President's September report

15 Sep 2009

Findings of 2009 ANZ Survey of property investors

The findings of the 2009 survey have been fully reported in the September issue of the NZ Property Investor. On average investors expect to see positive growth of 6%-10% in property values over the next 10 years, but Khoon Goh, the ANZ economist, warns that price increases in the future will not be like we saw in the 2002-2008 boom. 6 out of 10 of the respondents were members of affiliated property investor associations (PIAs). The main benefit of being a PIA member is the information that is provided (92%), and the networking opportunities provided (73%). The main benefits of the NZPIF, as seen by PIA members is firstly its national advocacy (81%), and secondly, as for the PIA’s, its distribution of information (70%). For those property investors who are not a member, the main reasons cited for not joining are a lack of knowledge and awareness about PIA’s, i.e. Not sure of benefits (39%), and never heard of it (27%). This feedback is very useful.

 Congratulations to Nelson PIA which won the $500 for the PIA which achieved the highest number of respondents in proportion to its membership. A member of Waikato PIA also won an individual prize of $500.

Focus of new NZPIF Executive Committee

The NZPIF Executive Committee elected at the AGM on 14 August has had its first meeting. Members have agreed to focus on two specific issues which affect all property investors – clearing the way for WINZ to pay rents directly to landlords on behalf of beneficiaries and easing enforcement of Tenancy Tribunal orders. The first step will be lobbying of the Minister of Social Development and Employment and of the Minister of Justice respectively. While keeping this focus in mind, the Committee will be building on, and maintaining, the excellent relationships which already exist between Executive Committee members and Members of Parliament.

Another area of focus during the next year will on obtaining more national sponsorship to support the work of the NZPIF and providing more support for activities in individual property investors’ associations (PIAs) designed to assist membership growth. 

Andrew King to talk at Tenancy Tribunal Adjudicators’ Conference.

NZPIF Vice President Andrew King has been invited to speak at the Tenancy Tribunal Adjudicators annual conference on September 24. He has been asked to speak on two topics, being the property market situation and how the Tenancy Tribunal is working.

In order to give an accurate representation of PIA members’ opinions, he  members to complete a survey on their impressions of the Tenancy Tribunal.

The survey is aimed at people who have attended the Tenancy Tribunal and Andrew will make the results known to Associations as well as the Adjudicators’ conference.

Capital gains tax

Andrew King and I have been interviewed on separate occasions over recent weeks about the possibility of a capital gains tax. We know that the Tax Working Group is considering land based taxes including a capital gains tax and the Labour leader Phil Goff has just announced that  his party is prepared to discuss such a tax with the Government except on family homes. The Minister of Finance, Bill English, and Prime Minister John Key have made it clear National does not favour a capital gains tax, but they do not want to place any limits on what the review group comes up with. Read the Labour leader’s statement here

It is unclear to me how the Tax Working Group has come up with their figure of achieving $2billion from the implementation of a capital gains tax directed at owners of two or more properties. People who buy and sell property investments as traders are already being taxed on their capital gains and the IRD was given an extra $14million to enforce this.   Long term investors buy and hold property, and sell only very infrequently when they are upgrading their portfolios. Others, for whom the second property is a holiday home, also only sell infrequently. I cannot see how these approximately 200,000 properties would produce the required amount of tax.  At an average of $30,000 net profit, achieving tax of $10,000 per property, these properties would need to be sold every year, at the same profit, for the target tax yield to be achieved.

The National government has stated that private property investors are important to the economy as they supply 30% of housing needed in the New Zealand. Without them, the government would have to increase the number of houses they supply. In fact, the implications of putting investors off investing in property in New Zealand and transferring their funds into overseas properties or alternative investments are huge. Such a shift in investment would intensify the looming housing shortage and demand from tenants looking for homes would remain unsatisfied to an increasing degree. Increasing immigration would also contribute to this increased unsatisfied demand. The outcome of this imbalance between availability of properties and demand would be skyrocketing rents.

Report of select committee on Unit Titles Bill

The Social Services select committee has advised that they have reported back to the House on the bill. They have made a significant number of amendments to the bill in response to the issues raised in both written and oral submissions. More details are in the select committee’s REPORT

Advanced DBH seminars have begun.

The first of the five pilot advanced seminars being held by the Department of Building and Housing has taken place. These are being offered in association with the NZPIF and the IRD. Andrew King and I assisted in the development of these and are the NZPIF speakers for this pilot series. The feedback from the first one has been extremely positive and it is hoped that these will become more widely available in the 2010/2011 year.

Martin Evans

President.