The effects of the Government's capital gains tax rejection have been measured by an Auckland rental property management business to gauge how landlords reacted. Crockers engaged independent market research firm Ipsos to find out what landlords thought about no CGT as well as the Government's move to banning tenants being
How landlords reacted to capital gains tax rejection and banning letting fees: survey measures response
Kiri Barfoot, a director of Barfoot & Thompson, which manages thousands of Auckland residential properties, said the feedback received was that no CGT was good news to some and many landlords were planning to hold long term anyway.
"We didn't survey but imagine most would be pleased with one less tax as they already pay tax, as for the majority it's an income for them. There is already a bright-line test for the short-term holders," she said, referring to the tax on short-term flipper profits.
"Some landlords might now even decide to upgrade their properties further, which is better for the tenants. Others didn't mind the tax. In general, landlords are happy about it," Barfoot said, although some were worried about losing ring-fencing.
In April, the Herald featured Auckland landlord Gary Lin, with 14 residential properties worth about $10 million, who had planned to hold places longer and use expected valuation rises to offset a capital gains tax.
"I've already got a strategy because we can't control what the Government does," said Lin of what he expected to be a punitive regime for landlords. He spoke before Prime Minister Jacinda Ardern rejected CGT but had pondered a grim scenario of it coming in.
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"If the Government taxes me 33 per cent on [investment property] valuation increases when I sell, then I will wait an extra three years because then the tax will be cancelled out by further gains," predicted Lin at the time.
The Crocker's survey also canvassed landlord views on the Government banning letting fees to reduce price barriers for tenants and encourage consistency in the rental market by ensuring they did not face different up-front costs.
The Crocker's survey found: "Just 26 per cent of investors said that has achieved the desired objectives of reducing price barriers and encouraging consistency in the rental market."
An overwhelming 84 per cent of landlords made no changes to how they manage their investment properties after the fees were scrapped and not a single investor said they had sold places when the fee ban was enacted, Crockers said.
A portion, or 16 per cent, increased rents to cover the cost of the changes.
"This shows the overall impact of the new law on tenants has been very minimal," Crockers said in relation to landlord sentiment.
Tenancy Services said that from December 12 last year, tenants could no longer be charged letting fees which had paid for listing and advertising, showing houses and vetting tenants.
The Residential Tenancies (Prohibiting Letting Fees) Amendment Act was passed to remove additional upfront financial barriers for tenants trying to rent homes, it said.
Letting fees were normally about a week's rent and paid at the beginning of a tenancy as an upfront cost, Tenancy Services said.
"Charging letting fees to tenants will be an unlawful act from 12 December, and anyone who does so could be liable for up to $1000 in exemplary damages," it said.