Treasury believes the removal of interest deductibility will cause highly-leveraged property investors to pull back from the market, “materially” reducing house price growth.
However, it foresees cashed-up investors filling the gaps more than owner-occupiers.
The agency provided this advice to Finance Minister Grant Robertson in April - before he delivered the Budget in May, and after he announced the tax rule change in March.
The removal of interest deductibility means residential property investors will no longer be able to write off interest payments on their mortgages as an expense when paying tax.
Cost to investors in the realm of $800m a year
Treasury couldn’t say with any certainty how much the policy would cost investors.
The details of the rule change, including how an exemption for “new builds” will work, are still being ironed out, and it’s difficult to know where interest rates will fall in four years’ time when the policy will be fully implemented.
Treasury said that had the rule been fully implemented in 2018/19, and had current interest rates prevailed, it might have cost investors $800 million.
As for the impact on house prices, Treasury tentatively said, “Without this tax change we would have forecast an increase in house prices of 34% over the [four-year] forecast period. Due to the removal of deductibility, we revised our forecast to around 14%.”
It’s worth noting that while Treasury, at the May Budget, forecast annual house price growth dropping right off to 0.9% by June next year, annual house price growth is still coming in well into the double digits.
‘Moderate’ disinvestment expected
Treasury said the change would see demand for investment property by highly-leveraged investors “drop dramatically”.
Its modelling suggests the amount a highly-leveraged investor (with equity of less than 30%) would be willing to pay for a property would be 10% to 15% below prevailing market prices.
Because a relatively significant number of investors are highly leveraged, Treasury believed there would a reasonable amount of divestment or hesitancy by these investors to buy more property.
Treasury noted that in the year to February 2020, 36% of new investors had a loan-to-value ratio of 70% or more (had deposits of less than 30%). Meanwhile 41% of investors had interest-only mortgages.
According to Inland Revenue, 213,000 taxpayers claimed $3.5 billion of interest deductions against residential property last year.
“Only a proportion of those will be highly geared, and we do not have data on them, but we do know that 36% of those taxpayers made a rental loss in 2019,” Treasury said.
“This implies that there would be at least a moderate level of disinvestment - even a change in the low tens of thousands could represent a significant increase in property transactions (there were around 150,000 in 2020) and therefore put downward pressure on price growth over the next few years.”
Opportunity for cashed-up investors
Treasury went on to say: “We expect some increase in demand from owner-occupiers, which will increase the rate of home ownership. However, we expect the bigger impact will be a lift in demand from unleveraged (or low leverage) property investors.”
Treasury also believed the new top income tax rate of 39% for income over $180,000 could increase demand by cash investors at the margins.
“The 39% rate may diminish the after-tax returns on offer for investments that yield predominantly income. In comparison, residential property investment yields mainly tax-free capital gain if held for more than 10 years, and will be offering better returns due to the absence of leveraged investors from the market,” Treasury said.
“However, this effect is likely to be relatively small given there are opportunities to structure property investment through entities that pay lower tax rates (e.g. portfolio investment entities, companies and trusts).”
Impact on rents limited, but will vary across the country
Treasury believed there was little scope for investors to pass the cost of higher tax bills onto tenants because New Zealand has a “moderately uncompetitive” urban land market.
Rents are set by a tenant’s ability to pay. So, a change in households’ cashflow positions is likely to be the largest driver of rents, rather than changes in interest rates and taxes.
Treasury noted landlords haven’t, for example, cut rents as interest rates have declined over the past decade.
Accordingly, Treasury believed the tax change would lower house prices, rather than boost rents, in parts of the country (like the cities) where land markets are constrained and uncompetitive.
“In parts of New Zealand where land markets are less constrained and more competitive, then there is more scope for rents to rise over time,” it said.
“Rents are also more likely to rise in locations where rental properties and owner-occupied properties are poor substitutes, such as near universities.”
132 Comments
An awkward moment hearing my own echo.
After the coming season is over, it'll be a game of who has more cash.
Who said cash was trash?
For FHBs who don't make it this season, unfortunately the horizon to be free from landlords will be murky especially when the new DTI & LVR combo kicks in.
Urgency is dire for those with marginal deposits.
Dreams are made or dashed in a moment just like the Olympics.
Except the Olympics have the same set of rules for all participants.
I think investors should have to stump up with cash deposits like FHB's - otherwise the Olympics you are referring to is like combing the para-Olympians with Usian Bolt types and expecting them to compete...then telling them to try harder when they get crushed.
Paralympic racers are almost all faster than Ussain bolt at distances 400m and up. https://www.google.com/amp/s/amp.theguardian.com/sport/2016/sep/08/can-…
“Compete”
Unfortunately it was never a fair competition. Usain Bolt was juiced to the eyeballs and if the IOC had the courage they’d allow WADA to out him as a cheat. They (WADA) still have his dodgy urine from the London Olympics (2012) and have until next year (10year period) to retest with latest technology…but IOC won’t allow that to happen as it would taint the Olympics forever and cost them plenty.
When you say “Usami Bolt types”, are you referring to the cheats that use performance enhancing drugs?
Jamaican athlete doping program more sophisticated than Russia and more secretive.
https://apnews.com/article/18a669e3119646b2a7e30db9e1e7b178
If they go through with the interest non deduction, and do not ramp up immigration or foreign investment in housing then yes I would. I supported the Nats for 30 plus years but they were dismal under jk. They had 9 years ....9! Most of the mess can be rammed right back to 9 years of wave and smile.
I vote we just napalm the country, ring-fence it off and ship a bunch of chimps over from Borneo or something and see if whatever they evolve into can manage basic social contract. We've clearly forgotten how it works, time for something/something else to have a crack IMO.
They will simply put rents up as much as they can, probably by renting to MSD tenants at above market rent. If that is still not enough, then they will sell the property or convert it to an AirBnB or something that pays a higher return. The $800M in extra tax collected will go to paying emergency accommodation and increased accommodation supplements.
Landlords are already getting as much as they can from the market. That's why it's called a market, it mostly depends on supply and demand and tenant incomes. This will simply reduce yields which is a negative pressure on land value.
https://www.interest.co.nz/property/93555/rodney-dickens-doubts-landlor…
Agreed. Talked to a guy at work who is still making the rental loss, but is now grumpy he cant wash it against his wages anymore. He now subsidizes a tax paid operating loss. He is also complained he stuck with low capital gains and withing the 10 tax period. What's the point seems the big question. When asked if it was all about tax avoidance vs yield his reply indicated that it was.
With the promise of increased rates, and talks of land tax he has yet to realise he is a whisker away from being a beached whale.
I don't mind this, the problem was always the leverage effect that made accumulating properties like playing monopoly, creating massive inequity effects and hidden dangers within the financial system.
If someone wants to pay for an entire property with 100% money down, good luck to them. The pool of money that can do this is a lot smaller than the leveraged middle class recycling their equity into an ever increasing property empire.
Well expressed Brutus. About those 'hidden dangers' lurking in the financial system, I've got my money on the probability that they exist. But I have no idea what they are. But neither do the sheeple. They will just listen to the experts on the TV who tell them that the financial system is rock solid.
There is such a scarcity of rentals on the market now prospective tenants are getting desperate and offering landlords $50 a week extra in rent just to secure a property. Remind me again how rents won't go up when you force investors out of the rental market? Combined with all the holiday homes and granny flats that are now being pulled from the rental market, and you have increasing demand for a decreasing supply. And when I studied economics, that meant prices went up. Not sure what planet Treasury staff studied on.
Many will be turned over to the AirBnB market. Others will simply pay down the mortgage on them. I know of one person who sold another rental property to pay off the mortgage on their holiday home. So thats two rental properties removed from the market. Ah, the law of unintended consequences.
So additional supply on the AirBnB market - which I understand is already well populated. Which based upon the argument of supply and demand, means lower room rates and less capacity to pay debt on the title, which means lower prices. Ah, the law of unintended consequences?
I can't understand why they don't tax people who have turned houses into airbnb, and also charge them commercial rates. Councils need money, and motels get charged commercial rates. So seems like a double standard if AirBNB owners aren't. Such a change could then lead them to sell and incr3ease supply.The problem is that people are stockpiling houses for capital gains. I know someone who purchase a rental in a small NZ town a couple of years ago, and ow expect to double their money when they sell soon.
Auckland Council are already taxing AirBNB owners as commercial ratepayers;
https://zodiak.co.nz/auckland-bed-tax-aptr-airbnb-hosting/
I'd have thought others are likely to have followed suit?
If this were the only policy change affecting landlords that'd be a reasonable point to make.
But couple this change with the other restrictions recently added to landlords, and for many the hassle and risk of renting out a granny flat may no longer be worth the return.
They may leave it empty, or instead reserve it for family visits.
Eventually prices may rise such that it becomes worth renting it again. Which is how supply and demand works and how supply is 'made available' when prices rise.
Time to rent garage for families and if you put it to empathy queen, will come up with her famous smirk and will ask you to see the positive side that atleast that family have a roof over their head and will pat herself for achieving roof for the family.
This sums up......
Check out the hypocrisy of this tweet from her in 2016, about banning Housing New Zealand from treating a garage or car as shelter etc. Making housing a human right and banning the cause and not the symptom. All talk, no substance. https://i.redd.it/1zv3sspmodf71.jpg
Do you get some kind of satisfaction out of these posts? You seem to think you know-it-all while these new initiatives are going on in the background by people and government working collaboratively to bring the cost-of-living where accommodation is concerned down.
Do you not wish them well, or would you rather we fell further and further into our inequality rut?
I really don't get people like you.
Interesting how multiple people can loon at the same set of policies and come to different conclusions as to their effect. I was under the impression that Labour was about helping the very wealthy and preventing those in the middle from climbing up using the same tools that the wealthy did years ago so that the wealthy can feel even wealthier.
I reckon that the net effect of making long term rentals less attractive will be a rise in rents, especially if you raise benefits and the minimum wage at the same time. Please do explain why you believe that creating artificial scarcity in the rental market will lower rents. If possible pls ease also explain the effects on construction activity and extrapolate the likely effect in the medium and long term. I suspect that your response will be more ideology than science, but it is interesting to consider other perspectives regardless.
I don't think artificial scarcity is an intention of the government. I like all of the 'tweeking' they are doing (as do social equity lobby groups, such as Renters United), such as the healthy homes standards and the changes to tenancy laws. Sure, slumlords and tax minimization seekers will exit the business - and I think that is a good thing. Professional landlords will remain in the industry as they are running proper businesses.
Wellington Renters United welcomes Parliament’s attention to issues of quality in the private rental sector. The right to live in a safe and healthy home is one of our eight key demands. Poor quality housing is a key issue affecting our members.
https://www.rentersunited.org.nz/
I'm working with that organisation and next campaign focus is on rent controls.
Haven't seen any effects on the construction industry to date. Most articles suggest residential building activity is at all time highs; e.g.,
https://www.nzadviseronline.co.nz/news/new-zealand-home-consents-contin…
Though this may slow due to the timber shortage. Then again, this government gave that local processing industry a few boosts via the PGF fund - so again good future on that front; e.g.,
https://www.nzherald.co.nz/the-country/news/more-wood-processing-jobs-o…
No, my response is not ideology but "real world" examples. If you need more - just let me know!
Have you been an accommodation provider (aka landlord) before? Do you have first hand experience dealing with tenants, 100s of applicants per rental each with their own story, none members of "renters united".
I have for a decade now.
I've seen the changes over the last 2 years in particular.
Rents in palmy from 350 a week for a 3 bed, to 520 in a short period on the same house, and at the higher price of 520 I got 5x the number of applications as I did in 2015.
Population growth up until 2020 likely a factor, but the last 2 years I think HHS requiring more and more specific requirements that even new builds may fail on has lead to rents going up massively. 10% plus rent increases year on year in palmy since labour got voted in.
Correct, it was not labour's intention to create scarcity and rent increases, but the fact they are blind to see what everyone in the business of accommodation saw as obvious speaks volumes.
Now you want to chuck another huge spanner in the works, double down if you will, and add rent controls?
Seek first to understand the system before messing with it. Talk to rental accommodation providers, we house most of nz's renters by choice, and are free to choose not to at any time.
I could have asked for 700, then instead of getting 100+ applicants I would of likely got none, as comparable and better property can be rented for under 700.
Therefore I'd be forced to meet the market, drop the price until I get a willing "buyer".
Does this sort of thing make sense to crazy lefties or is it all a bit like magical fairy dust to them?
Oh, I well understand the economic theory of willing buyer/willing seller as the current mechanism which sets prices. But understanding it doesn't mean that is the way the world must work. You could have made a moral choice not to follow the market up. As I said, greed is the root of the housing crisis - not scarcity.
The money world - says it all regarding your 'lens' on the world, or your worldview. Many people hold other worldviews - you'd be surprised. It's not a good thing to claim a "majority" way of thinking without evidence to back that up. The reality is a majority will soon (if not already) hold 'no assets'. They know well how destructive your way of thinking is, and they are the leaders of tomorrow.
Ok I think the problem is left leaning people generally don't understand human behavior, human behavior being the driver of economics and actually all social outcomes. Human behavior isn't a theory, it is a fundamental fact. Deal with what is actually there instead of imagining some ideal that doesn't exist.
Name one business where moral choices of the owners lead them to sell their product or service significantly below market value?
It is no different to an ecological or even biological system. Equilibriums are set up between competing co-existing agents. Unbalance in one causes action that drives the system in an opposite direction to correct the imbalance.
Name one business where moral choices of the owners lead them to sell their product or service significantly below market value?
Wrong focus. Look at the state agricultural growers are in. The example I use in teaching is the banana market. One of the world's most high volume, high demand products, and the growers earn a pittance. The only way to make profit for land/plantation owners is to exploit the labour market. This is the way of your world. Whether you are in favour of that or not is your choice.
Exploiting the labour market by slave labour or paying them under min wage?
If not then they are willing workers which isn't exploitation.
I advertise my rentals on the open market and get tenants begging me to move in, surely your not suggesting I'm also exploiting tenants who think they won the lottery by getting my place?
The imbalance is due to not building enough houses, in my opinion this is local government making it hard to build as local councils are filled with the most incompetent people you could ever imagine.
I've actually heard of examples of new builds in lower hutt that have been dropping rents to find tenants as developers finally get on with bringing lots of new builds to market. This trend will keep happening as long as councils allow it. But in general it is the inelastic supply response that causes these housing issues in NZ.
Minimum wages don't exist for subsistence farmers. But that said, open your eyes to the real world;
https://en.wikipedia.org/wiki/List_of_countries_by_minimum_wage
Top of the alphabetical list is Afghanistan with a minimum wage of 0.42 US cents/hour (or $1.57 if talking PPP). Would you call that slave labour/exploitation or a willing buyer/willing seller situation.
And children don't come under most minimum wage laws - hence their exploitation.
That you have people begging you for accommodation says nothing with respect to whether your 'market prices' are expoitative or not. Begging implies they are exploitative - i.e., you are feeding off of the desperation of others.
Indeed, some new townhouse builds in LH have dropped rental prices from outrageous and unaffordable to still unaffordable for the average household income in the district. Witness the growing cost of the accommodation supplement - I'm paying that to landlords - and that's exploitative too.
So if I asked lower rents I'd have less people begging me for rentals? No id have more. The banana workers aren't begging for employment, its just the best they can get or they know no better or are exploited as children? Tenants these days know exactly what their rights are and aren't afraid to exercise them, and I'm happy for them to so long as rent is always paid and they don't trash my houses.
Or as you've classified my actions as being exploitive by supplying rental accommodation, do you suggest I halt all my rental activity?
Should I ask the tenants to move out and apologize for the shelter i used to provide them? Would this please you and solve the housing crisis?
The problem is we have more people wanting rentals than the number of people supplying them.
Now that we have that figured out, ask yourself, will rent controls increase or decrease the supply of rentals available to rent?
Everything labour have done to date has resulted in less rental supply, hence the huge change I've personally witnessed over the past 3 years.
Oh for goodness sake. When you lose an argument you resort to nonsense statements.
And Simon, you got it in one regarding the situation your tenants are in: "its just the best they can get" because as you also wisely admitted you don't set the rent (based on enough profitability to pay your bills and make a reasonable return for the effort/work you expend), you base your rent price on the market price - and the government is going all out to subsise that market price (because the market can't afford to pay the market price).
I'll keep going as long as you two do - as watching others dig their own holes deeper is a bit of a pass time of mine. I actually find you both highly amusing.
I play within the rules and pay my taxes.
I know agents themselves who put down 50k to secure a turnkey package and sell straight away off the plans. They don't just buy one or two, they buy a whole lot.
I enjoy counting my dollars, and paying my taxes. At least I'm helping the country build more houses.
You suggest rent to be ..."based on enough profitability to pay your bills and make a reasonable return for the effort/work you expend"
In that case 80% of investors buying in last couple of years should actually be asking far above market rents to get a "reasonable return" as they have been buying at stupidly high prices and are negatively geared.
Even worse if bought since March as tax bills sky rocket being now the only business in NZ that is not taxed on net profit but on revenue.
On the other hand, if someone owns out right a million dollar house, in your fairy land world, they would ask say 50% of market rent, any more would be greedy as they don't have a mortgage to pay.
Lala land, sounds like you'd get a job advising the greens on new policies in a heat beat.
You suggest rent to be ..."based on enough profitability to pay your bills and make a reasonable return for the effort/work you expend"
In that case 80% of investors buying in last couple of years should actually be asking far above market rents to get a "reasonable return" as they have been buying at stupidly high prices and are negatively geared.
Even worse if bought since March as tax bills sky rocket being now the only business in NZ that is not taxed on net profit but on revenue.
On the other hand, if someone owns out right a million dollar house, in your fairy land world, they would as say 50% of market rent, any more would be greedy as they don't have a mortgage to pay.
Lala land, sounds like you'd get a job advising the greens on new policies in a heat beat.
You suggest rent to be ..."based on enough profitability to pay your bills and make a reasonable return for the effort/work you expend"
In that case 80% of investors buying in last couple of years should actually be asking far above market rents to get a "reasonable return" as they have been buying at stupidly high prices and are negatively geared.
Even worse if bought since March as tax bills sky rocket being now the only business in NZ that is not taxed on net profit but on revenue.
On the other hand, if someone owns out right a million dollar house, in your fairy land world, they would as say 50% of market rent, any more would be greedy as they don't have a mortgage to pay.
Lala land, sounds like you'd get a job advising the greens on new policies in a heat beat.
You suggest rent to be ..."based on enough profitability to pay your bills and make a reasonable return for the effort/work you expend"
In that case 80% of investors buying in last couple of years should actually be asking far above market rents to get a "reasonable return" as they have been buying at stupidly high prices and are negatively geared.
Even worse if bought since March as tax bills sky rocket being now the only business in NZ that is not taxed on net profit but on revenue.
On the other hand, if someone owns out right a million dollar house, in your fairy land world, they would as say 50% of market rent, any more would be greedy as they don't have a mortgage to pay.
Lala land, sounds like you'd get a job advising the greens on new policies in a heat beat.
You suggest rent to be ..."based on enough profitability to pay your bills and make a reasonable return for the effort/work you expend"
In that case 80% of investors buying in last couple of years should actually be asking far above market rents to get a "reasonable return" as they have been buying at stupidly high prices and are negatively geared.
Even worse if bought since March as tax bills sky rocket being now the only business in NZ that is not taxed on net profit but on revenue.
On the other hand, if someone owns out right a million dollar house, in your fairy land world, they would as say 50% of market rent, any more would be greedy as they don't have a mortgage to pay.
Lala land, sounds like you'd get a job advising the greens on new policies in a heat beat.
You suggest rent to be ..."based on enough profitability to pay your bills and make a reasonable return for the effort/work you expend"
In that case 80% of investors buying in last couple of years should actually be asking far above market rents to get a "reasonable return" as they have been buying at stupidly high prices and are negatively geared.
Even worse if bought since March as tax bills sky rocket being now the only business in NZ that is not taxed on net profit but on revenue.
On the other hand, if someone owns out right a million dollar house, in your fairy land world, they would as say 50% of market rent, any more would be greedy as they don't have a mortgage to pay.
Lala land, sounds like you'd get a job advising the greens on new policies in a heat beat.
You suggest rent to be ..."based on enough profitability to pay your bills and make a reasonable return for the effort/work you expend"
In that case 80% of investors buying in last couple of years should actually be asking far above market rents to get a "reasonable return" as they have been buying at stupidly high prices and are negatively geared.
Even worse if bought since March as tax bills sky rocket being now the only business in NZ that is not taxed on net profit but on revenue.
On the other hand, if someone owns out right a million dollar house, in your fairy land world, they would ask say 50% of market rent, any more would be greedy as they don't have a mortgage to pay.
Lala land, sounds like you'd get a job advising the greens on new policies in a heat beat.
LOL - in many cases economics 101 doesn't understand the realities of the world;
echo chamber
I am trying to challenge you to bring the best you got to convert me away from what I think are the closest underlying fundamentals of how humans, society, the world actually works
Youve failed on that task. You have confirmed you dont understand some of the more basic, already well understood, "hard" facts on how business works.
I have learnt nothing from you other than Greenies and far left leaning people simply DO NOT WANT TO LEARN OR CONVERGE TO THE TRUTH but rather live in idealistic world based on their own echo chamber based thinking.
You on the LEFT are the problem - Im a PhD in system controls engineering - My world revolves around working only with facts, numbers, things you can verify. I get sick of hearing Robber Robertson shooting from the hip new policies - I study and model systems in depth before even considering to start of introducing new variable and accessing the impact across the whole system, the time delay between new input and seeing the effect in the output - so many things - it is not easy and beyond anyone who has a BA degree or teachers sociology for a living
Bang on Simon.
Lefties just want everyone to live in grass skirts, pay lots of taxes to support those who choose not to contribute to society, and being kind.
Labour's kindness has really back fired hasn't it? Not enough electricity - hey everyone buy electric cars. No more gas - oh, let's import more dirty coal. Not enough social housing - don't build silly, buy from your voters, and pay 200k over market prices.
Jenee,
Few points :
1 : Treasury went on to say: “We expect some increase in demand from owner-occupiers, which will increase the rate of home ownership. However, we expect the bigger impact will be a lift in demand from unleveraged (or low leverage) property investors.”
This is True and already in progress. Those single house owner are mostly now using their equity to buy another property as have realised that can make fast and easy money, doing nothing.
So FHB screwed
2 : Meanwhile 41% of investors had interest-only mortgages.
41% are able to speculate only because of interest only loan as it multiplies their purchasing power in auction room. This 41% speculative demand can be easily fixed but neither RBNZ nor government has intent.
Imagine if interest only loan is restricted out of 41% even if 50% are unable, What difference, it will have in controlling speculative demand and is highly speculative people who in greed bid higher and higher.
So FHB is screwed.
3 : It’s worth noting that while Treasury, at the May Budget, forecast annual house price growth dropping right off to 0.9% by June next year, annual house price growth is still coming in well into the double digits.
Treasury and rbnz always comes up with false predection/analysis when ponzi is at such height that government and RBNZ will be forced to act, even though not with full force as no intent still...
Even with goof ups earlier by RBNZ and now by treasury, result FHB is screwed as government too does not want to act so hide behind this false data/predection/narrative.
Jenee reading your article, Can you highlight anything that is going in favour of FHB !
There is now zero incentive to hold a property for the long term. Flipping is back big time. Better to get in and out and pocket an immediate profit than to try and hang on to a cashflow negative property for over 10 years. Then move on and do it again. In a couple of years you will have made more profit flipping houses than by holding onto a single one for 10 years. Thus the market is extremely competitive for run down older houses at the moment, and FHB are still being outbid on them. And when they are all done up, you can sell them to Kainga Ora for a ridiculous price.
Don't worry Kate, it's about the 5th time in the last week or two Flyer has mentioned the amazing profits that he is making. If by some miracle the housing market tanks in the next 6 months and he has to sell, and god for bid, lose some money, I'm sure he will jump on here and all let us know about it.
Fair enough telling people what is happening in the market. But to be honest, you would have to be living under a rock to be unaware of what is happening. Also. putting numbers out there about how much money you are making just comes across as total arrogance to me. If that floats your boat, good for you.
But you obviously get your rocks off telling people how much money you are making. That's my point. As I've said in reply to one of your posts on another thread, when I read your posts you remind me of the Mac Davis song, Oh Lord it's hard to be humble. I guess we are cut from different cloth. And oh yes, be quick, we must create even more FOMO at any cost.
You love this setup, according to your previous comments. The shameless glee expressed by people benefitting from the desperation of others to secure a basic necessity of life, is only going to grow louder and more obscene, before this whole situation devolves enough that it pushes the people who are completely shafted to extremes. I wonder where that might take us as a country? We aren't going to change course hard enough, so I guess we'll find out.
"It's about doing what you can to get ahead"
What are you trying to 'get ahead' of? Are you willing to get ahead by shafting other younger people - say like your children or nephews and nieces?
You know the $500K you make is another persons debt, so they will have to work (earning wages) to pay for that in the future.
But as long as you are 'getting ahead', well who cares about the consequences.
Yeah, lots of parents legitimize their immoral actions (the end justifies the means) using that excuse. Instead, I just love my kids unconditionally and they're making honest, happy livings on their own. I teach prudence and compassion. And I'm so glad that they've both grown up to be good natured, unselfish adults.
If it's all about that, then please remember your 'but life isn't fair' motto if the people turn French as they try to get a head in this mess. Life is not perfect, but we are so far removed from anything resembling fair. This extremely parasitic system you are joyfully benefitting from, is absolutely tearing our society a part and pushing us down a really dark path. And one we should have learned from long ago.
'even a change in the low tens of thousands could represent a significant increase in property transactions (there were around 150,000 in 2020) " According to QV and the RBNZ , there were only 103222 property transactions in 2020 calendar year. Why the difference. Or is it a forecast?
More Twaddle from the experts, Tenants will pick up the extra cost over time for the loss of interest deductibility.
With the Brightline going to 10 years it incentivises more money being pumped into the family home.
Property prices will rock on, the more changes this Government make the more it only compounds prices and rents.
Between the Government and RB prices have unneccessarily been pumped, really pumped how could they have been SO stupid.
I'm on the receiving side big time but think it was soo stupid !
“Treasury believed there was little scope for investors to pass the cost of higher tax bills onto tenants”
It is hard to believe Treasury could come to this conclusion when the supply of privately owned rental properties is likely to decline while demand for rental properties will continue to increase.
This mean rents will significantly increase & if tenants cannot afford to pay they will either go into emergency accommodation, stay with family/friends or will be homeless.
Rental yields have declined during this period of house price inflation & lower interest rates. Risks for owning a rental property have increased substantially due to recent law changes so investors are likely to demand significantly higher rents than historical averages.
The evolving rental & humanitarian crisis is highly unlikely to be resolved without increasing the private rental supply. That requires a change in government policies towards landlords.
If Labour doesn’t change the policies they will probably be voted out at the next election.
I'm selling an asset I bought at 5% gy and developed to 8% gy... selling at 4%, will confirm ze new tax rules and structure a deal that I can redevelop to 7-8%, the balance freeholding my OO. People who seek to create value and improve their assets will be fine. The sitting ducks are Mum and Dad investors who bought nice homes in good areas at 3-4% yields because "property always goes up".
Just saw PM giggling on the question on housing crisis, seems like laughing on kiwis.
Madam we cannot tolerate you anymore but it's our bad luck to see you everyday. Pathetic show
This is going to be worse in next 6 to 12 months, without doubt as housing is the only thing Kiwis are obsessed with and no one can change it.
People are piling on property and not satisfied even after having 5 or 6 properties, surely this place will be living hell for new generation, renters & FHB.
Brain Drain 2.0 coming. What's the point of being locked out of buying a house in NZ, and stuck in the rent trap , paying rent which is dead money. In NZ we seem to see success as owning lots of rental properties, and being able to retire at 50 and live off that passive income paid for by tenants. It almost feels like we have become a class based society again.
800 million plus tax grab, nothing to do with first home buyers.
“The model suggests highly leveraged investors with equity less than 30 percent would be willing to pay 10 to 15 percent below prevailing market prices “ You need a 40 percent deposit for residential investment properties so not sure what their point is, they couldn’t buy anyway.
“We expect reduced demand from owner occupiers “ What ? Why? They are driving house prices, not investors.
“Scope of investors to pass on tax increases is limited” No it isn’t, plenty of scope to increase rents as incomes and everything else is going up.
I could go on, treasury sound political and totally unrealistic. There forecasts are a joke
And rents wont rise.
Except stats show that to the year to June rents up.
https://www.stats.govt.nz/information-releases/rental-price-indexes-jun…
See - Rental price indexes: June 2021
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.