Archive | Forward thinking

Foreign buyer screening law advances in Parliament

Overseas investors will still be able to invest in new housing under the new regime of the Overseas Investment Bill, which was reported back to Parliament yesterday.

The bill will still ban non-NZ citizens & residents, except for Australians & Singaporeans, from buying existing houses.

Associate Finance Minister David Parker said: “Other recommended changes will simplify the process for buying residential land for commercial purposes, such as hotels, supermarkets & businesses that create jobs and support our communities. This includes an exemption for utility companies, reflecting the importance of these services to all Kiwis.”

Changes have also been made to the forestry investment screening regime (see separate story).

Mr Parker said: “This law will ensure that the market for our homes is a New Zealand market not an international one.”

All permanent residents & resident visa holders who spend most of their time in New Zealand will be able to buy homes under the regime without obtaining consent.

Australian & Singapore citizens & residents will be treated the same as New Zealand citizens & permanent residents.

They will be able to buy apartments, new rentals & homes available to buy under rent-to-own or shared-equity arrangements.

Looking at the ban remaining on foreigners buying existing houses, Mr Parker said: “This will help first-homebuyers to get their foot on the property ladder.”

“It’s also a matter of values. We believe that, from the most expensive seaside & lakeside properties to the most modest homes in our towns & cities, New Zealanders should not be outbid by wealthier foreign buyers.”

Mr Parker said the bill, reported back to Parliament by the finance & expenditure select committee, would support the creation of new housing & the Government’s KiwiBuild policy by better harnessing foreign capital and directing it towards large residential developments.

If the current number of Singaporean buyers “materially” increases, the 2 countries have agreed to meet to discuss the cause of the increase and how to address it, if required.

More information can be found here:

Links:
Overseas Investment Amendment Bill, residential land changes
Screening of residential land: Questions & answers
Related story today: Minister optimistic about changes to foreigners’ forestry rights

Attribution: Ministerial release.

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Minister optimistic about changes to foreigners’ forestry rights

Shane Jones.

Forestry Minister Shane Jones said yesterday new legislation to bring forestry rights into the overseas investment screening regime would help promote high quality foreign investment that puts more emphasis on genuine benefits for New Zealanders.

The changes to the screening regime are included in the Overseas Investment Amendment Bill, which has been under the spotlight more for its impact on foreign residents’ & citizens’ ability to invest in New Zealand residential property.

Mr Jones said: “The bill recognises the importance of forestry to New Zealanders, and I’m confident it’s struck the right balance that will boost forestry investment while ensuring the regime cannot be bypassed.

“High quality overseas investment in forestry will be an important part of achieving the Government’s One Billion Trees planting programme and will also promote economic development opportunities in our regions.

“This Government wants to see a strong & flourishing forestry sector that will create & protect jobs across the country and contribute to our climate change targets.

“Following the select committee’s review & intensive consultation with stakeholders, some key changes have been made to the bill, including increasing investors’ flexibility in obtaining consent and removing unnecessary red tape.

“Investors can now choose from any of 3 different tests when seeking to acquire forestry land or rights. The bill also ensures that investors & landowners can make minor changes to their agreements without unnecessarily having to return to the Government to obtain consent.”

The Government will report to Parliament on the operation & effectiveness of these amendments 2 years after the new regime starts.

Links:
Overseas investment screening regime changes
Overseas Investment Amendment Bill

Attribution: Ministerial release.

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Parker uses wrong conclusion on statistics to justify ban on foreign homebuyers

Associate Finance Minister David Parker.

Associate Finance Minister David Parker said on Friday: “New figures showing a high level of overseas house buying in New Zealand’s least affordable areas vindicates the Government’s move to ban foreign buyers of existing homes.”

The aim of Mr Parker’s new law to stem the flow of home ownership overseas, the Overseas Investment Amendment Bill, is “to ensure that investments made by overseas persons in New Zealand will have genuine benefits for the country”.

Mr Parker introduced the bill to Parliament on 14 December and the finance & expenditure committee is due to report on it by Thursday next week, 21 June. He said it was on track to become law next month.

He was using the first release new Statistics NZ research to support a conclusion he’d already reached.

But he made one wrong assumption – that the concentration of buying is in the areas of worst affordability. The research showed foreign buyers (holding neither NZ citizenship nor a resident visa) accounted for 18.7% of residential purchases in Auckland’s central city Waitemata ward in the March quarter.

As I noted in my story on Friday: “There’s no differentiation in the statistics between purchases of apartments & houses in the Waitemata ward, which is material to the value of the statistics. Auckland’s (and New Zealand’s) apartment market has been led by sales through overseas campaigns, particularly through Singapore, Malaysia & Hong Kong. Without those overseas campaigns, most of the city’s big apartment developments would not have got out of the ground.”

Secondly, a high proportion of purchases by full foreigners (neither citizenship nor resident visa) & partial foreigners (where one half of a couple might have citizenship or a visa, for instance) have been in expensive suburbs such as Remuera and some of the bays on the North Shore.

They are areas which are expensive, where only wealthy people will buy. Some of their purchases have raised the overall price level and, I’ve argued, that has flowed through to the overall spiralling increase in house prices nationally. But to consider those areas to be in the realm of “affordable”, as in first-homebuyer affordable, would be irrational.

The foreign purchase of apartments off the plans – enabling development, followed in due course by selldown, not part of the proposed ban on buying existing homes but included in the statistics – is not a steal from locals. In some cases, the secondary sale has been made at a loss.

And purchases in expensive suburbs shouldn’t be used for an affordability argument. The Government is entering a programme to get construction of cheaper homes underway, KiwiBuild, and it’s not going to do that by buying land in the most expensive suburbs.

The first target for KiwiBuild is land the Government has bought from Unitec at Mt Albert, and you can expect the Government to look for similar suburban sites to continue the programme.

Back to Mr Parker’s Friday statement, in which he noted 3.3% of purchases nationally were by foreigners, rising to 18.7% in central Auckland & almost 10% in Queenstown.

“That shows the concentration of buying is in the areas of worst affordability and where price rises have been the highest,” he said.

“Kiwis were right to be concerned, and that is why we are passing the foreign buyers law.”

He said the data measured the flow of properties into overseas hands, not the proportion of the stock that was held by overseas owners, and with more foreign buyers than sellers the number of homes in foreign hands was increasing.

“We want the prices of New Zealand homes, whether it be a lakeside station, the best houses in the Bay of Islands or the most modest homes in our towns & cities, to be set by local buyers, not on the international market.”

He said it wasn’t just about the raw numbers of houses being sold overseas: “It’s also a matter of values. We believe New Zealand homes should not be traded on an international market and New Zealanders should not be outbid by wealthier foreign buyers.”

Earlier stories:
8 June 2018: 3.3% of March quarter home buyers were foreigners – but 18.7% in central Auckland
25 March 2018: Unitec land transfer kicks off KiwiBuild
15 December 2017: Twyford launches the KiwiBuild plan

Attribution: Ministerial release, Statistics NZ research.

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Draft national planning standards out for consultation

The Government has released the first set of draft national planning standards, which Environment Minister David Parker said would make plans under the Resource Management Act (RMA) easier to use & prepare.

The closing date for submissions is Friday 17 August.

“The aim is to make plans simpler & more efficient to prepare, and easier to understand & comply with,” Mr Parker said.

“Standardising plan format & definitions is long overdue. It will reduce compliance costs and address some of the justified criticisms by those who find Resource Management Act plans unduly complex.

“The standards will not determine local policy matters or the substantive content of plans, which remain the responsibilities of local councils & communities.”

Mr Parker said the standards would improve how the act operates, reduce costs to both councils & plan users and improve the public’s internet access to planning documents.

The Ministry for the Environment will seek formal submissions on the draft standards from the general public, councils, professionals & iwi over a 10 week period that will include meetings nationwide.

Once public consultations are complete, the final standards will be approved in April 2019.

“To implement the standards, councils will have to redraft their plans. We are proposing a 5-year implementation period for most plans and a 7-year period for councils that have recently concluded a major plan process. This allows the standardisation to occur as plans are routinely reviewed.

“The cost of updating plans to meet the standards will be vastly exceeded by the cost savings to those who use them.”

Link: Draft national planning standards consultation

Attribution: Ministerial release.

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Twyford creates new housing & urban development ministry

Housing & Urban Development Minister Phil Twyford.

When the new Government allocated portfolios last October, Labour’s Phil Twyford won housing & urban development and the separate transport role.

On Friday, he announced that housing & urban development would get its own ministry, to be established on 1 August, operating from 1 October.

Initially, the Government will move functions from existing agencies, and will look at using funding from their existing operational budgets:

  • From the Ministry of Business, Innovation & Employment: the housing & urban policy functions, the KiwiBuild unit and the Community Housing Regulatory Authority
  • From the Ministry of Social Development: policy for emergency, transitional & public housing, and
  • From Treasury: monitoring of Housing NZ & the Tamaki Redevelopment Co Ltd.

The changes won’t affect where people go to for help with housing. The Ministry of Social Development will continue to assess people’s need for housing support and manage the public housing register.

The aim is for the new ministry to help deliver on the Government’s priorities of making housing more affordable & cities more liveable. Mr Twyford said: “Addressing the national housing crisis is one of the biggest challenges our government faces. The new ministry will provide the focus & capability in the public service to deliver our reform agenda.

“Too many New Zealanders are hurting because of their housing situation. Many are locked out of the Kiwi dream of home ownership. Others are homeless or suffering the health effects of poor quality housing.

“The new ministry will be the Government’s lead advisor on housing & urban development. It will provide across-the-board advice on housing issues, including responding to homelessness, ensuring affordable, warm, safe & dry rental housing in the private & public market, and the appropriate support for first-homebuyers.”

Mr Twyford said the new ministry would provide the Government with strong leadership & fresh thinking. It would also end the fragmented current approach caused by involving a number of agencies.

Then he rattled off 7 aims of the new government:

  • Ramping up efforts to house the homeless
  • Building affordable homes through KiwiBuild
  • Modernising & building more public housing
  • Reforming the tenancy laws to make life better for renters
  • Setting minimum standards to make rentals warm & dry
  • Adjusting the tax settings to discourage speculation, and
  • Setting up an urban development authority to lead largescale urban development projects.

In sum, he said: “The Ministry of Housing & Urban Development will help us deliver our bold & ambitious plan to build much-needed affordable housing, and create modern & liveable cities ready for the future.”

Earlier stories:
25 March 2018: Unitec land transfer kicks off KiwiBuild
23 May 2016: Is it really a faraway boundary that’s raising inner-city house prices?
8 November 2015: Twyford talks ideas which unitary plan & council funding review likely to resolve

Attribution: Ministerial release.

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Robertson introduces the new rules of play on economy

Finance Minister Grant Robertson laid out, in his first Budget, the new set of platitudes that will set the framework this government will work under.

He’d already done that in his December mini-budget, and the Labour Party had made clear in its election campaign that it wanted a change in emphases. The annual numbers game puts it in place.

The Opposition appeared to be still thinking under the old set, which amounted to exceedingly unbalanced largesse on one hand, extending to denial on the other.

In this brief summary on the Budget, I’ve ignored most of the numbers, emphasised the platitudes – you might call them the rules the new government will stand by – and pointed to 2 important economic factors for the property sector, migration & housing. At the foot, you can link to Treasury & Budget pages for more of the numbers detail.

Mr Robertson:

“We must make our economy more sustainable for future generations. This means caring for our environment as a core value, not as an after-thought. It means transitioning in a just & deliberate manner towards a low carbon economy.

“To transform the economy we have to be more productive. We have to work smarter, build our skills & resilience, explore new innovations and adapt to change. We cannot continue to rely on merely increasing our population, exporting raw commodities and an overheated housing market to drive economic growth.

“Our economy must be more inclusive, too. This means a society where everyone has an equal chance to fulfil their potential, to contribute, and to live meaningful, connected, healthy & fulfilling lives….”

Next, the how

“Our plan will grow & share our prosperity, so that our whole society is lifted up, and everyone has access to good quality healthcare, education, housing & other social services.

“That is why, in this Budget, the Government is prioritising those investments that will rebuild the critical social & physical infrastructure in New Zealand, and address the long-term challenges we face.

“At the same time, we are committed to living within our means, and having a buffer to deal with the risks & shocks that can come upon a small country sitting on the faultlines of the Pacific….

“We must manage the country’s finances responsibly for the sake of future generations. This Budget delivers an operating surplus for 2017/18 of $3.1 billion, rising in 2018/19 to $3.7 billion, with surpluses reaching an estimated $7.3 billion by 2022.

“These surpluses allow us to reduce debt. The Budget responsibility rules commit us to reducing the level of net core Crown debt to 20% of GDP within 5 years of taking office….

“We are also delivering on our Budget responsibility rules by keeping government expenditure below 30% of GDP. Core Crown expenses are expected to track at about 28% of GDP each year through to 2022….

The funding switch

“Altogether, this means that over the next 4 years we have about $24 billion more than the previous government had planned to invest in infrastructure & social services, so we can repair the deficits that are undermining our economy & communities. This will lay the foundations for our economic & social transformation.”

Housing

“This government is determined to take action on the housing crisis & the scourge of homelessness which has emerged in this country.

“In December’s mini-Budget we allocated $2.1 billion for our ambitious KiwiBuild programme to deliver 100,000 long-overdue affordable houses built across the country, including 50,000 in Auckland over the next 10 years.

“Budget 2018 commits more than $1 billion in new funding to go towards housing, including $369 million in new capital funding.

The different priorities of this government are never clearer than in housing. One of our first actions was to stop the state house sell-off.

“Today, I am announcing that this government is taking serious action to increase the supply of public housing by investing $234.4 million in operating funding for Housing NZ & community housing providers. This will provide more than 6000 homes over the next 4 years.

“We are working with councils to deliver more houses. For instance, the Tamaki Regeneration Co, which is jointly owned by the Government & Auckland Council, will be given another $300 million to provide about 700 state houses, as well as another 1400 houses in Tamaki for the open market.

“These will be new, warm & dry houses. Too many of our homes are cold & damp, leading to preventable diseases. A new programme to make Kiwi homes healthier will provide $143 million to go towards grants for those on lower incomes to insulate & heat their homes. Investing in warmer homes simply makes sense….”

The homeless

“In this Budget, our government will support more than 1400 of New Zealand’s most vulnerable homeless people & families through the Housing First programme over the next 4 years.

“Housing First supports people who have been homeless for a long time or who face multiple & complex issues. We recognise it is much easier for people to address issues like mental health, or drug addiction, once they are housed.

“This programme aims to end homelessness for people, not just manage it.

All these plans announced today, as well as the Families Package, will help to lift children out of poverty.”

Sustainable economic development

“We are focused on playing our part to support generating prosperity & sustainable economic development.

“To that end, we are prioritising infrastructure….

“This Budget formally establishes the $1 billion/year Provincial Growth Fund to support growth in the regions, as outlined in the coalition agreement between Labour & NZ First.

“This fund represents the single biggest investment in the regions of New Zealand in our lifetimes. It aims to enhance economic development opportunities, create sustainable jobs, contribute to community wellbeing, lift the productivity potential of regions and help meet New Zealand’s climate change targets.

“This year the Provincial Growth Fund will be made up of $684.2 million of operating expenditure & $315.8 million of capital expenditure. This includes significant investment in the One Billion Trees programme and support for regional rail projects.

“The Budget also sets aside funding for the establishment of the NZ Forestry Service. Our investment in forestry will help us to deal with climate change, lift our economy and provide employment….

“It is possible & necessary for New Zealand to transition to our goal of a net zero emissions economy by 2050. This will require some major changes, but we can do this if we work together.

The new economy

“This Government also sees the opportunity that this transition provides. Budget 2018 sets aside $100 million of new capital funding for the Green Investment Fund to kickstart investment in assets & technology to reduce carbon emissions.

“This fund, which is the result of the confidence & supply agreement between Labour & the Green Party, will help a just transition to a more sustainable economy that will ultimately create jobs in new, clean industries….

The regional equation

“Work is underway on developing lists of regional skills & labour shortages. We want an immigration system that really works for New Zealand. We want to match migrant skills to the regions & industries where they are needed most. We want to ensure that any genuine skill shortages are filled, with immigration levels that are sustainable….”

Understand the differentiation: Wellbeing to replace GDP focus

“Next year we will be the first nation in the world to deliver a Wellbeing Budget reporting our annual progress against a range of measures that highlight the health & wellbeing of our people, our environment & our communities. We will use the living standards framework developed by the NZ Treasury to help develop our Budget, and to measure our success.”

  • That’s the end of my excerpts from Mr Robertson’s speech to Parliament yesterday. Below, some points on the key issues of migration & housing.

Migration:

One key figure in Treasury’s economic & fiscal update is the migration projection, which previously showed a steep decline from a net inflow of 70,000/year now to 15,000/year in 3 years. The projected decline in yesterday’s update would reduce the net inflow to 25,000/year at June 2021.

Housing:

Look at this statement to see how distorted economic measurements can be. Along with graphs showing its forecasts, Treasury provided a pithy statement of position for the Budget release. For housing, debt & gross domestic product (GDP), it said: “The growth in the housing market has seen household debt increase. In 2017, household debt reached 168% of household disposable income. If incomes don’t rise or interest rates rise sharply, then paying off mortgages could be difficult for some. If this happens, then people may spend less, or buy or build fewer houses, reducing GDP.”

The bottom line is GDP; acting rationally can reduce it.

It’s almost with surprise that the Treasury note reports that household debt has increased, even though interest rates have been at all-time lows. Why? Because buyers of houses buy to the limit of their outgoings and, as the debt component is lower, they can buy a more expensive house.

Those facts are factors of politics & misgovernance. The misgovernance has come in allowing – promoting – record immigration without creating a receiving economy that encourages dispersal of new arrivals. Hence, avoidable Auckland traffic congestion and pressure that forced house prices to spiral upward.

The new government has stated policies to grow regional development and reduce immigration – which another Treasury note says will plummet in a natural cyclical change anyway.

The Treasury note on housing also comments that there’s a shortage of skilled labour to build houses. Migration to Australia topped 53,000/year in 2012 (net outflow to Australia then was about 40,000/year) but has since slid to zero.

Assuming cyclical norms, the outflow will resume and rise steeply. In that case, a clamp on immigration will cause economic disruption. The better course is to provide a welcoming environment that’s spread around the country instead of being singularly focused on Auckland, encouraging immigrants to look at more options for a new life, and encouraging prospective emigrants to reconsider.

Links:
Treasury, 17 May 2018: Budget economic & fiscal update 2018 (BEFU)
Budget at a glance 2018
Fiscal strategy report

Attribution: Budget speech & documents.

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Inaccurate name-calling – the stuff of rising partisanship

Whacking communism as the enemy of US-style capitalism may be in order, if those 2 political concepts are what you’re talking about.

What prompted me to write about it was the different names applied to capitalism & communism. Am I right in thinking the suggested alternatives are more appropriate?

More often than not, the speaker who wields the terms capitalism & communism is talking about neither. For capitalism, the meaning is more likely to be an autocratically controlled form of trade, and the fear of communism more likely to be about dictatorship than about a mode of sharing.

As the partisan voices rise, frighteningly, in the US, understanding of others’ views will shrink. We’ve been fortunate in New Zealand in having less volatile, fractious partisanship, but it’s an important factor to watch because it will increasingly influence international relations. That, in turn, affects life in New Zealand.

On my trawl through various foreign media at the weekend, I was curious to read a piece about former New York mayor Rudy Giuliani’s odd performance now that he’s President Donald Trump’s lawyer, followed by a truism from Michael Bloomberg, Mr Giuliani’s successor as mayor of New York, which I think partisans are inclined to ignore.

The quotes

This quote is from a comment in the thread on a Gizmodo story about Mr Giuliani, as Mr Trump’s lawyer, letting his mouth run ahead of him: “What Americans call ‘capitalism’ is no more capitalism than whatever was in Soviet Russia was actually ‘communism’. The names applied to modern activities do not match the traditional definitions of social intent. In other words, people have been calling it capitalism knowing that it is not truly capitalism. Just as the Soviets called their methodology ‘Communism’ even though it was just as far from the truth. I do understand that demanding the labels remain is a key part of convincing people their arguments are sound concerning these sociological ideals, but what we call Capitalism would be better called Objectivist-Caste Economics. Whereas Soviet Communism would be better called Dictatorial Segmented Centralism. Neither involve a true social contract. Neither involve any sense of social well-being beyond what is necessary to maintain power structures. They are both methods of putting the few in charge of the many.”

Also at the weekend, Mr Bloomberg said in an address to a university audience in Texas: “The greatest threat to American democracy isn’t communism, jihadism, or any other external force or foreign power. It’s our own willingness to tolerate dishonesty in service of party, and in pursuit of power.”

Links:
Gizmodo, 12 May 2018, commenter PV on this story: Extremely good lawyer Rudy Giuliani claims Trump killed AT&T-Time Warner merger, then denies it
Associated Press through the Guardian, 12 May 2018: Michael Bloomberg calls ‘epidemic of dishonesty’ bigger threat than terrorism

Attribution: Gizmodo, Guardian.

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Populist politics, the backlash of unfettered globalisation

Opinion, by Denis McMahon, chair of the Tauranga-based syndicator & funds manager PMG Ltd

Denis McMahon.

2 weeks into the 2019 financial year, there are some very important trends emerging & playing out in the world which I believe will be affecting our lives, and investments, for some years to come.

The US got off to a good start in January, with most forecasters predicting a good year but not a stellar one. There has been a good deal of exuberance in the US stock market and many commentators are expecting earnings to grow, despite recent volatility.

The World Bank is predicting global growth of 3.1% – again, not spectacular, but something we need to get used to in a global environment of low inflation.

There are housing bubbles in Canada, Australia, China and, as most argue, in New Zealand (specifically in the main centres), although China appears to be stalling at present. Property bubbles are always a cause for concern as they always involve leverage and, as 2007-09 showed only too clearly, once people are unable to service the debt, the dominoes start to tumble.

But for me, the biggest threat to stability & progress around the world is the spectacular rise in populist politics. A lot of this is a backlash against decades of globalisation, as evidenced by the rise in protectionist policies. Ironically, this is happening at a time when the US is stepping back from its traditional role of global leader & guarantor of what is being called the Pax Americana.

Since the end of World War 2, the world has had the US enforcing the spirit of free trade, but I suspect those days are gone. The benefits of globalisation have not been evenly distributed and we are now seeing the backlash.

Globalisation has, since the 1970s, seen the transfer of millions of jobs from the US to emerging countries and that has changed the relative value of capital & labour the world over. One of my favourite historians, Niall Ferguson, has said that around 40 million Americans lost their jobs in the global financial crisis and the backlash is starting to be felt.

The same story is playing out in Europe, where populism is on the rise as a backlash against the EU, who have completely ignored the massive concern shown by many member states over both the EU’s mismanagement of the financial crisis and its apparent failure to stop over a million people entering its member states in an uncontrolled fashion.

As examples:

  • Austria has elected a 31-year-old anti-immigration candidate as chancellor
  • Italy’s populist & digitally progressive Five Star Movement won the most votes, nearly 33% in the 4 March election
  • German Chancellor Angela Merkel won the election but it took 5 months of negotiations & compromises for her to be able to form a government because of the strong showing by the populist Alternative for Germany party
  • Our own elections in September, showed an increasing number of people wanted change to the existing National establishment. Although National received the most votes, Labour’s new young, female leader saw support for Labour rise rapidly in the few short weeks leading up to the election.

Ferguson believes it is the beginning of the end for the EU and I suspect he’s right. So, when you start to see the rise in populism coupled with a rise in protectionism, you can well expect disruption in the markets.

Meanwhile, back in “Shortland Street”, business has typically not reacted well to the election of a

Labour-NZ First government, with polls showing a sharp drop in business confidence. To be fair, this is nothing new, as 2000 was a particularly bad year for business following on from the election of the Clark-led government in 1999.

What was different then was that they then had 7 years of arguably the best economic times in decades to mitigate the perceived negativity. They will certainly not have that this time around. With so much uncertainty and a low inflationary environment, it’s hard to see any current justification for a hike in interest rates. However, with Labour clearly signalling their desire for higher wages, this will feed through into the economy and generate some inflationary pressure, possibly resulting in interest rate rises.

We’re certainly seeing some very interesting trends, which all point towards increased market volatility and, in my view, reinforcing the need for a defensive portfolio approach & diversification in your investment strategy.

I’ll watch with much fascination to see what unfolds here & overseas in FY19.

Background:

Mr McMahon has been working in, managing & investing in property for 33 years, starting in Auckland, where he managed a property portfolio (including 2 retirement villages) for a local council body, which led to a position as manager of property & legal services for the Tauranga City Council in 1990. This work included rationalising the newly amalgamated authority’s property portfolio over a 2-year timeframe.

He set up Property Managers Ltd in 1994, introducing investors to property syndication. In 2014 with Phil Tushingham, he co-founded Pacific Property Fund Ltd, PMG’s first managed property fund.

In 2013, Mr McMahon became chair of PMG, following the appointment of Scott McKenzie as chief executive.

The portfolios PMG manages include Pacific Property Fund Ltd, which invests in geographically & category-diverse properties; 2 funds which invest in category-specific properties, PMG Direct Office Fund & PMG Direct Fund; and a private equity fund, PMG Capital Ltd.

Disclaimer: The Bob Dey Property Report & Bob Dey Publishing Ltd do not have a policy on opinions & their slant, other than that they ought to relate to property. Bob Dey believes nobody is right 100% of the time, including himself. Opinion pieces such as Denis McMahon’s are presented to you unedited, apart from fitting the website’s style.

Attribution: Denis McMahon.

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Twyford introduces law to ban letting fees

Housing & Urban Development Minister Phil Twyford introduced legislation to Parliament yesterday to ban the charging of letting fees to tenants.

The Residential Tenancies (Prohibiting Letting Fees) Amendment Bill to Parliament will amend the Residential Tenancies Act.

Mr Twyford said: “Around half of all Kiwis now live in rented homes. This bill could put up to $47 million into the pockets of Kiwi families each year. This could make a real difference to struggling families.

“There are significant costs associated with moving to a new rental property, which many families are now forced to do every year. When moving into a new rental property, tenants can face up to 4 weeks’ bond, 2 weeks’ rent in advance – and one week’s rent as a letting fee – in addition to moving costs.

“With homeownership rates at a 60-year low, this bill recognises that we need to take action now to make rent more affordable so people can save to buy their own home.

“Banning the charging of letting fees to tenants is a good first step in improving the life of renters, while we continue our broader review of the Residential Tenancies Act. This review will examine a range of changes to make life better for renters and will include looking at limiting rent increases to once/year. It will also consider other initiatives to improve security of tenure and better allow tenants to make their house a home. The review is expected to result in legislation being introduced to Parliament early next year.

“Ultimately the best way to put tenants in a better situation is to increase the supply of housing, and end the shortage that is driving rents up. The Government’s KiwiBuild policy & urban growth reforms are designed to increase supply.”

Links:
Ministry page on proposed law
Regulatory impact statement [PDF 133KB]

Attribution: Parliament, Twyford release.

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Regional fuel tax law introduced

Transport Minister Phil Twyford introduced legislation yesterday to allow regions to apply for a regional fuel tax, initially for Auckland.

The Government’s programme should allow the bill to come into force before Auckland Council’s next budget takes effect, on 1 July.

Mr Twyford said in a release yesterday: “The Land Transport Management (Regional Fuel Tax) Amendment Bill will enable Auckland Council to seek funding for specific transport-related projects. It would allow funds raised in Auckland to be spent only in Auckland.

“Auckland is at a standstill and the Auckland Council understands the frustration of its ratepayers who are spending hours of their day stuck in traffic.

“Auckland has gone through massive population growth in recent years and its current infrastructure can no longer support the city. Improving infrastructure in Auckland is vital for its businesses & its people for whom just getting to work, school & about their daily activities can be a struggle.

“Solving Auckland’s traffic gridlock is also important for the rest of New Zealand, with congestion in the city between 2015-17 estimated to have cost the economy $1.3 billion/year in lost productivity.

“Under the bill, Auckland Council must first consult with residents on the proposed projects it wishes to fund. It must then obtain Government approval before the regional fuel tax can be implemented.

“The bill will go to a select committee for public submissions. We expect the law to be passed in June, ready for potential implementation in the Auckland region from 1 July.

Goff sees $1.5 billion for transport infrastructure

Auckland mayor Phil Goff said the timing would allow the council to put the fuel tax in place when the 3-year interim transport levy expires: “A fuel tax will provide up to $1.5 billion to invest in critical transport infrastructure in Auckland.

“Aucklanders understand that, with huge population growth and hundreds of extra cars on the road every week, the response of doing nothing simply leads to more congestion & gridlock, and billions of dollars in lost productivity.

“A fuel tax is cheap to administer, contains a user-pays element for road usage and raises twice as much money as the interim transport levy, which expires on 30 June this year.

“It can only be spent on transport infrastructure and people prefer that transparency around its use.

“The equivalent rates increase needed if there were no fuel tax would be an 8-9% rates increase on top of the general rates increase of 2.5% plus any other targeted rate.

“Aucklanders can’t expect other New Zealanders to meet our share of the contribution towards solving our transport problems.

“During the mayoral election campaign, I told every meeting that if people wanted a solution towards stopping greater congestion they would need to contribute towards it. I strongly advocated for a regional fuel tax and said that if people thought they could get something for nothing they should consider voting for someone promising that, but that I did not believe that was honest.

“Council is currently consulting on its 10-year budget and half of public submissions on the regional fuel tax so far received support it.

“Aucklanders will soon get another chance to have their say on how we tackle congestion in Auckland when we consult with residents on the proposed transport projects we want to fund.”

Link: Land Transport Management (Regional Fuel Tax) Amendment Bill

Attribution: Twyford & Goff releases.

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