It’s been almost two years since we had a ‘Sunday reading’ post – Matt has been doing his ‘Friday roundups’ instead – but with everything I’m doing on housing, I thought it was worth bringing a few pieces together this week.
Covid and Our Homes
First up, a piece by Auckland architect Mat Brown over at The Spinoff: “How Covid-19 changed the way we think about our homes”. It looks like his company commissioned a survey to look at how people felt about their homes and neighbourhoods during lockdown, and how it might affect their future housing choices (bloody good idea, by the way):
We saw an increased appreciation of the parks and community spaces around our homes. In a world of social distancing, they proved fit for purpose.
Our respondents also indicated an anticipated shift toward walking and cycling and, while on balance there was a nervousness around public transport, the vast majority of respondents anticipated no change in their preferences around buses and trains.
It’s fair to say too that most homes performed well as workplaces, with many people utilising a bedroom or existing office space to work from home. This is a luxury that’s not afforded to everyone and interestingly, almost all respondents said they wouldn’t want to pay for an office space when they bought their next house. If they did, very few said they would pay more than $20,000 – approximately two square metres in an apartment building. Our homes, it would seem, have more flexibility than we would prefer to pay for. Of those homes that didn’t perform well, a common problem was cited: furniture, not size…
If we were to draw conclusions, it would be that lockdown has reminded us we are social animals, and that the social interaction we have within our community is valuable. We enjoy sharing spaces and experiences with our neighbours.
Our homes are lazy and poorly tuned to our day-to-day needs. While many respondents had a spare room to work from, they also lamented a lack of outdoor space. We’ve spent our money on things we don’t need.
What is a ‘home office’, anyway? Is it just a room that’s too small (or not sufficiently well lit) to be called a bedroom? The survey results seem to dispel the idea that we’ll all be looking for a ‘home office’ space in our next home. They also suggest that we should look more carefully at our outdoor space – the size and the quality too.
Covid and Our Homeless
However, homeless New Zealanders were always going to be a high-risk, high-needs group in a pandemic – especially during a lockdown. Organisations in Auckland, Wellington and Christchurch stepped up to the challenge, trying to give people a place to stay during this time – helped along by the fact that almost all ‘commercial accommodation’ was empty and could be made available, and government funding to the tune of $100 million which means that the accommodation could be secured for a whole year.
As a result, “rough sleeping” – the most visible type of homelessness, where people are literally out on the street – was “all but eliminated in just six weeks“. The Herald article, by Isaac Davison, continues:
Charities who work with the homeless say there are only a handful of people left on the streets in all of the major centres, some of whom had refused help.
“It feels like an amazing achievement,” said Zoe Truell, a manager at Lifewise. “It is something we couldn’t have dreamed of being possible or actually happening two months ago.”
“It would be wrong to say we have done 100 per cent,” said Auckland City Missioner Chris Farrelly. “But it’s the closest we’ve come in a generation to getting everyone off the street.”
The bigger challenge – keeping them off the street permanently – is yet to come. Many more people are expected to be made homeless as the economic downturn bites. And placing people with high needs in motels for months could create new problems.
There’s a podcast interview with Isaac and a representative from Lifewise here, a little over 20 minutes long and getting really interesting from 14:30.
“AirBNB properties are… exactly the kind of houses that NGOs want to get their hands on because they’re small, relatively cheap central city properties”.
While Covid-19 has been bad news for everyone who was involved in commercial accommodation – AirBNB, hotels, motels, serviced apartments and so on – it has created an opportunity to do much better for the people on the very edges of our society. Hopefully that can become a lasting improvement. Covid-19 has taken the edge off New Zealand’s housing crisis in a number of ways, and nowhere is this more apparent than in our ‘rough sleeping’ population.
And one for the policy geeks (and all interested Aucklanders)
Lastly, Auckland Council’s chief economist unit argue quite persuasively that Auckland should charge rates based on ‘land value’, not ‘capital value’. The total amount charged would be the same, but the incentives would be different:
Auckland’s current property rates system uses capital values (CV) to determine the variable component of a property’s rates bill. This approach, is widespread in New Zealand, but does not incentivise the most efficient use of land. Land owners who use land efficiently by developing on it, pay higher property rates, because the more improvements you add, the more you pay…
A land value (LV) based rates system approach has several strengths:
1. It incentivises efficient use of land and doesn’t reward those who do not develop their land.
2. It is easy to administer.
3. It is difficult to evade.
4. It doesn’t distort production in the economy – land is fixed and a tax on it won’t mean less of it is produced.
5. It better aligns timing between infrastructure provision and take-up of that infrastructure.
6. It is progressive. Those with more valuable land pay more.
Personally, I’m all for it. The main obstacles seem to be political ones, which the economists do talk about but perhaps not enough. And there are some minor downsides of rating based on land value, which they don’t discuss. It’s worth noting that they are not talking about a new ‘land tax’ as such – they are talking about changing the current Auckland Council rates system, which is essentially a ‘property tax’, so that it only looks at the land component of the property.
The obvious next question is, if land taxes are so great, why doesn’t the government implement one? That’s an even more politically charged issue, since we’re talking about a new tax rather than tweaking an existing system. A land tax would probably be used as an alternative to a Capital Gains Tax, and we all know where the CGT discussion ended up.
A lot of people didn’t realise (or deliberately ignored) that a Capital Gains Tax didn’t have to be a money grab; it was about fixing a hole or distortion in our tax system, and it could have been paired with tax reductions elsewhere to be revenue-neutral overall. Again, I’m in favour of a national-level land tax or CGT if it could be designed well and applied broadly (no exclusions for ‘the family home’). But I’m not holding my breath and won’t really write about it this year.