Labour plans to set up an affordable housing authority to buy land, fast-track the building of affordable homes and manage large-scale developments, including Labour's KiwiBuild policy.
It will also extend the 'bright line test' from two years to five years so investment properties on-sold within five years have to pay a tax on the capital gains achieved.
Labour has stopped short of promising to remove negative gearing which allows landlords to claim tax deductions on losses on their rental properties, but says it will consult on ways to close that "loophole".
Labour leader Andrew Little set out the affordable housing policy at a speech in New Lynn this afternoon.
It also included a rejigged version of Labour's 2013 KiwiBuild policy to build 100,000 affordable homes nationwide - half of them will now be in Auckland and range up to $600,000 for a standalone home.
Labour's key proposals are:
- Set up an affordable housing authority as an independent Crown entity. It will buy land and partner with the private sector and councils to develop it. Will have a fast tracked planning process and take the lead on large housing developments, such as on Auckland's outskirts. It will be responsible for delivering Labour's KiwiBuild policy (100,000 affordable homes over 10 years) and will have control of Crown land which is freed up for housing developments. It will cost $100 million to set up but will have to fund itself after that.
- KiwiBuild: 100,000 affordable houses over 10 years, of which half will be in Auckland where they will cost up to $600,000 for a standalone home. The Affordable Housing Authority will deliver it. It will require a $2 billion start-up which will be recouped from house sales and returned to the Crown once the houses are built.
- Crack down on speculators by extending the bright line test from 2 years to 5 years. Will consult on ways to end negative gearing, which allows landlords to claim tax deductions on any loss if their rental earns less than it costs in mortgage interest and maintenance - described by Labour as a "subsidy for speculation." Will continue with policy to ban foreign owners from buying existing homes.
Little said the Affordable Housing Authority would use the best of public and private sector expertise to work with developers to cut through red tape and build the houses Auckland needed.
He said other measures were aimed at dampening property speculation, saying 46 per cent per cent of houses in Auckland were being bought by investors - double the numbers being bought by first home buyers.
The current two year limit for the bright line had done little to dampen house price rises and it needed to be extended to five years. "This will stop speculators making a quick buck from flicking houses and is on top of our ban on overseas speculators from buying existing homes."
Little said home ownership was at its lowest level in 65 years and the average house price in Auckland has nearly doubled since National entered Government in 2008 and the prices were hurting homeowners with massive mortgages as much as house hunters.
"When did we decide we want to make buying your first home so difficult, or living with a mortgage so tough?"
The Property Institute chief executive Ashley Church said Labour's policies showed it was willing to work with the private sector to build as many homes as quickly as possible.
"It's the only practical way to start turning the tide on runaway house price inflation."
While the institute would prefer to see several competing Crown or Council owned companies as urban authorities rather than one "Big Brother", it supported a focus on affordable housing and was overall a "worthwhile contribution" to the housing debate.
However, Church said Labour had misfired by proposing to increase the bright line test to five years.
Little said his aim was to target property speculators rather than genuine landlord investors.
Church said a move to five years would punish genuine landlords. "Since it is unlikely that a speculator would hold a property for five years before selling the main effect would be to punish landlords selling for legitimate reasons."
In 2010, Treasury argued for a five-year term to bring about 'behavioural change' in property speculation. However, in 2015 Inland Revenue warned against a 3-5 year term, saying it would "capture significant numbers of persons who had no intention of resale" rather than speculators.
Auckland's acting mayor Penny Hulse said the policy was a useful contribution to the debate over Auckland's housing challenges.
"The policy is clearly focused on getting more affordable housing and that's encouraging given we certainly need more of it in Auckland. However, we are also committed to making sure we have well planned communities with all the facilities they need," she said.
"This can't just be about building houses, it has to be about building communities and we are keen to keep talking to the Labour Party and Government about this."
Minister of Economic Development Steven Joyce said Labour's package was "primarily an endorsement of the Government's approach with a few tweaks to it."
"They've built it up as some major major change in housing policy, but actually it's what's already happening."
The biggest difference was the KiwiBuild programme for first home buyers but he said Labour was yet to explain where it would build the 100,000 homes.
"We're already building 85,000 houses across New Zealand in this term of Government. The bigger issue is obtaining more land supply. That's the most important thing."
Labour says its affordable homes will cost $600,000 at the most.
Although National has set aside some of its new housing developments on Crown-owned land for affordable housing, Mr Joyce said it did not have a set criteria for an affordable house.
"The plan is to get as many houses available across a range of prices." He pointed to the Hobsonville development as an example.
He also questioned whether the $2 billion figure Labour put on getting its KiwiBuild project up and running was realistic.
"That equates to around 4000 houses and I know they say they're going to recycle the capital, but they'd have to be recycling the capital before it left the plans to be able to build anything like those numbers."
Labour intended the $2 billion as a start up injection of cash to get the first homes built and will then be 'recycled' as the homes are sold to build more. The policy aims at building 100,000 affordable homes over 10 years, ratcheting up as the policy progressed.