Find out what lies ahead for the rental market
The government’s consultation on interest deductibility changes closes on Monday (July 12), and the industry has been sharing its views on the issue.
The Property Council of New Zealand expects the proposed interest deductibility changes to have a “significant chilling effect on increasing supply at scale and pace.”
“While exempting new builds is encouraging, the government has an array of levers it can pull to incentivise more housing to be built that don’t pull the rug out from under the feet of developments,” said Property Council New Zealand chief executive Leonie Freeman.
“The government has long said it aims to tackle New Zealand’s housing crisis and help more Kiwis into homes. It should not be tinkering with tax settings to make developments more difficult.
“Instead of robbing Peter to pay themselves, the government should focus on reforming planning laws, allowing councils to free up more land, supporting the development of local infrastructure, and reducing costs and red tape on new supply to house more New Zealanders.”
Read more: Government seeks feedback on exemption of new builds from new tax rules
The National Party has confirmed that it received a petition from Lindsay Calvi-Freeman signed by nearly 15,000 people. The petition urges the government to reverse its decision to remove tax deductibility on interest for landlords.
“Labour are misrepresenting interest deductibility by calling it a ‘tax loophole’. They make it seem underhanded, and that is not fair to the thousands and thousands of mum and dad landlords who are entitled to deduct their costs from their revenue,” said National Shadow Treasurer Andrew Bayly.
“This is a fundamental tax principle. New Zealanders should be able to trust that the government will tax them on their profits. If costs cannot be claimed back, revenue is being taxed.”
Housing spokesperson Nicola Willis added: “Ministers were warned by their officials that the changes to these tax laws could cause increased churn in the rental market, meaning there is a risk ‘that households may need to rely on transitional housing or emergency housing, special needs grants’, and that we could see an increase in ‘the numbers on the public housing register’.”
