Voter Push to Tax Property Investors – What It Means for You

THIS WEEK IN REVIEW TOPICS:
Topic #1: 1News 29th of October-Rents fall to eight-month low, but still higher than last year

Topic #2: Stuff 29th of October -Last minute home loan fixing could save thousands, mortgage broker says

Topic #3: 1News 29th of October -How the Government is moving to streamline building consents

Topic #4: NZ Herald 29th of October -Bond refunds spark disputes: Tenants and landlords clash in tribunal

Topic #5: Interest.co.nz 29th of October -A majority of voters want to tax property investor profits but not other assets

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Transcript

 Hi everyone, I'm Debbie Roberts, Owner and Financial Advisor at Property Apprentice. Join us today for the Week in Review where I talk about current events for the everyday investor and homebuyer. Our topics for this week, topic number one   📍 from 1News on the 29th of October, rents fall to an eight month low but still higher than last year.  Topic number two from   📍 29th of October, last minute home loan fixing could save thousands, mortgage broker says.   Topic number three from   📍 1News on the 29th of October, how the government is moving to streamline building consents.  Topic number four from   📍 New Zealand Herald on the 29th of October, bond refunds spark disputes, tenants and landlords clash in tribunals.   And topic number five from   📍 interest. co. nz  on the 29th of October, a majority of voters want to tax property investor profits, but not other assets.   

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Topic number one from 1News on the 29th of October, rents fall to an eight month low, but still higher than last year. Rental prices reached an eight month low in September, despite remaining higher than last year, as reported by Trade Me's Rental Price Index.

The median weekly rent for September was  630, a 1. 6 percent drop from August, marking the lowest level since January 2024,  but still 1. 6 percent higher than September 2023. The steepest rental declines from August to September. Were in Malborough down $30 to $550 a week, and Canterbury down $25 to $565 per week, and in Hawkes Bay down $10 to $640 per week. 

In contrast, Northland saw a 20 increase to 620 a week, with smaller rises in Nelson, Tasman and Southland, each up 5 per week. According to Gavin Lloyd, Trade Me's property customer director, wrinkle prices typically increase with the approach of summer. However, this year's softened demand has shifted the market as rental supplies up 44 percent year on year.

This surplus supply is partly due to younger people leaving New Zealand, and others opting to live with family amid high living costs and unemployment.  Auckland and Bay of Plenty rank as the country's priciest rental regions Lloyd noted that while both regions topped rental costs, Bay of Plenty properties generally offer more space for the price. Otago and Wellington held second place at 650 a week, showing no change from August, while Hawke's Bay followed at 640 a week after a 10  📍 decrease , .  Although prices eased, rental supply fell from 1 percent from August to September, though listings are still up 44 percent compared to the same time last year, keeping options plentiful for renters.   

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Topic number two from stuff on the 29th of October last minute. Home loan fixing could save thousands mortgage broker fees. Many homeowners are saving around $50 a week on mortgage repayments by re-fixing at the last possible moment. Recent drops in bank interest rates have made the strategy advantageous with further rate reductions possible before Christmas.

However, waiting too long to refix does come with risks, as sudden economic shifts could alter the trend.  Wellington mortgage broker Michael Anastasidis noted that last minute refixing could save homeowners more than two and a half thousand dollars annually, especially benefiting those with larger loans. Most major banks allow customers to refix several months in advance and homeowners are often notified by banks or brokers when the windows open, which is about three months, you know, prior to your fixed rate expiring.

However, Anastasidis. advises delaying to maximize savings citing recent rate drops of up to 0. 5 percent which can save between 10 and 50 a week, which is significant in the current cost of living crisis.  The burden of rising mortgage payments has highlighted the impact of even minor interest rate drops, leading to increased borrower awareness, Anastasidis added.

The Reserve Bank is expected to reduce the official cash rate in November, which could drive rates even lower. by that stage or either before the announcement or soon after the announcement. This is where banks compete with each other. Personal finance expert Tom Hartman suggested that homeowners use repayment calculators to estimate potential savings from lower rates.

He advised those who secure a lower rate to keep payments steady to reduce their principal more quickly, emphasizing the potential for long term savings.  And so in other words, if you keep your payment the same as what it currently is when you're refixing at a lower rate, that'll help you pay down the mortgage balance faster.

In the last 90 days, ANZ's three year special rate dropped from 6. 35 percent to 5. 69%, translating to 71 a week in savings for a 720, 000 mortgage. Other banks offer shorter decision windows from 30 to 60 days. In one case, an ANZ customer with a 550, 000 mortgage refixed at a one year rate of 7. 14 percent in July, paying 3, 712 monthly.

Within 60 days, the rate dropped to 6. 35%, lowering their monthly payments, what would have been, to 3, 423, saving 67 a week.  While mortgage advisors prioritize clients financial interests, 

My thoughts on this are, you know, trying to pick interest rates and where they're headed is a recipe for disaster, because things can change in a very short time frame in the interest rate market. However, The general consensus at the moment amongst economists and, and banks as well. The general consensus is that we're expecting interest rates to come down over the next few months.

Okay? So if you've got an interest rate coming up for refixing within the next few months, probably beneficial to wait until the last minute to refix and talk to your mortgage advisor before you make a decision.  If you'd like to learn more about investing in property,   📍  📍  📍 join me at one of our free events called How to Succeed with Property Investing.

I'll discuss strategies for successful investing from my perspective as an experienced mortgage advisor and a financial advisor. And these events are available live, online, or in person. Check out propertyapprentice. co. nz for upcoming dates and register today. We don't sell property, so it's all about increasing your knowledge to reduce your risk.

  📍  📍  📍 If you've already been to one of our free events and you'd like to find out more about how we can help you to reach your financial goals, you can also book a no obligation phone call or meeting with my husband, Paul Roberts, via the website, and that's propertyapprentice. co. nz.   

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 Third topic for this week in review from 1News on the 29th of October, how the government is moving to streamline building consents.

The government plans to simplify the building consent process by introducing a self-certification scheme replacing some council inspections. Building and Construction Minister Chris Penk indicated that this proposal would apply to building professionals with indemnity insurance engaged in low risk projects.

This initiative would enable qualified tradespeople such as plumbers, drain layers and builders to certify their work independently without requiring council inspection.  The changes are expected to benefit large home building companies that produce hundreds of similar homes annually. Pink noted that while the building consent system is designed to safeguard homeowners from defective construction, it is currently inefficient, adding unnecessary time and cost for the building process.

On average, it takes 569 days to build and obtain consent for a home, which is too lengthy given the existing housing shortage in some areas of New Zealand. Currently, building consents are granted by building consent authorities, typically local councils or private organisations. The new self-certification scheme will be implemented in two stages, beginning with qualified professionals being able to self certify their work for low-risk builds.

This move aligns them with electricians and gas fitters who already have similar privileges, addressing industry calls for this change. The second phase will allow established companies, particularly group home builders, with a consistent record, to navigate a more streamlined consent process.  Presently, a basic single story home may require over 10 inspections, which Penk argues is excessive and inefficient.

To ensure quality, building professionals must already meet quality assurance standards, such as holding a practicing license and maintaining a public record of their work. Additional safeguards will be introduced, including clearer pathways for addressing poor work, stricter qualification requirements, and harsher penalties for negligent self-certifiers.

Penk mentioned that the government would finalise policy details next year after thorough consultations, exploring what role existing building consent authorities might still play in the self-certification scheme, such as auditing functions. He emphasised the need for Kiwis to have confidence in the safety and quality of their homes, while striving to reduce bureaucratic obstacles to improve housing availability. 

Prime Minister Christopher Luxon added that the government aims to eliminate regulation that doesn't have a benefit, focusing on three priorities, ensuring qualified tradespeople, providing robust consumer protection, and expediting the process. He noted that resolving housing insecurity is vital to addressing broader social issues.

Penk reiterated the government's commitment to eliminating cowboy operators while fostering trust in reliable tradespeople. He clarified that the changes aimed to prioritize regulations were the most effective rather than creating unnecessary regulations. He emphasised that accountability for poor workmanship must be increased.

Finally, Luxon remarked on the need for a more stable rental market and social housing system, asserting that this would lead to better financial stability for individuals. Hard  had to argue with that really.

  

 Topic number four, from the New Zealand Herald on the 29th of October, bond refunds sparked disputes.

Tenants and landlords clash in tribunal. Each year, thousands seek the assistance of the Tenancy Tribunal to resolve conflicts between landlords and tenants. In the most recent quarter, around 7, 000 applications were submitted, revealing several recurring issues, with some disputes being settled through mediation before reaching the tribunal.

Rent arrears accounted for the majority of applications, totaling 4, 484, which represents over 61 percent of all cases. In one instance, a tenant was ordered to pay $10, 790 in arrears or face eviction. While another was instructed to pay $4, 100 for a previous tenancy.  The General Manager of the Auckland Property Investors Association, Sarina Gibbon, noted that collecting large sums can be challenging for both parties.

She advised landlords to monitor arrears closely, and suggested that tenants should address financial difficulties with their landlords early to potentially negotiate a payment plan. Nearly 3, 000 bond refund applications were made, making it the most common reason for tenant applications, and the third for landlords.

When tenancies end, landlords and tenants are expected to inspect the property together and agree on the bond refund. Disagreements over refunds can lead to tribunal involvement, as seen in a case where a landlord denied a refund due to unpaid rent on a different property. The tribunal determined that the bond from the initial tenancy should be refunded.

Over 2, 500 applications for tenancy termination or possession were filed.

More than 2, 000 applications sought compensation or damages. One dispute involved a tenant who claimed insufficient notice for a room inspection, leading to a retaliatory eviction notice from the landlord. The adjudicator recognized that the timing of the landlord's notice suggested a potential retaliatory motive.

The tenant, having lived in the property for nine years, received $2, 000 in exemplary damages.  Approximately 1, 160 applications were related to outgoings, with tenants typically responsible for costs directly tied to them. In a notable case, a tenant argued that outgoings were included in their rent agreement, while the landlord contended otherwise.

The adjudicator found insufficient evidence that the tenant had agreed to additional payments. Zach Thomas, President of Renters United, highlighted the difficulties , that tenants face in navigating the tribunal process, often against experienced property managers.  He noted that inconsistency in tribunal decisions and lengthy delays in hearings contribute to frustrations on both sides.

Property investor representatives echoed these sentiments, citing significant wait times for dispute resolution, which undermines the tribunal's intended purpose. Gibbon emphasised that the tribunal is underfunded and inefficient, leading to substantial delays in resolving disputes. Many landlords are opting to absorb losses rather than pursue claims due to the burdensome process.

She stressed the need for increased resources to improve the system's accessibility and efficiency, warning that without these changes, legitimate claims might be abandoned. Thomas added that if 90-day no cause evictions were reinstated, tenants would likely be deterred from seeking tribunal assistance due to fears of eviction.

So in response to that last comment, I would just like to add that,  you can't evict tenants.  because the tenant has done something that's upset you.  That's called retaliatory eviction, and no tenancy tribunal would let that slide. So tenants absolutely should not be concerned about retaliatory eviction notices from their landlords, even if 90-day no cause evictions are reinstated, because the Landlords literally are not allowed to do it.

So don't ever be scared of taking your landlord to the tenancy tribunal if you think you've got a case that needs to be heard. It's literally what they're there for.  

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Topic number five from interest. co. nz.  On the 29th of October, a majority of voters want to tax property investor profits but not other assets. 

A recent poll indicates that a majority of New Zealanders favour taxing capital gains on investment properties, but oppose such taxes on other asset types.  Conducted by Ipsos New Zealand, the survey questioned a thousand individuals in October about their support for a capital gains tax under various scenarios.

The findings revealed that 57 percent of respondents supported a capital gains tax on the sale of investment properties, while only 43 percent backed it for businesses. A mere 13 percent were in favor of taxing the family home, and 22 percent supported taxing other assets. Ipsos reported a combined 65 percent support for some form of capital gains tax, though they didn't specifically inquire about a comprehensive tax.

Support for taxing investment properties was notably higher among those aged over 65, many of whom have seen substantial returns on their property investments. Conversely, younger respondents aged 18 to 35 showed more support for taxing the family home. Although this group still represented only 22%.

If implemented, 58 percent of respondents believed that a capital gains tax should be used to lower other tax rates, while 29 percent thought it should contribute to increasing overall tax revenue.  With the Crown currently facing a structural deficit, the Government aims to either reduce spending or raise the revenue to balance the budget.

While the poll indicates limited enthusiasm for a comprehensive capital gains tax, there's a clear inclination towards taxing property investments. Previously, Labour imposed a capital gains tax on investment properties held for less than 10 years, although they refused to call it a capital gains tax, called it Brightline instead, but the current coalition government has reduced the threshold to just two years.

In terms of political trend, Ipsos monthly polls show that concern over inflation and the cost of living has decreased over the past two years, though it remains the top issue for 55 percent of respondents.  Healthcare concerns may have risen, with 41 percent of participants citing it as a significant issue, up from 31 percent in May.

Interestingly, individuals aged 18 to 35 ranked climate change lower compared to other age groups. The coalition government's performance rating improved slightly to 4. 7 out of 10, while public perception of Labour's capabilities increased, with the party now viewed as most capable in managing issues like housing, Personal debt, education, drug and alcohol abuse, and immigration.

However, National continues to lead in areas such as the cost of living, the economy, crime, and taxation, while opposing any expansion of capital gains taxes.  My thoughts on tax is that people tend to be happy about taxes that don't affect them personally. So, you know, targeting property investors, which make up a small percentage of New Zealand population, it's no surprise that the majority of New Zealanders seem to think that that's okay because it won't affect them, right? 

So be it.  I figure increasing taxes for property investors.  You know, if we make a profit, it's not the end of the world. So capital gains tax, you only pay that if you sell the property. If you don't sell the property, you won't pay capital gains tax, unless they introduce a comprehensive one, which I think is stupid, especially if it involves the family home, that's going to impact on a whole bunch of different people, which I don't think would be fair. 

Don't leave your financial success to chance. Empower yourself with the knowledge and tools to make informed, strategic decisions.   📍  📍  📍 Join us for our How to Succeed with Property Investing event.  In our free online and in person sessions, we teach you proven strategies so you can make smart, informed choices.

Whether you're an experienced investor or just starting your journey, this event is filled with expert insights to help you navigate the complexities of property investing and achieve your financial goals. I'll also tell you more about how we help our clients to achieve their investing goals. So if you're interested in finding out more about what we do, visit www.propertyapprentice.Co. nz today and sign up for one of our free events.   📍 If 📍    📍 you've already been to one of our free events in the past and you'd like to know more about how we can help you on your journey, book a no obligation phone call or meeting with my husband Paul Roberts through our website.  Thanks for listening.