The following is a summary of political and regulatory news or comment affecting the residential rental property industry.
• Green MP Holly Walker stepping down 1/6/14 Comment
• Landlords say low taxes cap rents 3/7/14 NZPIF
• Earthquake strengthening law needs rework 5/7/14 Comment
• Housing figures National’s shame 7/7/14 Green Party
• Taxes and Votes 9/7/14 ACT Party
• HNZ unsure on uninsulated homes 19/7/14 The Press
• NZFirst election policy 20/7/14 NZ First
• Taskforce to tackle loopy rules and regulations 22/7/14 NZ Govt
• Boarding houses 31/7/14 Comment
• Issues under watch – 31/7/14 Comment
Green MP Holly Walker stepping down 1/7/14 Comment
Green MP Holly Walker is stepping down at the election. Of interest to the NZPIF, Walker has been the party’s Housing spokesperson. She has been promoting a private member’s bill: Energy Efficiency and Conservation (Warm Healthy Rentals Warrant of Fitness) Amendment Bill – which a mandates a “Warrant of Fitness” regime which in turn requires minimum energy performance standards for all residential rental accommodation. As a result of Walker’s resignation, there will be a new housing spokesperson post-election.
Landlords say low taxes cap rents 3/7/14 The Press
Nearly $500 million in tax was paid on rental incomes in the financial year ended March 2013, figures obtained under the Official Information Act show. The NZPIF requested the information in response to the Tax Working Group's finding in 2009 that rental property owners took money out of the tax system rather than paying into it. It found that rental property owners last year collected about $1.5 billion in revenue, of which about $500m went to Inland Revenue in tax. The NZPIF says the new information "completely debunked" the idea that landlords did not pay tax.
Earthquake strengthening law needs rework 5/7/14 Comment
Various commentators say new exemptions from seismic strengthening requirements show the policy is inconsistent and unnecessary. During the month, the Government announced that it would exempt farm buildings from the requirement for owners of buildings to upgrade them to national earthquake standards or demolish them within 20 years. The change highlights the unnecessary burden being placed on all building owners affected by the requirements. The NZPIF has argued in written submissions to the Local Government Select Committee that the proposed new legislative requirements will capture a large number of residential rental properties in areas that are not prone to earthquakes, potentially imposing a considerable and heavy regulatory and financial burden on individual owners for little real benefit. The NZPIF is urging the Government to exempt residential buildings that comprises 3 or more storeys; and contains 3 or more household units.
Housing figures National’s shame 7/7/14 Green Party
Green Party Co-leader Metiria Turei said: "We believe central and local government should take the lead in building more affordable housing. We will build more state houses and fund third parties to provide affordable housing. Under our Progressive Ownership initiative, home ownership will be put in reach for tens of thousands of families with children, through a rent-to-buy scheme. Our Home for Life policy will strengthen tenants' rights and will limit rent increases. For Housing NZ tenants, we will cap rents at 25 percent of income. We will curb house inflation by introducing a capital gains tax (excluding the family home) and limit non-residents from buying our houses”.
Taxes and Votes 9/7/14 ACT Party
David Cunliffe (has) boasted that his proposed new capital gains tax would collect an extra $5 billion a year. That is the biggest tax hike in the history of New Zealand.
Taxes are always paid by people, whatever the taxes are levied on. Income taxes, corporate taxes, property taxes, GST: they are all the same in this respect. They are all paid by people.
Nor are the people who bear the cost necessarily the people who write the cheques to the government. For example, if a capital gains tax means that landlords get a lower return on the capital appreciation of their properties, it will increase the rents they charge their tenants. Or landlords may sell their properties to owner-occupants. The supply of rental properties will then fall and, again, tenants will end up paying more.
Where the cost of a capital gains tax will fall is a complex matter and extraordinarily difficult to predict.
When it comes to income tax, people can divert their activities from highly taxed activities, such as working in productive jobs, to low taxed activities, such as playing golf. When it comes to a capital gains tax, they can divert their investments from rental properties to bigger homes for themselves (which will not incur capital gains tax at sale). They can invest overseas rather than in New Zealand. They can delay selling assets to avoid realising a gain and paying the tax. And they can spend money on accountants and tax lawyers to devise all sorts of other ingenious schemes.
Such avoidance activities will reduce the loot Cunliffe can get his hands on. A capital gains tax is a very bad idea.
HNZ unsure on uninsulated homes 19/7/14 The Press
Housing New Zealand says a total of 48,030 properties had been insulated "wherever practicable" at December 31, 2013. The retrofit is aimed at all its properties built before 2000, when a modern building code raised home insulation standards. Some HNZ properties built before 2000 could not be insulated because of their construction or design. Apartment units might be within a complex, have concrete floors or inaccessible floor and roof cavities.
In May last year Housing Minister Nick Smith announced a "Warrant of Fitness" applying to the 69,000 HNZ properties. Smith expected that by this year HNZ would have insulated "all of its homes capable" of being either retrofitted or modernised.
HNZ has advised that in these cases where properties couldn't be upgraded because of their design it provided "other energy efficient interventions" such as improved heating, fixing draughts, and insulating hot water and pipes. Since the 2008/09 financial year the agency had spent $30m on the retrofit. This included a "source of heating" in about 10,000 homes, including heat pumps, log fires, electric heaters and closing off fireplaces, Smith said.
NZFirst election policy 20/7/14 NZ First
Winston Peters delivered a speech at New Zealand First's convention on 20 July. In it, he announced New Zealand First would remove GST from council rates on residential property and the party would extend capital gains tax to foreign ownership of land and homes, but it opposed "an extension of capital gains tax without compensation for capital losses".
Taskforce to tackle loopy rules and regulations 22/7/14 NZ Govt
Local Government Minister Paula Bennett announced the establishment of a new Taskforce to rid New Zealand of loopy rules and regulations. The Rules Reduction Taskforce in partnership with local government will work closely with the public to weed out pedantic and unnecessary rules that frustrate property owners and councils alike. The Taskforce will be up and running in October. As well as central and local government experts, it will include specialists from the building and trades sector. The Govt wants to hear from property owners, builders, tradespeople and businesses on rules and regulations that are crying out for sensible change.
Boarding houses 31/7/14 Comment
The Social Services committee met on 2nd and 30th July to further consider its Inquiry into boarding houses in New Zealand.
Issues under watch – 31/7/14 Comment
Parliament has risen for the General Election. A range of legislative changes and reviews have failed to progress including:
• Building (Earthquake-prone buildings) Amendment Bill
• Healthy Homes Guarantee Bill
• Energy Efficiency Conservation (Warm Healthy Rentals) Amendment Bill
• Overseas Investment (Protection of New Zealand Homebuyers) Amendment Bill
• Boarding house inquiry
However, these business items may be reinstated or continued with at the pleasure of the new Government.