With the latest Roy Morgan New Zealand Poll showing National and ACT just ahead of Labour and the Greens, a change of government by the end of the year is a very real possibility.
National and ACT have been assiduously courting the support of “mum and dad” property investors and landlords, highlighting what they think Labour has got wrong on housing since 2017.
National has still to release its full policy position, but it hasn't pulled any punches in the fight for the investor vote.
The party's housing spokesman Chris Bishop has accused Labour of waging a war on landlords, citing a survey commissioned by the Ministry of Housing and Urban Development that found changes to rental laws, to make properties warm and dry, had driven up rents.
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ACT deputy leader Brooke van Velden says the government's recent rental market reforms have “hammered” landlords and renters, arguing that the removal of interest deductibility, healthy homes legislation and the extension of the bright-line test had put pressure on both groups.
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Rents are likely to jump in the locations hit hardest by Cyclone Gabrielle and the extreme flooding at the start of the year, with an increase in demand from those displaced by the storms putting pressure on stock.
Bishop says if National is elected on October 14, it will stop the “war on landlords” and set about “improving the rental market”.
“Mum and Dad landlords aren’t the enemy. They’re an important part of our housing market and the sooner the government stops demonising them, the better,” he said in a speech last month.
“We’ve already announced we will bring back interest deductibility for rental properties and restore the bright-line test back to two years.”
Bishop also gave his backing to build-to-rent developments. “Typically they consist of multi-unit residential developments within walking distance to key transport links. The developments are professionally managed, with great amenities and offer residents a variety of lifestyle options as well as unique security of tenure.”
Sue Harrison, president of the New Zealand Property Investors Federation [NZPIF], said landlords were expecting a National-led government to:
● Reverse the interest deductibility rule so running a rental property business is treated the same as running any other business for tax purposes
● Reduce the bright-line test back down to five years, or possibly even two years
● Scrap ring-fencing so any losses made can be offset against other income, just like other businesses
● Tweak the Residential Tenancies Act 1986 to allow no-cause 90-day terminations, which will mean landlords will start giving more tenants a chance. That will also help the student market, the NZPIF believes.
National Party Leader Christopher Luxon and National housing spokesman Chris Bishop. National says Labour is waging a war on landlords. Photo / Michael Craig
If National does form the next government, then they have the benefit of having seen all of Labour’s housing policies in action for two to three years, meaning they can keep the good, and tweak or scrap the not-so-good, says property investor Nick Gentle.
Gentle, who runs iFindProperty, does not expect a National/Act coalition to just roll back everything that Labour has done. “There are the distortions that are happening from the [rules] that have been brought in. But a lot of what Labour has bought in has been very sensible. Although it caused disruption, it has caused a lot of long-term good and the big one [to keep] is Healthy Homes.”
The Healthy Homes rules, which introduced minimum standards for heating, ventilation, moisture, drainage and draught stopping in 2019, should be kept, but tweaked, he says. Gentle expects a new government would tweak how the heating requirements are calculated under the Healthy Homes rules because those calculations led to perfectly good heat pumps being upgraded to cope with a single coldest day of the year. But overall the policy has been beneficial, he says.
Improved security of tenure for tenants, from February 2021, was another Labour policy worth keeping overall, says Gentle. “[National] has said they’ll change some of the no-cause termination [rules]. Landlords don’t like them, but they are politically popular. I think they will tweak it, but there should be a balance.”
That balance should allow extremely bad tenants to be removed more easily, he says. Currently landlords need three strikes in the Tenancy Tribunal within a 90-day period to have a tenant evicted on the grounds of anti-social behaviour.
“Security of tenure is a good thing. I think they should make it easier to remove the tenants who are causing problems. It’s the edge cases involving the very problematic tenants.”
Gentle is also expecting that interest cost deductibility on rental properties would revert under a National-led government. “I believe that is distorting the market,” he says. Likewise he expects National would return the bright-line test from 10 years to two years.
The bright-line test has led to new landlords favouring subletting their properties to social housing agencies because there was an exclusion that allowed them to deduct interest costs. The next best option for landlords was short-term rental such as Airbnb or Bookabach. The least desirable tenants, thanks to the distortion of the interest deductibility rules, are those who have jobs and can afford to pay the rent, says Gentle.
“Everything else they will just tweak rather than rip up and throw away.”
- A previous version of this article incorrectly attributed a property investor's remarks around a capital gains tax to Sue Harrison, president of the New Zealand Property Investors Federation. OneRoof would like to make clear that Ms Harrison and the NZPIF have never supported the introduction of a capital gains tax. OneRoof apologises for the error.
