On June 27 Jacinda Ardern announced the cabinet reshuffle of the housing portfolio. The timing is curious as only the day before a piece of legislation was passed that significantly affects landlords. And it was passed under a curious name that I just don't think reflects the content of the act.
Curiouser and Curiouser me thinks ..
Taxation (Annual Rates for 2019-20, GST, Offshore Supplier & Remedial Matters) bill were some serious changes affecting how Property Investors can offset rental property losses against other income.
Ashley Church ex CEO of the Property Institute believes this piece of legislation will have a greater effect on the rental property market than any other housing legislation passed in the last half century .
In my opinion, Jacinda's preoccupation with penalising the ( supposed) rich to support the poor is akin to Winstons great quote" I contend that for a nation to try and tax itself into posterity is like a man standing in a bucket and trying to lift himself up by the handles"
Unlike other nations where corporations can dominate the rental arena, Most Landlords in New Zealand are small business owners, Mum and Dad investors,
normal hardworking kiwis with a mortgage on the rental and more often than not, running it at a loss aiming for returns and capital gain a decade hence.
Previously if owners rental property costs (such as rates, maintenance, insurance etcetera) exceeded rental income, then the difference could be offset as a lot against other income such as salary.
This tax rule is although still available across a raft of other industries, is now no longer available in relation to rental properties . Why the bias - so curious.
Combine this with the plethora of changes to the rental industry and exponentially increasing costs of compliance - there is no doubt how the rental market will be affected. Some owners will exit = less supply= higher rents.
Others will seek to recoup costs=higher rents.
How did this get through and why is there such a preoccupation with Landlords being the bad guys and to blame for the struggles of tenants. When did working hard at 2 jobs trying to get ahead and future planning for retirement become so frowned upon in support of those living day to day. It is not private investors job to provide social housing - that is the Government's job.