Property Institute slams ‘cynical’ Labour Housing policy

Property Institute of New Zealand Chief Executive Ashley Church says that the proposal, by Labour, to remove the ability for property investors to claim tax losses is a cynical electoral ploy and risks making the countries housing crisis significantly worse.

Mr Church says that it is disappointing that Labour, which announced a suite of smart housing proposals in 2016, is now resorting to a form of envy politics designed to set one section of New Zealand society off against another. He says that the policy is a direct attack on Mums and Dads who are trying to provide for themselves in retirement and be less of a burden on the State.

“Mr Littles use of the word ‘speculators’ to describe Property Investors is mischievous. Speculators are people who buy and sell property very quickly in the hope of making a quick buck – whereas Investors are people who buy for the long haul – providing housing to thousands of New Zealanders in the process”.

Mr Church said that, if implemented, the policy would have a dramatic and rapid effect on the supply of private rental accommodation in New Zealand – creating a problem which would ultimately fall back on the Government.

“Your typical Property Investors are average Mums and Dads – not wealthy cigar smoking fat cats – and their ability to purchase an investment property is usually leveraged against the equity in their home and their ability to claim losses in the early years, like any other business does. This move would certainly stop them investing – but in the process it would quickly lead to a shortage in rental housing which would fall back on the Government – so it would end up costing the taxpayer a lot more in the long run”.

Mr Church also noted that negative gearing is only a factor in the early years of a property investment.

“Over time, rents rise and properties become ‘positively geared’ – at which point the additional income becomes taxable. Is Labour suggesting that they will forgo this tax income – or that they’ll make property investors pay tax on profits while removing the ability to claim losses”?

Mr Church says that his biggest concern is that Labour are proposing a policy to reduce private investment in property at a time when private investment in new houses is probably more important than at any other time in the nations history. He says that the Government (and Parties who want to be in Government) should be proposing policies that increase private investment in the construction of new dwellings as quickly as possible – exactly the opposite of what Labour is proposing.

“The shortage of houses in Auckland is at crisis point and there’s a need for smart and innovative solutions that harness the power of Mum and Dad investment to get those houses built quickly. That might include giving preferential tax treatment to Investors who build, or buy, new homes – not punishing them for doing so”.

Mr Church also strongly rejected Mr Littles claim that Labours policy would "create a level playing field for home buyers and help families get a fair shot at buying a place of their own."

“That’s absolute nonsense. Home buyers and families aren’t being closed out of the market by Investors – they’re being closed out by Loan-to-value restrictions that require them to have a 20% deposit at a time when house prices are at historically high levels. The best way to fix that is to remove those restrictions on first home buyers – not blame those who are providing rental accommodation to those who choose not to own”.

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