The first concerned the acknowledgement that Kiwisaver (the voluntary compulsory savings scheme) and its assistance for first-time home buyers, where the first drawable deposits available in five years’ time - 2012, may “put extra pressure on the housing market”. Kiwisaver is also intended to reduce the pool of money available for rental property investment.
The second relates to a measure designed to curb property speculators failing to pay their fair share of tax. Specifically, over $14million was pledged to the Inland Revenue to strengthen its auditing of property transactions. In effect, this will mean more staff and more auditing.
The third, buried deep within the Budget speech was an indication that a Limited Partnerships Bill would be introduced to Parliament alter this year. The Bill is likely to contain changes to the LAQC regime.
In all, the announced measures are tools to mildly discourage the ownership of rental property investment for tax purposes.
Parliament’s Finance select committee is to conduct a wide-ranging inquiry into alternative ways for the Reserve Bank to control inflation.
A review has been prompted by concerns associated with the Reserve Bank lifting interest rates, in a bid to control inflation (in the housing market), having implications for a high currency, the wider economy and exporters.
Whilst the inquiry’s terms of reference do not directly reference investment property/housing the Government’s support party, the Greens and others do want to hear about the tax treatment on investment property. This will likely be covered by the committee’s decision to revisit the options considered by Treasury and Reserve Bank officials in their April 2006 report on “Supplementary Stabilisation Instruments”.
For ease of reference, the options from the report of direct concern to the Federation include:
On the former, the Government and IRD have already signalled that there will be more enforcement of existing laws and on the latter the IRD has said they “do not consider that such change(s) would be warranted”.
Whilst the imposition of a Capital Gains Tax (CGT) was not part of officials’ original terms of reference and it has been ruled out by both major parties, the policy option nonetheless remains a tool to be adopted by future Governments.
Separately, submissions to the Commerce Select Committee Inquiry into housing affordability (examining the cost of housing for first home buyers) –close next month.
The commerce select committee is expected to report on the findings of its inquiry by August.
The Department of Building & Housing has advised that the long promised on-line Tenancy Tribunal database has been further delayed, due to software problems, and will not be “launched” until mid-June.
The database should enable landlords (and tenants) to search a website containing all Tenancy Tribunal decisions – albeit historic and after the appeal period for each decision has passed.
Health advocates are calling for tougher housing standards and rules to hold landlords to account for letting cold, poorly heated homes.
The demands follow an Otago study released 3 May showing a direct link between cold housing and ill health in asthmatic children.
Of further interest, the Green Party has called for rental accommodation to include minimum heating, light and insulation conditions as part of the Residential Tenancies Act.
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