The Government has rushed out its latest attempt to intervene in the housing market, but the sad reality for Kiwis struggling to rent or buy a home is it will most likely make the situation worse.
Thank you for reading this post, don't forget to subscribe!The repeated extensions to the ‘bright line test’, now 10 years, have effectively turned it into a Capital Gains Tax. This is a broken campaign promise by Labour and Prime Minister Jacinda Ardern and will likely see property owners hold onto their houses longer, make complying more complex, and it will not deliver any more houses into the market.
Treasury and IRD concluded it was ‘worse than doing nothing’.
And according to Finance Minister Grant Robertson Mum and Dad landlords with one rental, who sell it after nine years, are now considered ‘speculators. The support for Kāinga Ora to borrow $2 billion risks pushing up land costs for the rest of the country as the state developer competes with private sector developers for scarce housing land.
National would have liked to see measures to require Councils to release more space for development, a more transparent approach to funding infrastructure for housing and support for Community Housing Providers who are desperate to get in and build more houses. The $3.8 billion infrastructure fund announced by Housing Minister Megan Woods contains no agreed eligibility criteria, targets, start dates or an actual tangible plan. That detail will apparently be available by 31 June.
To be clear, National supports more funding for infrastructure needed to support housing. But Labour’s fund looks unclear, and Megan Woods admits it will be at least 18 months before it results in any new housing being built. Tax deduction changes for landlords are likely to increase rents as landlords try to cover the costs, meaning Kiwis currently renting will find it even more difficult to save for their first home. Treasury and IRD once again warned the Government about this in their advice, but it was ignored. When asked about increasing rents, Grant Robertson said he ‘can’t predict exactly what will happen’ and renters can ‘go looking elsewhere’. The question for Grant is where?
When pushed on what he would do if rents everywhere increased, Grant Robertson dropped another bombshell on property investors and did not rule out capping rents. The fact capping rents is even on the table shows the Government did not fully think through the consequences of its housing changes. It may mean we see rents hiked much more and a lot quicker than first thought as landlords try to get in before the Government sets a cap, which will only once again hurt our renters and first-home buyers struggling to get a deposit together.
Our Mum and Dad landlords who own one rental as an investment are now being treated like criminals by this Government. What New Zealand needs is more houses, and we need property investors to feel confident and invest in new builds.
But the Government’s policies and comments will be eroding this confidence. Attacking landlords and property developers will not get more houses built. National would repeal the tax changes and return the bright line test back to two years to specifically target rampant speculators trying to make a quick buck, as it was originally intended.
We will focus our efforts on policy that will move the dial on the supply of new land and housing, and not punish renters and most landlords trying to do the right thing in a limited market. -Nicola Willis, National Party spokesperson.