Unintended Consequences Of Today’s Housing Announcements – Scoop.co.nz

Tuesday, 23 March 2021, 11:23 amPress Release: NZ Property Investors' Federation

By removing mortgage interest tax deductibility andincreasing the Bright Line test, Government is prioritisingfirst home buyers over renters. However the many people whocannot yet afford their first home and are therefore tenantsneed more rental properties. Private rental property ownersare not the problem. They are part of the solution to theproblem.

While the Bright Line test increase willdo nothing to stop property speculation, removing interestdeductibility will increase the cost of providing rentalproperties drastically, said Sharon Cullwick, theexecutive officer of the NZ Property Investors Federation(NZPIF)

Without the ability to claim the legitimateexpense of mortgage interest costs, the NZPIF estimates thatthe cost of providing a $600,000 rental property willincrease by around $6,000 a year.

Interestdeductibility for rental properties is not the loophole itis claimed to be. It does not allow rental propertyproviders to outbid home owners. The facts are that homeowners get the benefit of accommodation. Rental propertyowners get the benefit of rental income. Home owners do nothave an income from their homes and therefore have nothingto deduct interest costs from. Rental owners, like allbusiness owners, deduct their business expenses from theirbusiness income to work out how much tax theypay.

NZPIF will be very interested to see theGovernment calculations of what the new tax rules will be.IRD officials have indicated that the fiscal impacts havenot yet been established.

The provision of rentalproperty has already been affected through measures such asremoving depreciation claims, the previous Bright Line testof five years and ring fencing rental property tax losses.These were all introduced to stop house price growth. Thisresult has not been achieved so when will lack of supply beuniversally acknowledged as the real issue. Governmentcannot build the required number of houses New Zealandersneed and the demand side measures announced today are justgoing to reduce the supply of rental properties and increaserental prices.

The NZPIF is proud to support theprovision of good quality rental properties in New Zealand.Rental property providers are not speculators. NZPIFreaffirms that tenants need more rental properties andprivate rental property owners are not the problem. They arepart of the solution to theproblem.

Scoop Media

Become a member Find out more

The Government has announced a housing package that will increase the supply of houses and remove incentives for speculators, to deliver a more sustainable housing market.This is a package of both urgent and long-term measures that will increase housing supply, relieve pressure on the market and make it easier for first-home buyers, Jacinda Ardern said... More>>

The Australian and New Zealand Governments today reiterate their grave concerns about the growing number of credible reports of severe human rights abuses against ethnic Uighurs and other Muslim minorities in Xinjiang.In particular, there is clear evidence of severe human rights abuses that include restrictions on freedom of religion, mass surveillance, large-scale extra-judicial detentions, as well as forced labour and forced birth control, including sterilisation... More>>

Read the original:

Unintended Consequences Of Today's Housing Announcements - Scoop.co.nz