So, the elections. According to many in the media landlords across the country will be rejoicing Nationals win. Certainly, the previous Government introduced regulations to the detriment of landlords. They said that they were protecting tenants but indirectly these new regulations worked against tenants as well as increasing costs to landlord’s resultant from the changes were passed on by means of rent increases. Without doubt rent increases have been impacted as well by inflation and a shortage of rental properties but those legislative changes were the big contributor.
Both National and ACT have policies more friendly to investors. They campaigned with promises to wind-back several of the changes introduced by Labour.
So what changes are expected – in fact promised – by National – ACT?
- To again allow landlords to claim interest on mortgages as a legitimate tax claim
- To wind-back the bright-line test from 10 years to 2 years
- To re-introduce the 90 days ‘no cause’ eviction criteria.
In addition, National has promised to allow foreign buyers into the market – albeit restricted to properties worth more than $2 million and albeit with a new over—riding tax.
Landlords have responded positively, indicating they will purchase more properties for rental to help fill the current significant shortfall in the market.
Landlords are also hopeful that the extreme rhetoric voiced by Labour and Greens which branded private landlords as ‘the bad guys’ will be reversed and that respect will again exist between landlords and tenants.
So, all that matters now is just how quickly these changes are introduced. No doubt these will form part of coalition talks between National and ACT – and maybe even New Zealand First.
Fear has been expressed by some that National – ACT policies will reignite the housing market. National prices have experienced a significant fall over recent months but are expected to stabilise now the election is over. Economists don’t necessarily agree.
Corelogic economist Kelvin Davidson – “Nationals policies may tend to drive prices up. But they wont change stretched affordability, high mortgage rates and possible new legislation around debt-to-income rations being introduced by the Reserve Bank. Potentially, in the medium term, there may be pressure on prices if the Resource Management Act reform is back-pedalled with resultant lower push on brownfield land and more intensified housing. Although I’m not sure the change will be huge and it is uncertain over long horizons anyway – we never know the counterfactual”.
Gareth Kiernan, chief forecaster for Infometrics – “A new Government could give house prices a boost but they will be limited by affordability pressure and alternative returns available given higher interest rates”.
Brad Olsen, Chief Executive Infometrics – “Interest rate have more influence over house prices than Government policy”.
Time will tell.