Labour is getting crapped on from the left and right after loosening its restrictions on people making capital gains off KiwiBuild houses. Hayden Donnell argues with the only expert he respects on the new rules.
On Wednesday, important political news was emitted from the Newshub. Phil Twyford had changed the rules for people looking to on-sell their KiwiBuild houses. Instead of forfeiting their entire capital gain if they sold within five years, they would have to give up only 30% if they sold within three years.
My first reaction was to convulse in visceral disgust. My second reaction was to wait a few minutes, then convulse again in visceral disgust. My third reaction was to call an economist, who said it was actually fine. At that point, two sides of my brain split and began to engage in a brutal, unending war – each wrestling for control of my conscience on the KiwiBuild changes.
This is a transcript of their negotiations.
Fearless Truth Seeker Hayden
Fuck this. The whole reason Labour had to come up with KiwiBuild in the first place was because of the market distortions brought about by property speculation. People leveraging their houses to buy more houses, forcing property out of reach for just about anyone without existing equity. Now Labour is essentially saying the houses they built to address the harm caused by property speculation can be used by people to … do more property speculation. Flip the house the day after you buy it and you can keep 70% of any capital gain. Wait three years and you get 100%.
Partisan Hack Hayden
Who made up these names? Matthew Hooton? First of all, you can’t just “flip” your house inside three years – you need the permission of the Kiwibuild Unit –
Fearless Truth Seeker Hayden
Except what’s the penalty for not getting the permission of the KiwiBuild Unit and secretly selling your house anyway? Only 30% of the capital gain, according to Twyford himself. That’s just in the first three years as well. After that it’s a free-for-all. Having to forfeit your entire capital gain inside the first five years was a much more powerful disincentive. But don’t just take my word for that. Take the word of Phil Twyford, in 2016, when he made that Labour’s policy before changing it on the sly.
Partisan Hack Hayden
Why are we putting extra restrictions on people who buy KiwiBuild houses though? Why do they have to be more moral than everyone else? These houses are sold at market rate. People buy them with their own money. They’re not subsidised by the government. The only thing that KiwiBuild does really is provide a type of house the market wasn’t providing: small and affordable rather than huge, tacky, and kitted out for a party where people drink prosecco and talk about how young people are too lazy to work jobs that earn enough money to buy gruel.
Fearless Truth Seeker Hayden
No, the houses aren’t subsidised. They’re sold for what they’re worth. But the truth is, they wouldn’t have been available without the government coming on board and assuring developers they’ll be a worthwhile investment. The least we could hope for out of the government’s flagship scheme to alleviate the housing crisis is that it won’t be used to make the housing crisis worse.
Partisan Hack Hayden
It won’t make the housing crisis worse! Its main purpose is to increase housing supply, particularly at the lower end of the market, and it’s doing that. But also, you’re acting like the people who are buying KiwiBuild houses are all going to become rapacious property investors. They’re not. They’re people like your friend Matt –
Fearless Truth Seeker Hayden
Don’t bring Matt into this –
Partisan Hack Hayden
Matt, who’s below the median income for Auckland, and is taking on a huge amount of debt to buy what will be by definition of the KiwiBuild rules his first and only home, and isn’t likely to then sell up, pay off his 90% mortgage, and use his meagre leftover thousands to become a fully paid up member of the Property Investors Federation.
Fearless Truth Seeker Hayden
Speaking of the Property Investors Federation, they’re “thrilled” with this new policy. Are you really siding with something that makes Andrew King happy? Don’t your allies say something about the nature of your argument?
Partisan Hack Hayden
Not everything in life is about making Andrew King sad. The way to cut down on property speculation isn’t by restricting it to poorer people who scrape together their savings to buy a KiwiBuild house. It’s to introduce measures like a Capital Gains Tax targeting actual rich people. They’re the enemy. Not some poor sap who managed to get a $600,000 house out in Papakura.
Fearless Truth Seeker Hayden
This does show something though: the government could be running a bit short on buyers who can afford KiwiBuild houses. They’ve had to sweeten the deal.
Partisan Hack Hayden
It sure seems that way. Maybe they should be launching a massive state house building programme instead.