Rents will go up if tax rules changed - investors' claim
Property investors have warned that rents could go up by $34 a week if the government scraps landlords' depreciation claims on housing, but the government says they are wrong.
TVNZ reported the NZ Property Investors Association said landlords would lose on average $1750 a year if they lost the tax rebate and this amounted to $34 a week, which would be passed on to tenants.
Labour MP Trevor Mallard estimated the increase could be as much as $45 across 400,000 households.
Prime Minister John Key told TVNZ that the figures were wrong and the government's advice was that if there were rent rises they would be small.
The government is looking at lifting GST from 12.5% to 15% to cut taxes across the board. The tax is not applied to rental payments.
The government has said it will make sure those on benefits are compensated and that no one will be worse off due to the GST rise.
It is planning to use the changes to property taxation to help fund that package and to help make such investments less attractive.
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Comments and questions19
Seems the Nats forgot to check out what happened to rents and property values in Australia in mid eighties,i suggest that they do before ARMAGEDDON kicks in.
Message for John Key and co ,what a web we weave when we set out to deceive,better listen to big TREVOR.
How come the media uncritically report and accept this load of bollocks from Mallard and King? There will still be the same amount of housing stock around housing the same number of people. Simple supply and demand would suggest that rather than rents going up investment properties will come down in price, maybe far enough to entice current renters into buying a property
Quote: "The government has said it will make sure those on benefits are compensated and that no one will be worse off due to the GST rise."
No. The taxpayers who have to fund yet higher benefits, AND the higher GST, that is, the hard pressed, oppressed, productive sector, will have to foot the bill, again, of course.
And if English and Key try to sell us that these taxpayers will be getting income tax cuts, so magically no one will be be worse off, then they are simply arguing there is no point in doing the 'changes' they are intimating in May whatsoever. Another wasted, expensive, bureaucratic farce.
There are 1.75 million people working in the private sector, the only sector where wealth is actually created, and 1.75 million bureaucrats in the public sector, beneficiaries and retirees destroying that wealth on every transfer: that's one for one. That's appalling.
The odd minor merger in the public sector being spoken up isn't going to pay off the quarter of a billion dollar debt still being racked up week on week. There needs to be a brave government that not only professes belief in small government, but that actively seeks to bring it about ... there is no such party currently in parliament.
Forget about the tenants. Look at the civil unrest in Greece, that's the future for every Western country at the moment. And all at the hands of that fool, Mr Keynes.
Breakfast over. Got to go to work and pay my taxes so my effort can be redistributed to breed the next generation of violent brats. [And build the bigger and bigger jails, of course, to keep me safe.]
So what rents go up? The cost of owning the property etc means you start to run your business like a business and not sucking on the other business who have to pay taxes on profits with no release through LAQC, Trusts etc. Grow up property investors you have for years ripped off all of NZ.
Trusts don't attribute losses DQ. I assume you're not a reporter, but this is indicative of the inaccurate reporting on many aspects of the property issue in the mainstream media since August of last year, and exemplified in some of the asinine statements from our 'supposed' business leaders such as Mark Weldon, who dissed LAQC's, period, thinking he was dissing property investment, but was in fact completely confusing an investment sector with a business structure (the LAQC which is a perfectly appropriate structure for all areas of small business in New Zealand - with property investment just a side show). And the conflict of interest of Weldon, Gareth Morgan, et al serving on all the various taxation committees preaching against property investments, and hence savings into funds management or the NZX, has been appalling.
But governments will do what government always do: 'fix' a problem of earlier legislation distorting the market, by simply distorting it further. When what governments need to do is separate themselves from our economies altogether (and for every reason that State and religion were once separated): market forces are the best pricing mechanism and allocator of resources.
The tax benefit of rental properties should be scrapped altogether. Its has no value add to the country in an international economy.
People should be rewarded for creating commercially value add businesses vs. holding a static asset.
Agree with DQ
There is a glut of rental property at moment and great deals for renters. It's what the landlord can get on the day and to suggest that landlords pass costs on is naive and simplistic. There are building companies out there even attempting to "scare" people into buying property now because investment housing prices will go up because of tax changes - BS to that, they'll I suspect come down in price which quite frankly is great - our property investment market in NZ seems to run like a "ponzy" scheme half the time with no real value being added to our economy. Bring on the property taxes and incentivise productivity I say.
What a load of garbage Mallard and Co.
Since when has a persons taxable position had any bearing on rental levels.
Rentals are based on what the market can or will pay.
Just because a landlords costs may go up $35 per week dosent mean the tenant will accept a $35 rent increase.
They will go elsewhere and will find a landlord who charges what they are willing to pay.
If landlords enmasse decided to put up rents which is what Mallard claims then tenants will simply take in an extra person in there flat.
If the average occupancy per flat in New Zealand was 2.5 and that went to 2.75 there would be a 10 %vacancy across the land.
Landlords would be dropping the rent faster than a hooker drops her pants.
The other factor is if losing the depreciation claim is such an economic burden on landlords they will ditch there properties and the result would be a drop in building value .
This would allow lower rents and still make a return.
This whole claim by Mallard is economic ignorance from an ignorant man and the NZPIF trying to scare the government
As a hard working middle income NZer I am now going to be paying more so the rich and the non-workers can have a tax break! I am, and no doubt many Kiwis are, getting poorer by the year. No salary increase in 2 years, GST up and because I am not making over $100k am shafted on the tax breaks, from what was once a good salary, my family are now middle class poor! Nice one Mr Key, thanks for everything!
Who is going to foot the bill Mr Key when all the workers in this country have left for Australia?
Landlord can't increase rents just because their tax breaks have been taken away! It's the biggest load of rubbish and defies all logic.
Last time I checked the rental market is subject to the laws of supply and demand like any other market. So why can landlords just increase prices at will? They can only increase rents if their is less supply of housing or greater tenant demand. The removal of tax breaks won't create any of these two scenarios. If anything house prices will come down, home ownership will increase as people renting can afford to buy and rents are more likely to go down than up.
NZ has some of the lowest incomes in the OECD and some of the highest house prices. Clearly something is wrong and National have to be commended for addressing the issue. Let's hope they go the full distance.
national is weak, a bunch of yes men (and a few yes women) pandering to the rich and the bludgers of our society... They are softly footing around in the hopes of taking more essential services like health and education away from Kiwis... it is just a question of time before, unless you are very rich, good education and the health services will be all but gone.
Can someone with some logical answer please define" RICH".
I can "Good Health."'
"House prices steady in February, sales recover."
and "Lots of houses, not enough buyers."
So forgoodness sakes who is telling the truth?
If the government is going to scrap all landlords' depreciation claims on housing, then it only fair every Landlord can claim 100% of all repairs and outgoings at any one time.
things are really going to be stuffed when the emissions scam kicks in during july. GST UP 2.5% Power Up 10% on top of that. Fuel already up 9% plus forecasted 11% due to ETS.
where is the fiscal neutrality in that.
Answer: There is none. ETS + GST + ACC+ PROPERTY TAXES = Major econonic meltdown. John Key and Co are following, to the letter, Clarks, UN,, EU, NAU protocol to destablise the economy.
Strangeway Magee at 11:19 is 100000% correct
TIME PEOPLE, TO WAKE UP and SMELL THE COFFEE
What did happen in Australia in the 1980s?
Suggest you get a of copy of "Building Wealth in Changing Times' by Jan Somers read Chapter 11.The big idea of the then Labour Govt in Australia lasted two years,the people who suffered most were the renters,depreciation was quickly restored,if the John Key led National Govt cant learn from the exercise in futility they dont deserve to be running the country.
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