With less than four months until the September 23 general election, investors are sharpening their focus on housing policies being announced by NZ’s main political parties.
Eyebrows were raised at Labour leader Andrew Little’s May 14 announcement that his party proposed to ring-fence rental losses so landlords can’t offset them against other taxable income.
Labour would use the revenue gained from ending negative gearing to fund grants for home insulation and heating, he said. "Homeowners and landlords will be able to get up to $2,000 per dwelling to pay for up to 50 per cent of the cost of insulation upgrades and double glazing that meet or exceed the current building code, or of the cost to install a clean, fixed form of heating."
Labour estimates that once the policy is fully phased in, over five years, it will yield about $150 million in revenue.
Labour also proposes to extend the current bright-line test from two to five years, effectively imposing a capital gains tax on investors who sell within five years of purchase. Current exemptions will continue to apply.
In a pre-Budget announcement by Social Housing Minister Amy Adams, National focused on increasing the Auckland housing supply using government-owned land. The target is a net increase of about 26,000 houses.
In a move that will potentially lead to a temporary increase in the supply of tenants seeking private rentals, Ms Adams said 8,300 rundown houses would be demolished and replaced with 34,000 new homes. Some were part of already-announced building projects in Tamaki and Hobsonville and Housing New Zealand would be responsible for building 24,300 of them.
Ms Adams said 13,500 will be social housing and 20,600 will be sold on the open market, some priced at "affordable" levels, with a net increase of 5,000 state houses over 10 years.
The Green Party’s focus is on providing secure and affordable social housing with plans to increase acquisition and building of state housing units by at least 3,000 a year for the next three years.
It will also provide funding to third sector housing organisations for a minimum of 1,000 units a year for the next three years, prioritising those with a commitment to environmental and social sustainability.
NZ First has announced a 16-point housing policy which would encourage private investment in upgrading rental housing through the tax system. Specified qualifying home improvements would be able to be expensed for income tax purposes in the year in which the expense is incurred. These include home insulation, solar heating, heat pumps, HRV heating systems, wood pellet and other approved burners, earthquake strengthening, fire, flood and other disaster protection.
The party also said it will ensure that New Zealand’s housing stock is restricted to New Zealanders and non-residents who are not New Zealand citizens would be ineligible for home ownership "except if a genuine need to do so can be demonstrated".
Gareth Morgan’s The Opportunities Party is proposing what he describes as a "pretty radical" change to the current tax system. It is focussed on taxing "all income, whether it is in cash or in kind" to encourage better utilisation of capital, and he said the new system would be put in place gradually to ensure house prices remained stable.
The party would set a "minimum rate of return" on housing and land. People who already declared that level of income would not be affected, while those who didn’t would have to pay more.
The party said the policy was "nothing like a capital gains tax", which was ineffective at stopping property speculation. "This is an annual levy (like rates) and what it’s doing is making income tax fair."
