OPINION: Last week, during a TV interview, I made an offhand observation that the Government is the most anti-landlord administration in our nation’s history. That comment kicked off a fierce debate and led to a number of commentators and political blogs wading in to defend the Government.
So was my claim unfair? Not at all – and I stand by it.
The fact is, the overwhelming bulk of rental accommodation in New Zealand is provided by private landlords, who collectively own around 440,000 rental properties. Housing New Zealand owns another 65,000, councils own around 12,000, and non-government social housing organisations own 8,000.
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This means that the private sector provides the vast bulk of the countries rental accommodation. This is significant because, without this private investment, these homes would need to be provided by the state. For this reason it’s fair to assume that mum and dad property investors have, collectively, saved the country tens of billions of dollars over the past 40 years.
Given these numbers, a wise government would do everything it could to support private property investment and would work with landlords, and their representatives, to ensure that the rental housing estate continued to grow. Around 40 percent of Kiwis live in rental accommodation, and while this number has been consistent over several census periods, the actual demand for rental accommodation is increasing because the population of the country is increasing.
Granted, Covid-19 will significantly reduce the flow of new migrants for a couple of years, but ex-pat Kiwis are returning home in record numbers and, for every 10,000 of these, around 4,000 will require rental accommodation.
Again, a wise Government would avoid, or stagger, initiatives which imposed significant new costs on landlords; would reject policies that worsen the already precarious position associated with the cost of buying and owning rental property; and would introduce programs that would make it easier for Kiwis to invest in this important sector.
Instead, here is what the Government has done for landlords over the past three years:
1. Attempted to impose a Capital Gains tax which would have largely targeted property investors – only finally abandoning the idea when it was unable to get the support of New Zealand First to push it through Parliament.
2. Introduced a suite of significant new compliance requirements to ensure that rental properties meet minimum health standards. This isn’t to say that a mandated standard isn’t a good idea, but the Government has decided that private landlords will need to comply by 2021 while giving Housing New Zealand an extra two years to comply, exposing a worrisome double standard.
3. Extended the Bright Line test to five years to capture "speculators" – a move which demonstrates a stunning ignorance of the difference between speculation and property investment.
4. Enacted legislation to ring fence tax losses made on rental investments, a move which will end up shutting many new property investors out of the market.
5. Introduced draconian changes to tenancy laws including moves toward regulation of rent increases and have made it even more difficult to evict troublesome tenants.
No previous Government in the history of our nation has introduced a suite of such punitive measures in such a short space of time.
Those who claim that landlords get an easy ride can only be making such comments out of naivety or mischief because nothing could be further from the truth. A large part of our rental property estate is negatively geared, which essentially means that the landlord is out of pocket after the cost of owning the property is deducted from the rental income and no sane investor will continue doing this while being beaten up by an aggressive government.
Equally, those who claim that investors shouldn’t complain because "house prices are going up" – as if this is some sort of justification for hitting landlords hard - are using an irrelevant straw man to justify these policies and failing to see the bigger picture.
Frankly, it’s hard to believe that any Government could be so blind to the inevitable consequences of its rental housing agenda and you could be excused for wondering if there is a deliberate plan to destroy the private rental sector – perhaps for reasons associated with ideology or political populism.
These policies are inequitable and will inevitably lead to higher rents, an exodus of investors and fewer rental properties at precisely the time when we need them the most. Few things could be more certain.
- Ashley Church is a property commentator for OneRoof.co.nz. Email him at [email protected]
