Landlords celebrate a happy new tax year
Changes to tax rules mean property investors will be able to keep more of their income from April 1. What will that mean for rents?
Mōrena, and welcome to The Bulletin for Monday, March 11, written by Catherine McGregor.
In today’s edition: Chlöe Swarbrick sweeps the board in co-leadership contest; Vacant Premier House got almost $100k in upgrades since Chris Luxon became PM; Private operators to take over running mobile speed cameras from police. But first, the government says tenants are set to benefit from the return of mortgage interest deductibility for landlords. Critics say the claim is laughable.
Landlords’ business expenses column gets a big boost
After trailing the change in the National-Act coalition agreement, the government confirmed landlords will again be able to deduct mortgage interest from their taxes. The decision reverses a 2021 law change aimed at levelling the playing field for first home buyers who were being rapidly priced out of the market by investors taking advantage of historically low interest rates. Landlords will now be able to claim 80% of their interest expenses from April 1 this year, and 100% from April 1 next year. This is a change from the coalition agreement which had promised a 60% tax deduction in the current financial year – ie retroactively – followed by 80% and 100% in the years after. The government decided the retroactive deduction would have been too complicated to implement. While landlords will wait longer for the deduction, the increase to 100% will come a year earlier than originally planned.
Will the savings be passed onto renters?
The arguments against the 2021 law change had been twofold. Investors said they were being treated worse than other business owners who can routinely deduct expenses, including interest costs, from their taxes. Critics of the law such as Act’s David Seymour also said the increased cost to landlords was being passed onto tenants, exacerbating the rental crisis. However Labour finance spokesperson Barbara Edmonds is among those who highly doubt rent prices will go down, or even stabilise, as a result of the reversal, given that landlords are under no obligation to pass on the savings. For some major investors the change represents a massive windfall, she noted. “[T]he Government has decided to give approximately 346 landlords who own at least 200 properties each around $464 million between them.”
Government to facilitate overseas investment in build-to-rent
The deductibility change was the second announcement in less than a week aimed at the rental property market. Late last week housing minister Chris Bishop said the government would amend the Overseas Investment Act to create a streamlined consent pathway that will allow foreign investors to buy into build-to-rent (BTR) developments. (The ban on foreign investment into residential housing and land remains.) While BTR is relatively new in NZ, interest is growing, writes Brent Melville at Businessdesk (paywalled). “Main players at this stage include Kiwi Property Group, which is rolling out its first major BTR project at Sylvia Park next month, and Simplicity Living, which has finished construction of 159 units to date, with a further 1,097 units either under construction or at the design stage.”
Fewer women than men own investment property
Friday was International Women’s Day, and property insights firm CoreLogic took the opportunity to release some new research on women and property ownership. The report found that slightly more women than men now own their own homes. Of all owner-occupied homes, 22.9% are owned by women, 20.7% by men, and the remainder are jointly owned. A more dramatic gap can be seen in the number of women and men who own investment properties. Putting aside jointly owned investment properties, 21.6% of owners are women while 26.3% are men. As with the gender gap in savings and investment, lower pay among women is largely to blame. “The gender wage gap means that, in theory at least, males can build financial wealth a bit faster, allowing for earlier and more investment in rental properties,” says CoreLogic’s Kelvin Davidson.
More on housing: Even if we assume the decisions made by the Wellington density panel were perfectly well-intentioned, the results are still egregiously flawed, writes Joel MacManus. Their recommendations must be rejected.
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Swarbrick cruises to co-leadership victory
In a result that surprised absolutely no one, Auckland Central MP Chlöe Swarbrick has been elected co-leader of the Green Party. She replaces James Shaw and will serve alongside Marama Davidson, who told 1News she looked forward to co-leading the party’s caucus with Swarbrick “in the fight against this government's cold, cynical and cruel agenda". Swarbrick had only one challenger for the position, Dunedin Green activist Alex Foulkes. In the event, Swarbrick swept the board among Green Party delegates, receiving 169 votes to Foulkes’ zero. Two votes were cast for reopening nominations for the position.
Vacant Premier House received almost $100k in upgrades in last few months
Close to $100,000 has been spent on Premier House since Chris Luxon became prime minister, The Post’s Thomas Manch reports. The $95,000 bill included $45,714 for re-painting five bedrooms and four bathrooms, $25,432 on air-con installation and $6292 on a full washdown of the building’s exterior. Officials expected the house to be ready for the prime minister to live in by mid to late February, but it remains empty after Luxon decided to live in his own mortgage-free apartment instead – and to claim $52,000 a year in accomodation allowance for the privilege (which he quickly promised to pay back). While $95,000 is a substantial amount, it is only a drop in the bucket compared to the $30 million estimated to be needed to upgrade and fully refurbish the property.
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Click and Collect
Waka Kotahi has put out a tender to private operators to run the country’s 45 mobile speed cameras from next year. The transport agency assumes full control of speed camera operations from the police in July 2025.
A list of the country’s top 10 most dangerous intersections includes only one located in a major city.
Multiple wildfires are burning in windy conditions in rural Otago, with some residents self-evacuating for safety.
Wellingtonians wait 17 times longer to get leaks fixed than residents of other cities.
The Academy Awards ceremony starts at 1pm today NZT, with live coverage on Disney+ from 11.30am.
Feeling clever? Click here to play 1Q, Aotearoa’s newest, shortest daily quiz.
“I started writing this column in February,” writes Duncan Greive. “In less than four weeks, the number of people working in our news media has declined by more than 200.” Joel MacManus beseeches Wellington Council to reject the independent hearing panel’s recommendations this Thursday. Julie Hill looks back at the local “voice of the century” who wound up in a psych hospital for 16 years. Gabi Lardies argues that the tyranny of efficiency has ruined large stretches of SH1. Kids tell Tara Ward what they think of the new-look What Now. Calum Henderson talks to Katey Martin, the new voice of summer cricket. Food from India is great, but it’s time to move on from generic “Indian” restaurants, says Perzen Patel.
Sporting snippets
After claiming four wickets late yesterday, the Black Caps have victory over Australia in their sights today in Christchurch. Australia require another 202 runs to sweep the series two-hil, while NZ needs six wickets to win.
Hurricanes Poua performed a new haka on Saturday which, like the one it replaced, mentions the government and Te Tiriti. However administrators deny the haka is a direct criticism of the current government.
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