Government urged to remove the causes of large cost increases instead
Rent controls are being considered due to high rental prices in New Zealand, Poto Williams, associate minister of housing has indicated, but will this really benefit tenants?
Andrew King, president of the NZ Property Investors Federation (NZPIF), pointed out that “rental price increases have been below the general rate of inflation for the past year… despite many other housing costs, such as rates, insurance, repairs, and maintenance increasing faster than general inflation.”
Helping push down increases in rental prices have been low mortgage rates, but this situation is unlikely to continue.
The major factors driving rental price increases, on the other hand, have been the government changes aimed at disincentivising the provision of rental property, including extending the Bright Line Test, ring-fencing losses, and removing mortgage interest as a tax deduction – none of which improve the quality of life of tenants, King said.
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NZPIF agreed with Williams that more houses are needed in New Zealand – including rental properties. Although rental property providers do not build new properties, they still contribute by buying the properties other people build.
The organisation was also of the same opinion as the minister that rent controls, though may appear as a good solution for tenants, can have longer-term consequences that can make renting more difficult.
“Rent controls will undoubtedly add to the problems which the above-mentioned changes have already created,” NZPIF said in a press release. “Rather than the government controlling rental prices, tenants would be better served by the government removing the causes of large cost increases that have in turn resulted in rising rents without any improvement in tenants’ living situations.”
