Harcourts Accommodation Centre See Government Housing Policy Impacting Their Clients

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Advice for tenants

Last month the governmentannouncedits plans toabolish the tax deductibility of interest payments, expand the bright-line test on investor sales, and increase financial assistance for first home buyers.. 

Property research firm Core Logic said the biggest effect on investors would come from the move on interest measures. “This will impact investors’ profitability, which in conjunction with reduced expectations of capital growth will cause some investors to reduce their portfolio and may reduce future purchases too,” its head of research Nick Goodall said. 

He said doubling the bright line test from five to 10 years was a step closer to a more comprehensive capital gains tax, but the impact was likely to be limited in the short term. “It also may have unintended consequences of encouraging investors to hold properties longer, which actually limits properties available for supply which can actually contribute to stronger value growth,” Goodall said. 

The Property Investors Federation believes tax changes announced today that are meant to discourage property speculation will penalise investors and take more rental properties off the market. Federation spokesperson Sharon Cullwick told Nine to Noon the roughly $6000 that her members would no longer be able to claim back on a $600,000 home would only discourage investors from owning rental properties. “You’ll probably find that it will slow down the market which isn’t good for tenants. We still need places for those people that can’t afford their own property, and we still need to have the investors that really cover that middle section.” 

As expected, retail banks have warned the government’s measures to cool the housing market and deter property investors may not just chill the housing market, but also the broader economy. Westpac senior economist Satish Ranchhod said cutting the incentives to invest in the sector, such as removing the tax deductibility of mortgage interest, might flow through to broader spending. He said a slowdown in house prices would slow economic recovery and make the Reserve Bank even more reluctant to raise its official cash rate. 

The Harcourts Accommodation Centre team are there for all your tenancy questions, so for more information on tenants advice service and rent appraisals please go to www.assetmanagers.harcourts.co.nz .

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