No Benefits For Renters In The 2023 Budget

The 2023 Budget has done nothing to ease the pressure on tenants as their property owners struggle with rising costs, forcing them to increase rents in order to stay financially viable. The increasing cost of renting has been ignored with policies that have forced up rents while owners cope with a new tax on top of interest rates doubling and other expenses increasing faster than inflation. This is why removing tax deductibility of interest on mortgages has been referred to as a ‘tenant tax’. The tax is unfairly targeting the biggest legitimate business expense for investment home ownership, a mortgage. As Dr Michael Cullen has stated "landlords are a necessary part of the housing market” so making it hard for owners makes it hard for tenants by increasing costs in a big way.

“The majority of our members are investing in property with long term aims such as helping children through University, ensuring they have an income in their retirement or taking care of other family members,” says Sue Harrison, President of the NZ Property Investors Federation (NZPIF). “However, a survey of members earlier this year showed that the loss of the ability to deduct interest as a legitimate business expense and substantial increases in expenses, such as interest rates and insurance, have forced many rental property owners to increase rents, or to sell in some instances although long term hold was intended.”

“This policy is not only affecting the long term plans of these investors,” continues Harrison, “but takes properties out of the rental market. A decreasing supply of rental homes just adds to the housing crisis”.

The building of state owned homes and community housing is progressing in all parts of New Zealand but private rentals substantially represent the major proportion of the available properties in the rental market. It’s time there was a better understanding that it makes sense to have policies in place which incentivise private investors rather than making it harder for them to continue to provide much needed homes to tenants. It’s not realistic or good for the country for the state to own and control the rental marketplace.

All the Property Investors Associations in New Zealand which are affiliated to the NZPIF are concerned for the well-being of both valued tenants and owners, which is why some of the current policies need to be changed urgently. These policies are the ability of rental property owners to deduct interest as a legitimate business expense and sections of the RTA which have increased the risks of being an owner. Property Investors Association members look after their tenants and strive to give them good homes at reasonable rentals, which the recent survey shows is often below the level of the market rental in their area. In return they need tenants who respect their properties and Government policies which enable them to survive.

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