Housing crisis: Landlord starts petition against tax changes

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Investors who bought a house on Friday will have scraped in on avoiding the Government's extension to the bright-line test.

On Tuesday the Government extended the test to 10 years for properties bought on or after March 27, 2021, but also gave an exemption to new build houses, which will remain at five years.

Harcourts Wellington partner Antonia Brown said the announcement had done little to change buyer and seller behaviour so far, with no auctions brought forward to settle sales before the changes took effect.

"We did suggest it to a few but most people in the market are in it for the long haul, so we didn't tempt anybody to do that... we tried though."

Property investor Steve Goodey agreed, saying most investors had a long-term portfolio plan, but the policies had caused some to reconsider.

"Some have cancelled their plans to sell properties, a lot of people are looking at when they purchased their property with this new bright-line test issue.

"There's a lot of confusion out there though."

He said overall, the changes introduced to discourage investors would not help the housing crisis.

"I certainly think it will give people a pause to think about future investments in real estate in New Zealand, but it's also put a heck of amount of pressure on developers.

"We don't have the materials, the tradespeople, the apprentices to fulfill that need in the marketplace."

Change in interest deductibility unfair - petition organiser

Another property investor Lindsay Calvi-Freeman has started a petition, which has more than 8000 signatures, calling for the Government to reverse its planned policy on interest deductibility, saying it was unfair.

"Any business can claim interest as an expense. If you're a trucking company and you need to borrow money to buy a truck you can deduct the interest from your taxable income because it's a cost incurred to provide that service. The same is true if you borrow to buy a house to rent out.

"The general principle of income tax is that the Government gets a slice of what you get. What they're doing here is wanting a slice of something you don't even get."

He said the majority of landlords were amateur so had not raised rents in line with what the market would tolerate and that means if they were to take a loss under the new changes, raising rents would not be out of the question.

He said it was either that or an exodus from the property market.

"If investors all left the market there would be a big issue because not everyone, even if prices dropped, would be in a position to buy a house and unless the Government could come up with enough money to purchase all the rentals out there, there's going to be an issue."

He said the planned changes had caused him to rethink purchasing another property.

Property lawyer Michael Hofmann-Body said he had seen some clients decide not to go ahead with purchases since the announcement and had also had enquiries around bringing settlements forward so they were done and dusted before the weekend.

RNZ

 

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