Rents will go up if tax rules changed - investors

File photo.

Property investors have warned that rents could go up by $34 a week if the Government scraps landlords' depreciation claims on housing, but the Government says they are wrong.

TVNZ reported that the Property Investors Association said landlords would lose on average $1750 a year if they lost the tax rebate and this amounted to $34 a week, which would be passed on to tenants.

Labour MP Trevor Mallard estimated that the increase could be as much as $45 across 400,000 households.

Prime Minister John Key told TVNZ that the figures were wrong and the Government's advice was that if there were rent rises they would be small.

The Government is looking at lifting GST from 12.5 per cent to 15 per cent to cut taxes across the board.

The Government has said they will make sure those on benefits are compensated and that no one will be worse off due to the GST rise.

It is planning to use the changes to property taxation to help fund that package and to help make such investments less attractive.

- NZPA