Labour rental policy will make housing crisis worse
Property Institute says Labour rental policy will make housing crisis worse
Property Institute of New Zealand Chief Executive Ashley Church says that Labours new Housing Rental policies will scare existing Landlords out of the rental market and will make the current housing crisis even worse – particularly in Auckland.
Mr Church was responding to todays policy announcement by Labour leader Jacinda Ardern in which she said that, if elected, Labour would:
• Abolish no-cause
terminations of tenancies.
• Abolish all 42-day notice periods (allowed in limited cases) for 90 days.
• Limit rent increases to once a year, with a formula for increases included in tenancy agreements.
• Ban letting fees.
• Offer $2000 grants to landlords for insulation and heating
Mr Church said that while moves to support the security and comfort of tenants were laudable – most of what was being proposed would simply scare Landlords out of the market.
“The timing of
these proposals couldn’t be worse. Auckland is currently
in the grip of a serious housing shortage which effects both
buyers and renters - and anything which deters Investors
from providing housing can only succeed in compounding that
“If you’re an existing Landlord - the deck is already stacked against you. The market has flattened, LVR restrictions mean your equity position is worse, and bank credit rationing means that it’s now much harder for you to borrow money to do renovations and improve your position”.
“Now, Labour is telling you that, if elected, they’ll take away your right to terminate a tenancy and they’ll regulate the circumstances under which you can increase rents to make them comply with some as-yet-undefined Big Brother formula”.
Church said that these latest moves come on top of a recent
announcement that Labour has placed a possible Capital Gains
Tax back on the table pending a report from a
yet-to-be-formed Tax Working Group.
“It doesn’t take a rocket scientist to recognise that Labour are already committed to a Capital Gains Tax and that their Tax Working Party will be made up of others who share that worldview. So, if you’re a Property Investor, the very clear message is ‘we’re going to get you’”.
“That might make for good politics – but it risks doing long-term damage to the property market by scaring off Mum and Dad investors who are currently putting a roof over peoples heads”.
Mr Church says that private investment is the key to solving the housing crisis and that providing incentives to get people building new homes was the way to overcome the supply issue.
“But no one is going to do that if they’re worried that they’re going to be regulated and taxed to death”.
He says that existing Landlords will abandon the market and people who might otherwise have invested will stay away.
“Which means the State – which is just you and I as taxpayers – will be left holding the bag”.