Real Estate Institute of NZ president Peter McDonald is reported to have said that in the main centres "there's a lot of growth. With [high] net migration, there's going to be a definite shortage of homes at some stage because we aren't building enough," The full article in the Sunday Star Times today reports on section sale prices dipping, but not in Auckland.
Further to our previous article - is it any wonder we're not building enough new homes when the Auckland City Council taxes each new dwelling project $25,000-$30,000? Actually, many Councils are taking what they think they can get away with. A Local Government Forum is complaining calling the contributions a "rort". But their article mainly refers to big developers. What about us? We wanted to purchase a rental property as a way of saving for our retirement. Well who wants to leave their well-earned savings in a badly-managed fund that charges fees that almost wipe any gain off? Let alone that some investment companies are not the safest place to have your savings at the moment. As for leaving it in a bank - similarly, the fees, minute amount of interest earned and taxes means your money is almost going backwards there. Land, like gold, is a finite resource and the REINZ forewarn we're going to have a shortage of housing in Auckland. Surely we can't lose if we buy or build homes to rent out?
We're wondering if we should have just bought an existing dwelling. But, that doesn't increase the number of dwellings available. Our longer term plan is to develop decent (stylish, eco-features) lower cost housing to support Kiwi home ownership at entry level (in the lower price bracket). We can understand the resentment towards the large developers and we can empathise with public support for wanting to sting them with these huge contributions - they build 'little boxes on the hillside, little boxes made of ticky-tacky' (as my father used to sing). Their developments are ugly, lacking in style and character; they shove heaps of people in to a small area - it's gross. So, yes. Let's stop them. (For instance - look at Stonefields - how tragic is that, but Dannemora, Botany, Albany - huge swathes of once-beautiful farm land is now covered in desert-coloured, tree-denuded beige-on-beige-boring sleeping boxes.)
We're not Fletchers! We can't negotiate our way out of paying the contribution.
Sunday, June 20, 2010
Friday, June 18, 2010
Council Contribution Crashes Project Hopes of Building Cheaper Than Buying
The hidden costs that jump out at the naive developer to rip a chunk out of their arse have got us. We've just been dealt a nasty blow. Yadda yadda ignorance is no excuse blah de blah, but heay this is a new policy and okay, we didn't know about it. The Auckland City Council "in accordance with Auckland City's adopted 2009 development contributions policy" is charging us $23,785.63 towards: the Council's fund to buy parks and reserves, create walks, playgrounds and develop open spaces, develop libraries, swimming pools, community centres, and to help pay for the upgrade of the city wide stormwater system. In addition, we're to pay towards improving citywide roading, creating cycle and bus lanes. So, isn't that why we pay rates? Isn't this basically a land tax?
What felt really unfair about it, is that a proportion of the calculation is worked out on the full size of the section including the neighbours front half. Because it's a cross-lease section it's treated as one title. The clerk at the Council thinks we got off lightly - the usual contribution per new dwelling is $25,000 - 30,000. Our contribution is below average because of the smaller size and value of the project. We have to pay this - there is no appeal and no way around it. If we want to pick up our building consent, this must be paid.
We hadn't budgeted this in and it's way beyond a vague amount we had as a contingency fund. When we add this on to the cost of the land and house, because it is effectively a development tax, we're up to $199,000. We still have to pay for connections and fixing up the house once on site, fencing, paving, insulation, base boards, landscaping and on and on and on. There goes the new (2nd hand) kitchen we were going to put in.
So, it's off to the bank we go for a 3 month mortgage holiday on our home and the section.
What felt really unfair about it, is that a proportion of the calculation is worked out on the full size of the section including the neighbours front half. Because it's a cross-lease section it's treated as one title. The clerk at the Council thinks we got off lightly - the usual contribution per new dwelling is $25,000 - 30,000. Our contribution is below average because of the smaller size and value of the project. We have to pay this - there is no appeal and no way around it. If we want to pick up our building consent, this must be paid.
We hadn't budgeted this in and it's way beyond a vague amount we had as a contingency fund. When we add this on to the cost of the land and house, because it is effectively a development tax, we're up to $199,000. We still have to pay for connections and fixing up the house once on site, fencing, paving, insulation, base boards, landscaping and on and on and on. There goes the new (2nd hand) kitchen we were going to put in.
So, it's off to the bank we go for a 3 month mortgage holiday on our home and the section.
Digging in the wet and cold
We've been having fun with a digger. Got a small Bobcat and have been scraping the vegetation off the house site, digging up tree stumps and ripping out old fencing. New photos at Flickr. We bought a generator 2nd hand off Trade Me to enable us to use power tools on site and at the house prior to power getting connected. We removed all the vegetation hanging over the back fence: choko vines, long grass and other weedy vines. The fence is nearly falling over now. Had to take out a noxious tree also: kerosene plant. There was an old wire fence running along the back and once the vegetation was clipped away we pulled that out. Looks tidier.
Hired a tipping trailer which was a bit of fun. We used the digger to load concrete, dirt and rubble on to the trailer and then I (the girl) heads off to the rubbish dumb, backs up the trailer and I pull the pins and thump the trailer tips clunk to the ground. A bit of dirt fell off the back but the bulk of the concrete, rubble and mud just sat there. Hmmm... so it was a bit of hard labour with the rake, then easing the ute forward, then pull more dirt and grass and rubble off the back, then ease the ute forward again... at least that was under cover. We've both had bad lingering head colds all week from working 2 days out in the cold, intermittently getting wet.
Both of us did the following 2 loads. Pst don't tell the Trailer Hire people - we got a tonne on the last load, oops (the trailer's only rated for 500kg). Each 400kg of rubbish costs $55.00 so it cost a few hundred dollars plus a couple of hundred for the digger and there's still a truck load sitting at the section waiting for another weekend. At least the site is now ready for the house to be moved on.
Hired a tipping trailer which was a bit of fun. We used the digger to load concrete, dirt and rubble on to the trailer and then I (the girl) heads off to the rubbish dumb, backs up the trailer and I pull the pins and thump the trailer tips clunk to the ground. A bit of dirt fell off the back but the bulk of the concrete, rubble and mud just sat there. Hmmm... so it was a bit of hard labour with the rake, then easing the ute forward, then pull more dirt and grass and rubble off the back, then ease the ute forward again... at least that was under cover. We've both had bad lingering head colds all week from working 2 days out in the cold, intermittently getting wet.
Both of us did the following 2 loads. Pst don't tell the Trailer Hire people - we got a tonne on the last load, oops (the trailer's only rated for 500kg). Each 400kg of rubbish costs $55.00 so it cost a few hundred dollars plus a couple of hundred for the digger and there's still a truck load sitting at the section waiting for another weekend. At least the site is now ready for the house to be moved on.
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