Labour are aiming to make property investment ‘less attractive’

The current government are an excellent example of ideology trumping common sense. They say that they want to improve Maori achievement but the practical, common sense solution, which is actually working (Charter schools), is being terminated because of socialist ideology that rejects anything with a whiff of private enterprise.

Now they are saying that they want to improve the rental market for tenants but they have, instead, made it much, much worse because their ideology insists that landlords are rich pricks who need to be cut down to size. Their latest policy is a deliberate and incomprehensible decision (given the need for more rental properties) to make an investment in property ‘less attractive’.


Quote:

[…] Landlords believe the cost of providing a rental property will rise from $5500 a year to $9000, if Revenue Minister Stuart Nash’s tax reforms go ahead.

Nash has proposed “loss ring-fencing” rules that would mean people with residential properties would no longer be able to offset tax losses from those properties against their other income.

The aim was to level the playing field between home-owners and property investors, Nash said, reducing the tax advantages of investing, or speculating, in residential property.

End of quote:

This is like shooting cattle farmers as well as cattle rustlers. While I can understand the government wanting to make speculation less attractive they are using a sledgehammer to crack a walnut. Why on earth would they want to make property investment less attractive to landlords? Most rentals in New Zealand are provided by private landlords. More rental properties mean lower rents. A shortage of rental properties means higher rents due to increased demand. Jacinda Ardern has criticised landlords for raising their rents, which she has called ‘immoral’. Is it then immoral to bring in a property tax that will either force landlords to raise their rents in order to cover their increased costs or to leave the market altogether, which will also lead to increased rents?

Quote:

But landlord representative Andrew King said: “A NZ Property Investors’ Federation study into the cost of providing the average NZ home as a rental shows it currently costs $5500 a year after all costs are paid, even with recent rental price increases and a cash deposit of over $50,000.

“If ring-fencing losses was introduced, this cost will increase to $9000. This is an extra $67 per week.”

He predicted the rise in costs would have a negative impact for tenants.

“Ring-fencing rental property losses will simply make it considerably harder for people to provide rental homes for tenants. We are already seeing the consequences of policies which are driving rental property providers out of the market,” King said.

“It is no surprise that tenants are complaining that there are not enough rental properties, that rental prices are increasing and overcrowding is becoming more common.”

End of quote:

Revenue Minister Stuart Nash has admitted that his so-called reforms will make property investment less attractive but he also believes that it will level the playing field between property investors and home buyers. It seems that the government are more interested in making it easier for people to buy their first home than they are in keeping rents down for tenants.

Landlord representative Andrew King has said that:

Quote:

Nash’s plan would put the industry into a “lose-lose” situation.

“If rental prices don’t increase to compensate then the rental supply shortages we are experiencing will not only continue, they will accelerate. If rental prices do increase, tenants will face a mixture of financial hardship and overcrowding. There is no good outcome here.”

King also dismissed Nash’s claim the tax plan would “level the playing field between property investors and home buyers”.[…]

End of quote:

 

– Stuff


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