On The Nation: Lisa Owen interviews Phil Twyford

Youtube clips from the show are available here.

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Labour housing spokesperson Phil Twyford says Housing New Zealand has been selling state houses for below the official valuations

He says of the 298 properties sold between July 2015 and April 2016, two thirds sold for below the GV

“It raises real questions about why Housing New Zealand is selling off these houses at knockdown prices, and I think most disturbingly, Lisa, what we see here is the government asset-stripping state houses out of regional New Zealand when there’s a housing crisis and people are living in campgrounds and garages.”

The properties are all around New Zealand, but include seven in the Auckland suburb of Orakei sold to Ngati Whatua under a commercial agreement (not right of first refusal) for between 7 and 23 percent below GV.

Twyford says Housing New Zealand is being pressured to divest properties by the Government, citing a 2013 letter obtained under the Official Information Act from then-Housing Minister Nick Smith. “The Government has put the squeeze on housing in New Zealand.”

Lisa Owen: For years now, Housing New Zealand has been selling off properties they say are too damaged or in areas of low demand. But has it been a fire sale? Between July last year and April this year, almost 300 state houses have gone, providing a cash injection to Housing New Zealand of over $60 million. Well, this morning The Nation can exclusively reveal that many of those houses were sold for below market price, even below their official valuation. Labour’s housing spokesperson, Phil Twyford, joins me now. Good morning.

Phil Twyford: Good morning.

You’ve had a look at these house sale figures, the information for that 10 months. What did you find?

So, in the last 10 months, 298 properties were sold. As you said, it netted about $60 million for the taxpayer, but disturbingly, one-third of the properties— sorry, two-thirds of the properties sold for below the official valuation, and on average across the whole portfolio, the houses were sold at $32,000 [correction] below council valuation. So the taxpayer’s taken a hit here, serious hit. It raises real questions about why Housing New Zealand is selling off these houses at knockdown prices, and I think most disturbingly, Lisa, what we see here is the government asset-stripping state houses out of regional New Zealand when there’s a housing crisis and people are living in campgrounds and garages.

I want to unpick quite a bit of that, but first off, where were these houses? Are they just in small towns or…?

A handful of them are in Auckland, but actually most of them are in small towns around regional New Zealand — Taumarunui, Gisborne, Dunedin, Invercargill. They’re spread all over New Zealand.

Okay. Well, you mentioned the Auckland properties. They’re actually in some quite exclusive eastern suburbs. There were properties there that were sold undervalue. Can you give me an example of, say, a GV and a sale price?

Sure. There were, according to this data, seven properties in Orakei in east Auckland sold, and they were sold below the valuation to a total of about 1.3 million [correction], I believe, and one of them was a $2 million house. And I can understand in this particular case it doesn’t make sense to have a state house on a section which is worth $2 million, and my understanding is that this particular group of houses were sold to Ngati Whatua.

We actually have looked into that, The Nation’s looked into the data, and that was a commercial arrangement, that sale, commercial deal. In your mind, is it possible in this kind of housing market to sell undervalue, even? We’re told that prices are raging.

I don’t know the answer to that. I’ve been advised that that was a commercial arrangement and they were sold, mutually agreed, at the market value. But I really can’t explain it any more than that.

So if we look at this data more carefully, 24 of them were sold to iwi with the first of refusal under Treaty obligations. Most of those went to social housing, but 156 others went to first-home buyers or former state tenants that meet a strict criteria. Arguably, that’s a system working, isn’t it, Mr Twyford? You’re putting a permanent home, a roof over people’s heads; they’re getting to buy a house from the state. That’s how it’s supposed to work, isn’t it?

We have no criticism with state houses be sold to tenants who can afford to buy them, but that’s less than 20 houses in this database, actually. The vast majority of these state houses that have been sold have been put on the local market and knocked off on average $32,000 below the council valuation. So that’s the taxpayer taking a big hit, and it’s denying towns and cities in regional New Zealand a valuable asset that is affordable housing.

So what do you say the motivation is for this, then?

Well, the motivation… I think we can see what’s happened here. There’s a letter that we got under the Official Information Act from the minister to Housing New Zealand telling them to speed up the process of divestment, asking for faster sales of surplus housing stock in the region, immediate divestment of assets in so-called low-demand areas. Don’t forget, Lisa, that during this time this has been going on, the government has taken more than half a billion dollars in dividends out of Housing New Zealand in the middle of a housing crisis.

So are you suggesting that they are taking cut-price deals to flick off the houses that they don’t want?

Yes, I am. The Government has put the squeeze on housing in New Zealand.

Why would they do that?

Because the Government, in their own words, want to free up capital, and they’ve told Housing New Zealand explicitly to hurry up and sell off the stock. So think that explains why it’s been sold off at below valuation.

But is that such a bad thing? Because Housing New Zealand says it sells properties that it can’t tenant, that are dilapidated, that have got such high maintenance costs people don’t want to live in them. They use that money to build more suitable houses in areas that people do want to live in. Isn’t that sensible?

That’s not what’s going on here. The National Government has made a net reduction in the total number of state houses of two and a half thousand at a time when government agencies, as you’ve reported, are referring people to live in unconsented garages. We have a housing crisis. What the government should be doing is building more houses, not selling them off.

But Housing New Zealand isn’t an emergency housing supplier.

No, but the—

That’s not what it does.

No, but the reason we have a homelessness crisis now, Lisa, is that there aren’t enough state houses. Instead of reducing the stock by two and a half thousand, if the Government had actually increased the stock, say, by a thousand a year and added 8000, we would not have the homelessness crisis that we have today.

All right, well, Housing New Zealand says it gets its properties valued before it sells them and if there’s a lack of demand, sometimes they can’t get the desired price.

You know what?

It’s just the market working.

Yeah, all over regional New Zealand, Housing New Zealand and the government says there’s no demand for these houses, and in many places they’re leaving dozens of houses empty and boarded-up. Now, all over New Zealand, in small towns, in regional cities, there is genuine homelessness. There are desperate families who cannot find affordable rental housing. The problem is that the Government has ratcheted the eligibility criteria for a state house so high that even very poor people cannot even get on the waiting list.

I want to ask you about another housing issue. You’ve been critical of the Government’s social housing reform programme. It’s just named a subsidiary of IHC as its preferred provider for these I think it’s about 1100 houses in Tauranga, isn’t it? What’s wrong with that? It’s a reputable organisation. It seems to be doing a good job. It wants to do that. Isn’t it a win-win situation?

Well, it won’t deliver a single extra house in Tauranga, where there is actually right now an acute homelessness problem. There are pensioners—

But it’s not going to make it worse, Mr Twyford.

Well, why are they doing it when there’s a housing crisis, when there are pensioners living in campgrounds in Tauranga? What they should be doing is building more houses. The Government has no evidence for their contention that the IHC will do a better job of managing these properties and the tenants than Housing New Zealand does. We’ve asked them for that evidence. They don’t have it. It’s simply an ideological crusade by National to get the state out of state housing.

But when you talk about a house-building programme, I mean, Housing New Zealand is committing $2 billion over three years. It’s going to redevelop 4000 new houses. It fits the programme.

The facts don’t tell the same story, Lisa. The Government has reduced the number of state houses net by two and a half thousand in the middle of a housing crisis. They’ve pulled out half a billion dollars in dividends. They are running down Housing New Zealand. They are taking its powers away from it. They are cutting it up and dividing it out. Labour, on the other hand, will rebuild Housing New Zealand. We will build more state houses. We will run it as part of the core public service with one job – to put a roof over the heads of vulnerable people.

All right, we’re going to have to leave it there. Just before I go, I’m wondering do you think we should have a referendum on decriminalising cannabis? Yes or no?

No, I don’t support that.

Okay, thanks for joining me this morning. Housing New Zealand didn’t have anyone available to appear on the show today, but a spokesperson told us independent valuers provide a current market valuation for the houses up for sale and it aims to achieve that or better.

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