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Landlord and tenant chiefs aren’t expecting a huge change in the residential rental sector from the Government’s Budget this Thursday.
Peter Lewis, NZ Property Investors Federation vice-president, says landlords aren’t thinking about state funding allocations for the May 18 Budget but instead want a total policy reversal.
Geordie Rogers, RentersUnited president, said tenants wanted to see this Budget encourage more new houses to be built and for a better-funded Tenancy Tribunal in operation to ensure better enforcement of the law.
But like Lewis on the policy reversals, Rogers doubts either of those two things will happen.
Traditionally, it has been cited that New Zealand has around 600,000 rental properties that house around 1.3 million people. The private sector provides around 510,000 or 85 per cent of that. The Government owns or leases around 72,000 rental properties or 12 per cent.
But the data shows a much lower number: only 398,000 bonds were lodged with Tenancy Services by February, up from 383,000 a year ago.
Renters United president Geordie Rogers tells what tenants are hoping for in this year's Budget. Photo / Renters United
And while both sides are claiming a rental crisis due to too few places, numbers are actually up by 15,000 bonds annually, indicating rising rental property numbers. Stats NZ’s residential consent data is also showing strong new apartment/townhouse numbers and many of those could be for rent.
But immigration is up markedly lately too, putting more pressure on rental stock. Rising mortgage interest rates mean many first-home buyers still can’t get into the market, despite anti-landlord measures in government policy.
Lewis wants a complete policy reversal - most unlikely to be contained in estimates of expenditure on May 18.
“What we don’t want to see is a continuation of the current Government’s portrayal of private residential landlords as tax-dodging speculators, the associated war on landlords and subsequent targeted fiscal punishment which has led to the current situation of high rents and endemic shortages,” Lewis fumes.
He’s returning to many old battle scenes where landlords lost and tenants won.
Government changes to strengthen the law to ensure rental homes are healthy and fit for purpose, to try to empower more first-home owners not to be out-bid by wealthy investors and to change tax laws to also try to deter landlords from buying more are those battles.
Lewis wants to fight them all over again, despite many of the measures being in force for more than two years.
He believes policies have created a “rental crisis” via a shortage of homes for rent.
Lewis wants landlords to be able to claim mortgage interest costs as a tax-deductible expense “just like any other NZ business legally can”.
He also wants a repeal of ringfencing regulations. Those measures, he says, will then increase the supply of rental property available for tenants “and eliminate shortages like we are already seeing in Queenstown and on Waiheke Island”.
The bright-line test should be reinstated to two years instead of the current 10 years, Lewis says.
Instead of landlords paying their applicable tax rate on rental income, they should only be taxed at a flat 15 per cent “to encourage supply and lower the rental process”.
“Make the accommodation supplement comparable to income-related rents payments so that tenants are no longer disadvantaged due to their landlord’s status. Private-sector rental providers should receive all the government support that social housing providers already receive,” Lewis says.
Peter Lewis has explained what landlords want from the Government. Photo / Michael Craig
And in his final seemingly improbably wish-list demand, Lewis asks for Government subsidies for landlords to get cheaper loans: “The Government should undertake to provide low-interest, fixed term and fixed-rate mortgage financing to all rental property providers who are providing their tenants with long-term tenancies.”
Lewis, a multimillionaire, owns 12 properties and is in his 70s.
Rogers dismissed the Lewis wish list. The Budget was more about funding allocations than policy reversals.
Rogers is expecting some Budget cuts in the housing sector.
If he had his way, he would like to see more funding to help tenants via the tribunal process and to enable more action against landlords not complying with the law.
“I would hope to see some of that. From the policy side and the enforcement side, when we look at how accessible the Tenancy Tribunal is and how easy it is to enforce tenants’ rights, there’s very little support. I would like to see the Budget change that, via funding for tenancy advocacy or better funding for the tenancy compliance investigation team,” Rogers said.
But he doesn’t think the Budget will deliver anything for renters, referring to discussions he’s had with the Ministry of Housing and Urban Development officials.
Responding to the all complaints Lewis made about the current law, Rogers said there was one way around that.
“If landlords want interest deductibility back, they can look at building more homes. Brightline tests don’t apply to new builds nor does interest deductibility. I would suggest anyone interested in getting those two measures back consider providing more housing for tenants,” Rogers said.
National’s housing spokesman Chris Bishop says 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.
“We will be stopping Labour’s war on landlords and improving the rental market. We’ve already announced we will bring back interest deductibility for rental properties and restore the bright-line test back to two years,” he said.
Labour had “launched a war on landlords by removing interest as a legitimate expense for rental property owners and extending the brightline test to 10 years. They were warned it would put pressure on rents and the social housing waitlist, but they did it anyway”.
Bishop said National would fix the housing crisis by freeing up more land for new housing, getting more infrastructure funding and finance, making resource consents cheaper and faster, encouraging a more competitive building materials market and reversing financial moves against landlords.
Renters United wants rent controls as “an urgent measure to reduce the stress that too many New Zealanders face due to exorbitant and unjustified rent increases”.
About the only thing Lewis and Rogers do agree on is the phenomenon of a rental crisis with shortages in many areas of New Zealand.
