“Landlords are being hit with a double whammy of rising mortgage interest rates and increasing interest deductibility limitations to hit them hard during a cost of living crisis,” says ACT Deputy Leader and Housing spokesperson Brooke van Velden.
“ACT has crunched the numbers and it isn’t good for landlords. Someone with the average new investor mortgage debt of $492,342 faces $6,400 more tax this financial year than they would have three years ago. If they choose to pass this cost on to tenants it’s another $123 per week in rent.
“The same landlords are now paying over $17,000 more in net interest than they were three years ago.
“This is because Labour has taken away their ability to deduct interest costs. Landlords have gradually had to pay a higher percentage of their interest bill at the same time that interest rates have been increasing.
“It’s bad policy that increases costs for all New Zealanders during a cost of living crisis. Landlords have more costs that are inevitably passed on to renters. This is one of the reasons New Zealand has all time high rental costs.
“One landlord I’ve heard from with one rental property has said “Combining these two challenges I am now left with a very difficult decision to make. Do I sell the rental property and displace the tenants, or do I put up the rent to a value to meet my costs which I don’t think is fair on the tenants?”
“Another landlord has told me she’s needed to put up the rent by 7.5% but says “This does not begin to cover my increased interest payments, it is more a case of sharing the pain. I’m sure landlords and tenants country wide are sharing the same experience.”
“Hammering landlords isn’t going to help build more houses, it does the opposite. ACT is proposing genuine solutions that will make a tangible difference and lead to more houses being built at lower prices.
ACT would:
- Incentivise and resource councils to provide infrastructure for new homes by sharing half of the GST with them
- Scrap the Resource Management Act, replacing it with a new Urban Development Act that respects existing property rights while making it easier to increase housing supply
- Automatically allow building materials approved by jurisdictions with high-quality regulators and similar seismic situations to ours (e.g., Japan and California) to be used in New Zealand
- Require councils to accept any ‘equivalent material’ certified by MBIE for use in building projects
“In the case of GST sharing, I have a Member's Bill that is soon to be debated in Parliament. The Government should support it to create real change in housing immediately.
“The Government has targeted Mum and Dad landlords and investors with new housing taxes. ACT will bring real change to housing policy that ensures costs are kept down and more houses can be built."