Is there a ‘war’ on landlords?
Mum-and-dad landlords are under attack from the Government, and the ‘‘war’’ has led to higher rents and too much red tape, opposition politicians say.
The accusations are not new, with politicians and landlord groups making them regularly since Labour formed a government in 2017. Heading into election year, National and ACT have stepped up the claims. But what do they mean, and is there any truth to it?
What are the new regulations?
Tax policies affecting landlords have been changed. This includes extending the bright-line test, which taxes profits from the sale of an investment property, to 10 years, and removing the ability to deduct mortgage interest on rental properties from taxes.
Letting fees have been banned, and healthy homes standards – which set minimum requirements for heating, insulation, ventilation, moisture, drainage and draught-stopping in rental properties – have been introduced.
Tenancy law has been overhauled, and that included banning no-cause terminations, limiting rent increases to once a year, and allowing tenants to make small changes to their rental.
Why are the new rules a problem?
National Party housing spokesperson Chris Bishop says the removal of interest deductibility is unprincipled because a fundamental principle of tax law is to tax profit, not revenue.
It is leading to higher rents and putting pressure on the state house waiting list and emergency housing, which makes it a tenant’s tax, he says.
ACT deputy leader Brooke van Velden says law reforms have skewed the rental market balance too far away from landlords. Removing no-cause terminations has left landlords unwilling to risk renting to marginal tenants, she says.
What is the Government’s take ?
Housing Minister Megan Woods says the tax changes encourage new builds and shift the balance back to first-home buyers. ‘‘Our plan is working, and we are seeing the green shoots of change with a massive upswing in construction of new homes and government investment in infrastructure, such as pipes and roads, to enable more housing.’’
The strong level of construction will help keep rental inflation down, she says.
‘‘Since 2018, regions with better supply, or higher levels of new construction relative to population growth, are more likely to have wage growth outpacing rent growth. This has been visible in Auckland and Canterbury.’’
The Government is committed to turning around the housing crisis by increasing supply, including rental properties, she says. That is why it is exempting build-to-rent developments from the interest-deductibility changes.
Do landlords feel under attack?
Auckland Property Investors Association general manager Sarina Gibbon says landlords are targeted. While that is appropriate in instances such as healthy homes standards, it is not in others, such as interest-deductibility limitation.
‘‘It is a shame as most landlords agree the market should be rebalanced, and we can get there without pitting landlords against tenants and neighbours against neighbours.’’
What do tenants think?
Renters United president Geordie Rogers believes most of the changes crack down on landlords who do not care about providing a good home for their tenants, and are simply interested in hoarding houses.
‘‘Landlords should have to give a reason for kicking tenants out of a rental home ... for example. The changes have improved security of tenure for tenants, but there is still a long way to go.’’
There are financial incentives in the new build and social housing space for landlords who do want to provide good rental homes, Rogers says.
What would the Opposition do?
If elected, both National and ACT would reverse the interest-deductibility rules.
National would return the bright-line test to two years, while ACT would get rid of itentirely. Van Velden says ACT would re-introduce the ability for landlords to give no-cause notices to end a tenancy.