has assisted National in only focussing on supply and not demand (i.e. investors). It was a flawed report. It is nonsense to suggest that 45% of house sales in Auckland to investors is not increasing values.
In summary, National are too cautious and are unlikely to restrict investors because they will lose votes. End of story.
Bernard, good article.
I agree, National need to restrict investors. The situation will only deteriorate further if they don't make changes. However, if you look at National's track record in Government, they are very hesitant to implement measures against investors because they are a good proportion of Nationals voter base.
You may recall the Tax Working Group from 2009, which fleshed out debate on tax reform, such as land taxes, capital gains etc. National implemented the change for depreciation, which was helpful but more is needed.
I believe that when the Tax Working Group report was released, National would have carried out polling to gauge interest in the various policies. The poll results would have indicated that it was too risky to move against investors. As result, National has shifted their focus to addressing supply instead of demand (e.g. investors).
Following this, they then requested the Productivty Commission to prepare their report on housing affordabilty, and in my view, they were told by the Govt to not encourage policies against investors. This report didn't highlight investors as one of the reasons for unaffordable housing, and this has assisted National in only focussing on supply and not demand (i.e. investors). It was a flawed report. It is nonsense to suggest that 45% of house sales in Auckland to investors is not increasing values.
In summary, National are too cautious and are unlikely to restrict investors because they will lose votes. End of story.
Ban foreign landlords, outlaw negative gearing, and no welfare for private landlords. If you haven't the guts to do that, then tenancy laws need to be altered so that if someone has to face the prospect of a lifetime of renting, that they are able, after paying vast sums for such rental, to make where they live is a home. No banning of pets, no banning of gardens, no banning of picture hanging, etc and long term leases that are transferable if ownership changes and rent control.
Looks like the looney lefties are still trying to ankle kick those with enterprise and ambition despite being beaten into oblivion at the elections by the vast majority.
They missed the boat and now are merely bitter and twisted.
Leave them be.
One must not mock the afflicted.
Building any kind of infrastructure is one thing (having the materials and skills).
But does the infrastructure problem you're addressing add any repayable value add?
If I cut out a winding corner that causes 10mil in travel costs...then that 10mil saved.. which comes off the travel-selling people's revenue - revenue which would pay taxes to provide for the infrastructure! If you build this better corner you've just reduced your funding !
If I build a better road from Hutt to southern Wairarapa it wll increase commerce and jobs in the Wairarapa, and cut down time lost in travel. The lost time no one is paying for, and it can be better used in leisure or commerce. The extra ease of travel reduces the travel income, but the extra amount of traffic due to the ease, increases infrastructure revenue. This produces economic growth, admittedly this will put up house prices, and more people will be doing better and no longer have to shop for the nasty cut-margin deals and cheapest imports so "inflation" (actually economic growth) will occur. this value add will pay off the road and increase funding in the future.
The difficulty is that as usual, the low hanging fruit has already been dealt with.
So you thinking of social housing?
Well it does get people into houses, not at bargin basement, so it allows some landlords to improve their properties (since they're not selling on competitive margin). That's a bit of a win. But does it actually produce revenue? The better housing results in lower medical costs, lower cost housing means the poor, ill and elderly have better environment and food budgets...but that can be achieved more effectively by reducing the cost barrier of house improvement. So lower cost housing is good, but is it an infrastructure service (or a commercial activity to consumers)
Are you planning to become a non-profit registered charity in order to do this, if not, then you will not be supplying social housing, you will be leeching. Better we put our efforts into finding ways to get more people into their own homes than propping up rentiers
no Big Daddy, we havent all missed the boat, some of us care about these kids coming through after the generation that escaped user pays, squandered and consumed more resources than any other and now sits upon high cashing in 2 if not 3 super schemes, still working and gearing off the rental portfolio.
The way I see it is that every mortgage should incur a levy payable to IRD at a percentage in value defined quarterly by the RBNZ.
The exception would be where the mortgage is held on a property held exclusively for the occupation by the owner. In that way an owner who had cleared their mortgage could still have one investment property free of the levy provided the mortgage is exclusively against their primary residence and the lender would have no recourse in law to the other assets.
1.Thus the banks do not need to find out anything to justify a probe.
2. Owner occupiers would escape the levy.
3. Any investor not mortgaged would escape any tax - incidently they would get a better return because their capital outlay would be less for the rent they could charge.
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On a slightly related topic re foreign buyers
Note the comment by Evans-Prichard in the Telegraph in UK
There are indications that some of the money coming from Asia is leveraged tenfold and falsely designated as cash, but this is chiefly a problem for banks in Hong Kong or China rather than for British regulators
Interesting, aye?
What ABSOLUTE rubbish , why not get banks to restrict or not lend to a transporter who has more than 5 trucks , or a farmer with more than 5 cows , or a manufacturer with more than 5 machines?
Anyone owning more than 5 rental properties is a running a business and just like any business they should be treated as such .
This is the most disingeous thing I have read this month so far.
The business of renting houses to people who if it was affordable would buy is not a business it is merely leeching, especially off the public purse in the form of top ups. There is little real risk involved and is NOTHING like a real business at all and the sooner it becomes undesirable to do so, the better. I wonder how many truckies etc receive welfare in order to keep their businesses going.
Boatman, look in the core, its more Swiss cheese with a triple dip... .
Residential home loans to residents are the least risk/capital consuming business division for banks. For a number of reasons including the motive of folk to keep the roof over head etc (accepting people currently being sold up for council rate debts) ....
Given the amount (massive/wave) of money, profits landers obtrain from RHL, they are determined to extend the boundary of what is a residential home loan (what counts as such a loan and such a borrower), and thats the rub: Is a residential home loan to some one who is not that residential home resident the same as a residential home loan to one who is resident in the residence....
The Trick: Characterising: saying something is one thing, when it is of another So compare non-resident home loanee to residing home loanee.
do the loans have the same income servicing ratio.
do the borrowers have the same risk profile to economic events
do the borrowers have the same repayment/refinace risk.
there are others...
Investor Option: Owners of multiple residential properties are free to opt in and be counted as a commercial borrower by the banks, however many prefer not to (or spread borrowings amongst several lenders, some as well using several borrowing identities) in order to keep under the radar and enjoy the benficial terms of appearing to be a residential home loan borrower.
Triple Dip: We see multiple property owners that rent have the subsidy of the housing benefit (Dip One), we struggle to understand why they should enjoy an extra subsidy (bank system regulation arbitrage) of maximum funding (Dip Two) and lower finance costs (Dip Three) - being counted as a residential home loan resident, when simply they are not.
trucks, farms, cows, manufacturing plant and equitment can not be counted as residetial home loans by the banks in their forms for the regulator/s, or applications to the off-shore debt funders.
Why do you think it is different this time?
If the banks are to big to fail......then property is too big to fail......why do you think the RBNZ has policy to implement an OBR.......those with debt are going to be protected at all costs.
It doesn't really matter to any Government how good business is doing as they have the tools to create any kind of taxes whenever the feel like it..........all the people who have been buying property now will one day want to transfer it on to another generation......and Governments will be forced to change the types of taxes they use.....we will most likely see the reintroduction of many defunct tax types like death, inheritance taxes and stamp duty etc. These taxes will be introduced when the current tax types cannot deliver enough booty and this will just happen to coincide with other factors.
Look up "irony".
For the rest of your comment you obviously have not read and understood a thing I have written in the last few years or so as you pretty much parrot what I have said I expect will unfold.
Why of course differs probably differs, for me its is [fossil] energy or the lack of it, curtaining the ever expected growth.
regards
Blah, blah, blah, talk about re-arranging the deck chairs..
Unless you all didn't notice Labour attempted to alter the status quo on housing in the recent election and got blown out of the water. No party in NZ that gets elected for only 3 years will be doing anything dramatic with housing. Especially the current National party. They have more personal investment in rentals than the average kiwi so do you think they will be interested in what is going down here. It is a great idea but not in my back yard.
So if you own 5 crap rental houses at $100,000 each = $500K you will be punished.
eg:
http://www.trademe.co.nz/property/residential-property-for-sale/auction….
But if you own one $500k "affordable" rental house you will esape free.
What a load of c***p
Shows you how the dopey Socialist mind works.
Quite right too..
Even wild dogs behave better than this:
http://www.stuff.co.nz/sport/league/10725108/England-hush-over-door-sma…
It would be fairer if any tenant that has had more than 5 landlords to pay double rent and double bond because they are obviously unreliable and a menace to society .
It seems to me that a "More Than Five" punitive rule might to apply more to NZers borrowing from NZ institutions. It could therefore disadvantage local investors but favour overseas investors who will be able to take advantage of reduced competition from local investors. That wouldn't be ideal.
The Banks sure have things sown up well. Stuff reports that on Friday (5 November 14) a Spark shop in Timaru refused to accept cash to pay a bill. Banks are private institutions out to make a profit. they work with Credit Card companies to extract the last pound of flesh from people. Cash undermines their power. this is just another example of who really rules our societies. We should be placing higher expectations on the Government to curb their power and control. The moves by the Government and the RBNZ to control the ever increasing house price inflation will inevitably undermine the Banks ability to extract exorbitant profits will be resisted, sometimes only by delaying tactics.
David Chastons comments today are good (until the "and then...." bit), but you are right over all that all investors should be prepared to pay tax on their income!
There are some idiots on this site who dont understand the most basics of economics .
If there were no investors willing to supply houses for rent , who would supply them ?
If you punish the suppliers of rental houses and cut off the supply of houses to rent , what do you think would happen to rents ?
Housing New Zealand is unable to do so , unable to cope , ahs a massive waiting list , and a shocking return on Capital ( probably negative ) .
And if its negative it can only go on for sao long before it comes cap-in-hand to the taxpayer.
That has only happened as earnings and prices of housing, including rent actually, have gotten so far away from each other, that far too many people can no longer afford to buy and probably in reality can't afford to rent either, but everyone has to live somewhere. You'd get the heave ho if you set a tent in a park.
So I say, work on tipping the scales back the other way so that we no longer any need the leeches and pretty much the only rental properties are once agaiin blocks of flats and apartments.
Curiosity
Talking about flats and apartments
With Auckland blossoming into a land-of-property investors and landlords, the following comment by Spinach last week reminded me of my few years venturing into the world of being a landlord
Had an investment property in a residential suburb, in a street which was 99% owner occupied. A nice 3 bedroom house in a nice quiet North Shore suburb. Not quite upmarket, but not cheap. Problem was getting tennants to respect the neighbourhood, maintain the place in keeping with the rest of the neighbourhood, keep the lawns mown, and gardens tidy, etc, etc, etc. That was joke. It was the only rental property in the street. Inevitably the landlord-tennant relationship soured. One tennant demanded their bond back while the grounds were like a hay-paddock. I gave up. Being a landlord is demoralising. Unless AKL renters have since changed
Wonder what it's like living in a street which is now dominated by renters
Read Spinach's reflections here
http://www.interest.co.nz/opinion/72802/fridays-top-10-david-whitburn-r…
The rentier class need the people you are talking about, the ones who don't mow lawns, don't get off their bums, require the govt to top up the landlord. Without all of that there would be no need for the rentiers. They have a vested interest in people staying down, they have no interest in people rising above, in fact they look forward to underclass growing, all the more for them to profit from, via the rest of the taxpayers.
If you want to stop speculation in housing ,its so so so so simple
RING -FENCE THE LOSSES incurred by investors .( no offsets)
And
Using RATES AND TAXES TO PENALISE VACANT LAND that hase been subdivided left fallow or derelict , and held by speculators and land-bankers
The speculatprs will disappear in a flash .
Doing anything else will be as watertight as a sack
The solution for this is simple, just make a rule that anyone (or trust) owning multiple rental properties must keep it up to high standards, insulated etc. That will scare away most of the slum lords currently holding large numbers of properties.
There is no sense complaining about investors, we might as well use and profit from them instead.
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