John MacDonald: A housing policy I'd like to like, but can't

Labour’s idea of helping people living in state houses get into the property market is one of those things that might sound good or feel good, but doesn’t take into account a whole lot of practicalities.

Which anyone who has actually owned a home will know about.

Anyone taking part in Labour’s scheme would have $100 from their state house rent deposited into a trust account each week and, once there was enough for a 5 percent deposit, they could use it to buy the house they live in.

Murray Edridge runs the Wellington City Mission. He’s quite enthusiastic about it because he reckons the deposit is the big hurdle.

But saving for the deposit through this scheme is one thing. Paying the mortgage off on an ongoing basis is another. That’s if someone living in a state house could even get a mortgage in the first place.

Not to mention the other costs that come with owning a home.

Rates. Maintenance. Insurance.

Because, let’s say someone did get enough for a deposit through this scheme, they would have done it with a portion of their rent being kept aside by the state.

Very different when you’re the one with the mortgage.

Tell that to Murray Edridge from the City Mission in Wellington, though.

He says he’s seen something similar to this work before and he reckons it could work again.

This is the Family Benefit Capitalisation Scheme, which let families with kids get their Family Benefit payments in advance in a lump sum, which they could then use for either a deposit on their first home, put towards building a new house, or use for necessary structural additions or repairs.

The difference to what Labour is proposing is that scheme, which ran from 1958 until 1986, was available to everyone, not just people living in state houses.

By the way, in case you’re wondering how this fits with Labour’s criticisms of state houses being sold, its housing spokesperson Kieran McAnulty says they’ve thought about that. And, for every state house sold to a tenant, they’d replace it with three new ones.

He reckons there are 1,100 tenants who could, eventually, be in a position to buy. So that would be 3,300 new state houses that Labour would have to build over time as well.

While I would like to like this policy, I think it’s one of those feel-good ideas that promises way more than it can deliver.

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