“National’s proposal to restore interest deductibility for landlords is welcome, but it can and should be done immediately, not be phased in over three years,” says ACT Leader David Seymour.
“Under ACT’s fully costed Alternative Budget, Labour’s removal of interest deductibility for residential landlords will be reversed will be reversed immediately, taking effect in April 2024. This will ease pressure on rents and simplify the tax code.
“Landlords have been hit with a double whammy of rising mortgage interest rates and increasing interest deductibility limitations during a cost-of-living crisis. The pressure on landlords and tenants is severe and they need relief now, not in the future.
“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. If they don’t or can’t, then that’s an added pressure on Mum and Dad investors at a time when all their other living costs – including the mortgage on their own home - have gone up.
“Because Labour took away their ability to deduct interest costs, landlords have gradually had to pay a higher percentage of their interest bill while 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 tenants. This is one of the reasons New Zealand has all time high rental costs.
“Restoring interest deductibility immediately would remove this upward cost pressure. It’s a simple and direct way of doing something to halt the relentless increase in the cost-of-living.
“Hammering landlords doesn’t help tenants or help build more houses. As well as restoring interest deductibility, ACT is proposing genuine solutions that will make a tangible difference and lead to more houses being built at lower prices to take further pressure off rents.
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
“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."