Another blow to landlords

Rental Property

From 1 April 2019 residential landlords will not be able to offset their rental losses against other income. Rental losses can only be carried forward to be offset against future profits, which may be years away. This is yet another landlord-bashing policy from a government that hates capitalists. The really sad part is that landlords can generally sell easily in today’s property market, whereas tenants are finding things tougher and tougher. Still, you know what socialists are like. They’d rather have people living on the street (and dependent on the government) than have a ‘rich prick’ make any money. That is already the result of its landlord bashing policies, and things are only going to get worse from here. quote.

Soon landlords won’t be able to offset their residential rental losses against other income, as the Government introduces ring-fencing legislation.
The legislation is a move to reduce the Government’s perceived unfairness between property investors and owner-occupiers.

The Government expects the rules to improve a first-home buyer’s ability to compete with investors, improve housing affordability, and increase tax revenue by about $190 million per year.

In the coversheet to the Regulatory Impact Assessment issued by Treasury and the IRD which accompanied the legislation, the IRD Quality Assurance reviewer stated:

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Another rise in minimum wage

Many of you will know that I used to be an employer, and I prided myself on the fact that we always paid good wages. We would employ students to do scanning and filing, and they were paid above minimum wage. $15 per hour was the going rate. The real benefit to the young people involved was the office experience that they gained. Some of the students went on to university, and some went into administrative roles, always helped by the office experience that they had gained working for us. It was a win-win situation, and I am proud of those people who used us as a stepping stone to good careers.

At $17.70, there would be no value in those roles. There comes a point at which the cost outweighs the benefit, and I would not be employing these people if I were still in business today.

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Tenants may be the cause of cold houses

State houses

Someone has finally said what many of us already know, particularly those who now are, or have been, landlords. It may not be the landlord, or the house, that causes rental houses to be cold. Maybe, just maybe, it is the way tenants live in them.

Stuff reports: quote.

Economic consultancy NZIER provided the Ministry of Housing and Urban Development with a cost-benefit analysis as part of its consultation work to develop standards to underpin the new Healthy Homes legislation.

But now economist Ian Harrison, of Tailrisk Economics, said that analysis painted too rosy a picture of what could be achieved.

He said, while it was commonly claimed that New Zealand houses were “cold and damp”, there was no clear evidence of a widespread problem.

Only 2.7 per cent of tenants claimed cold and dampness was an issue in their homes in a 2017 Branz report.

“Most houses will be cold and damp if the tenant does not adequately heat and ventilate the property,” Harrison said.

He redid the cost-benefit analysis, and found that if insulation were topped up to the highest of the standards proposed, there would only be 39 cent in benefit for every $1 spent – or a loss of 61c.

The net cost to the country would be $270 million. end quote.

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The government got off lightly

Derek Handley – Photo: Newsie

Well done, Derek Handley – it takes a certain kind of tech guru, sorry futurist, to deliver two miserable failures to the NZX. Administrators have just been called in for Snakk Media, the second of Handley’s stuff ups to have been foisted on the NZX. Handley was responsible for floating the company in 2013 and raising capital. He was its chairman and one of its major investors.

But wait – there’s more!

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Crybaby of the week

Air NZ passenger clicks on wrong website, pays $135 to get forgotten glasses sent back

Today’s crybaby of the week would probably forget her head if it wasn’t screwed on.

  • She forgets her glasses.
  • She doesn’t tell Air New Zealand
  • Instead, she goes to another website which charges her.
  • When Air New Zealand contact her she asks for it to be couriered… Which they arrange… at a cost.
  • Then she changes her mind… too late and now thinks that it was all terribly unfair.

Let’s call it a stupid tax

A newspaper explains. quote.

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Merry Christmas, landlords

Ring-fencing of losses on rental properties is about to become law, as the bill’s first reading will go through the House before Christmas.

Stuff reports: quote.

A bill that will introduce ring-fencing of tax losses for rental properties has been introduced to Parliament and is likely to get its first reading on December 12.

It means investors who run a property at a loss will not be able to claim that against their other income.

At the moment, if a rental property costs more a year to own than it provides in rent, you can use the difference to reduce your other income.

Many landlords use this as a way to help them hold properties long enough to benefit from capital gains, particularly when house prices are high compared to rents.

But the bill would instead require that the losses were only claimed against future rental property income.

The default will be for losses to be ringfenced within an investor’s property portfolio but they can opt to do it on a property-by-property basis instead.

The change would be introduced in the 2019/2020 tax year, rather than being staggered or phased in over a couple of years. end quote.

Rental losses are not what they used to be, and many properties make rental profits these days. But landlords who have bought properties relatively recently may have been relying on tax refunds to fund their properties, particularly where maintenance and upgrades are required by the government. Please note that rental property is the only area of business that is affected by this. If you have a small business on the side buying and selling items on Trademe, you can still claim any losses made. These rules apply only to rental property.

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The Green Investment Fund

Stuff  reports: quote.

The launch of New Zealand Green Investment Finance, with a $100 million capital contribution from the Government, fulfills a confidence and supply agreement between Labour and the Greens. Prime Minister Jacinda Ardern and Climate Change Minister James Shaw say the company is central to a plan to make New Zealand carbon neutral. But it has a complex task ahead.

The new board of New Zealand Green Investment Finance, a new $100 million Government-funded venture, faces a complex task.

It effectively has two different goals, which do not sit comfortably together.

As well as boosting funds flowing into projects which cut the carbon footprint of the New Zealand economy, it also tasked with turning a profit. [sic]

This could create a conflict, not because green technology is inherently unprofitable, but because the company is meant to act as a means to boost projects which the market is  failing to back. end quote.

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From Banana republic to the OK Corral

Further to our recent discussions on the proposed capital gains tax, Stuff has written another article that might provoke some interest. Let us see what you think. quote.

Last week I warned the TWG’s preferred method of bringing in the new tax which would force every asset to be valued, as at a certain “valuation date”, adding billions of dollars in compliance costs across hundreds of thousands of New Zealand’s small businesses.

Cullen, the TWG’s chairman, accused me of “blatant scaremongering” but I stand by the reasoning. So does the TWG’s own report, the only one the public is able to work from. end quote.

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It is not a ‘green’ system as it is fuelled by fossil fuels


We are in an age where it is considered that we should reduce, perhaps even eliminate, the use of fossil fuels.

We should also, we are told, aim for zero production of carbon dioxide because its production is what is causing what is constantly referred to as global warming.

These are the parameters we are instructed to live by. Failure to do so will be at our own risk, notwithstanding that, if the people in power remove our supply of fossil fuels, we will effectively have no option.

But we are now presented with a wonderful solution, that proposed by 8Rivers, as if it is the answer to all our problems.

On the face of it things sound very nice, so should we go along with it or not? Taking our leader’s advice I have ‘read between the lines’ and I am far from convinced.

Why? Well, firstly, the proposal is for an experimental phase only, which IF it produces a positive result will then require enormous injections of capital.

Secondly, the  ‘Allam Cycle’ system uses natural gas (aren’t we supposed to be stopping the use of that?) which in turn produces carbon dioxide, the production of which we are being encouraged to avoid. Not only that but the plan is that the carbon dioxide will likely be pumped back into the ground (to avoid its release into the atmosphere) by the process known as fracking, or it will be used to produce urea. Locally produced urea is produced using natural gas.

Thirdly, 8Rivers is an investment company not a participant entity in the field. Yes, it does have a subsidiary company NetPower which has built a pilot plant in Texas. Whether that is a success or not remains to be seen but at this point in time 8Rivers are simply seeking some investment funds to continue their research.

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The ideology wars begin

In the green corner we have the zero carbon team; in the black corner we have the regional development team; in the red corner is the ban oil and gas crowd and in the blue corner are some squabbling wimps.

There is a promising new technology that appears to be able to convert natural gas to electricity with reasonably good efficiency and have only CO2 and water as the ’emissions’.  The CO2 can be compressed and fed back into the underground strata to assist in further extraction of the oil and gas there.

The zero carbon corner should love it, but they are still waiting for Greenpeace to tell them what to think about it.  However, the ban oil and gas gang have already thrown a spanner into the machinery.  A newspaper looks at the issues.  Quote.

Regional Economic Development Minister Shane Jones wants it.

But his senior colleague, Environment and Economic Development Minister David Parker, won’t take a briefing on it.

Energy Minister Megan Woods, who has talked up the potential for hydrogen to replace oil and gas as a major industry, has been briefed on the 8 Rivers hydrogen plant proposal but won’t comment on it.

Climate Change Minister James Shaw is also keen on hydrogen as a transport fuel for heavy trucking, for electricity production and as a potential clean energy export opportunity.

Finance Minister Grant Robertson is keeping an open mind. If it comes to fruition, 8 Rivers would be the biggest industrial development in New Zealand since the Think Big era, but this time the Government wouldn’t be paying for it.

Prime Minister Jacinda Ardern is another fan of New Zealand’s “green” hydrogen opportunity and is aware of the proposal, which seeks an initial $10 million to $20m loan from the Provincial Growth Fund (PGF) to help pay for a $50m feasibility study.

If that proved positive, the project’s backers would seek up to $2 billion in private capital to build a zero-carbon emissions plant in Taranaki that would produce industrial quantities of hydrogen, urea for local agricultural use and export, and electricity, along with a swag of other chemicals.

But there’s a snag. The 8 Rivers technology uses natural gas – which the Government has burnt huge political capital on putting a premature end to with its unanticipated decision in April to stop issuing future offshore oil and gas exploration permits. End quote.

Always look before you leap …  Quote. Read more »