Smith defends Government spending NZ$29 million on subsidies for Weymouth housing project when speculators pocketed big gains by selling houses within five weeks; New buyers have to hold for 3 years

By Bernard Hickey

The Government was forced today to defend its spending of NZ$29 million to help build 295 new homes on a Special Housing Area at Weymouth in South Auckland, some of which were flicked on by speculators within weeks of being built for hundreds in thousands of dollars in tax-free capital gains.

Simon Collins reported that one couple had bought a house at the Weymouth sub-division off the plan in July last year and sold it in September this year, pocketing a profit of NZ$130,000 in just five weeks after settling. As many as three of the houses had been flicked on for a quick profit, it was reported, forcing the sub-division’s developers to write into sales agreements from the middle of this year that buyers could not sell within three years. The project is run by Tamaki Makaurau Community Housing, which is owned by the Tamaki Collective, the Maori Trustee, the Community of Refuge Trust and the NZ Housing Foundation.

Labour Housing Spokesman Phil Twyford attacked Building and Housing Minister Nick Smith in Parliament for not ensuring the protections against quick-flick sales were not included from the start.

Smith said 20% or 59 of the 295 new homes remained with social housing providers and the rest of the development was being partially funded by the sale of 105 private market sales.

“The first 20 of these were sold off the plans and had no conditions, so they could secure the bank finance for the community organisations to be able to fund the infrastructure and get on with the project,” he said in Parliament.

“I am not surprised that some of those homes have subsequently been bought and sold at some increase in price, given what has occurred to Auckland house prices over the last year and a half,” he said.

Twyford then asked: “Was the $29 million grant at Weymouth, which amounts to NZ$100,000 per house on average, meant to enable speculators to make NZ$130,000 in 5 weeks on the back of a Government subsidy?”

Smith said the homes that had recently been sold on had been bought off the plan in August last year after being on the open market for 10 weeks. He  said the NZ$29 million had been used to help buy the land and develop roading and other infrastructure for the development, rather than build the actual houses.

“More than a year later when the house was completed, that purchaser who bought it at the free-market price decided to resell it. That is no different from what has occurred in Hobsonville,” Smith said.

He noted that the overall size of the project had increased by 21 houses to 295 between planning and development because of the good price the developers had secured on the private sales.

‘Clawback provision?’

Twyford then asked why the Government had not included a clawback provision that would have seen capital gain from the sale of affordable homes within a certain period repaid to the taxpayer as a way of deterring speculation.

Smith denied the Government was doing the development, saying it had only helped with infrastructure to ensure the provision of 59 social homes and help support the development of 295 houses in total.

“If the member opposite wants to regulate the price of every house that is bought and sold in New Zealand, that is the sort of socialism he might stand for; it is not what we do,” Smith said.

“People’s circumstances change. What you need to realise is that this project could be funded only by some of the houses being at private market value. It is a $120 million development. The infrastructure and other components required private sales to fund it,” he said.

“The only way we could have a country where nobody was able to profit from houses would be to have the Government controlling the sale price of every house in New Zealand, and that is not this Government’s policy.”