Northland Property Investors' Association

northland@nzpif.org.nz

News & Updates

Recent updates

02-11-2014

Post Election Property Politics

Political update

Property investors will be relieved that a capital gains tax and the proposal to ring fence tax losses are off the table for at least three years. But there are still some political activities that could affect the rental property industry.

The Warrant of Fitness issue has still not been resolved, neither has the earthquake strengthening debate. The NZPIF has presented our case in both these areas.

National has changed their housing portfolios and added an extra Minister. Labour’s spokesperson for housing is still Phil Twyford and Dennis O'Rouke is still the housing spokesperson for NZ First. The Green party has a new spokesperson for housing, Kevin Hague.

The following are three key issues of vital concern to property investors that the National Party is looking to progress over the next three years.

Social Housing

Previously Housing NZ was the only entity able to provide social housing for which tenants were able receive income related rent subsidies. National has now allowed these subsidies to be given to  Third Sector Housing providers.

The housing portfolio used to be split in two, with the Minister of Housing being responsible for Housing NZ matters and the Minister of Building and Construction being responsible for all other housing matters, including tenancy matters. With the social housing changes, these two roles have been split into three.

Bill English is now the Minister responsible for Housing New Zealand Corporation. Paula Bennett is the Minister for Social Housing and Nick Smith is the Minister for Building and Housing.

The Government is looking to divest ownership of state houses to the Third Sector housing providers, such as the Salvation Army.

There has been comments that this is a "back door" state asset sale program. Bill English has said that the properties will be sold for market value but it has not been determined how a market value will be established for houses that can only be used for social housing purposes. Tax payers would not like to see state houses sold cheaply.

Bill English has said that he wants 20% of social housing to be operated by non-government organisations. He says that this may involve community agencies working with construction companies. He also suggests that finance companies could build homes, possibly selling some off and retaining others as rental properties. Construction and finance companies are, however, the only private companies currently mentioned by the Minister as being involved in social housing. You can listen to him interviewed on Radio NZ at http://www.radionz.co.nz/news/political/256322/govt-pushes-on-with-state-house-sales.

Over 30 community organisations have registered as social housing providers. The Salvation Army has said they are open to buying state houses, but that it costs a lot of money to run them. They need either higher subsidies or to be sold the existing state houses at a cheaper price. You can listen to them here. http://www.radionz.co.nz/news/national/256316/salvation-army-open-to-buying-state-houses

Considering the discussion so far, the community providers will potentially be provided with cheaper assets and highly subsidised rental income that they can then use to build portfolios of rental property and compete with private rental providers.

If they do work with construction companies to develop housing areas, selling off some houses to retain others as rentals, they should be paying tax on the properties they develop to sell.  

 

Child Poverty

Although "child poverty" is an emotionally charged term, there is no doubt that there is hardship within some NZ families. Many of our tenants from low income households are struggling financially, which is making it harder for rental property owners to increase rental prices to match increased costs.

The Prime Minister announced that tackling child poverty was a priority in this parliamentary term. He has ordered Treasury and Department of Prime Minister and Cabinet officials to start presenting new ideas for Government to consider. He has acknowledged that the problem will be difficult to address, but that there is more that can be done. He has stressed that any measures undertaken should not narrow the gap between workers and those on a benefit. He wants to be sure that people are still encouraged to get into work.

Examples of policies that could be used to address some aspects of child poverty are breakfasts in schools and free doctors’ visits for young children.

The cost of housing is increasing and many economists have stated that the low rate of rental price growth in NZ is unexpected. Unfortunately many tenants cannot afford the rental price increases landlords need to make in order to supplydecent rental accommodation.

Changes to the accommodation supplement would help many low income families struggling to make ends meet.

Radio NZ interviewed the Prime Minister on child poverty and you can hear this here. http://www.radionz.co.nz/national/programmes/morningreport/audio/20151147/john-key-promises-to-tackle-child-poverty   

Resource management Act

The purpose of the RMA is to promote the sustainable management of natural and physical resources. The Act defines sustainable management in terms of environmental considerations and the Government wants to incorporate economic development aspects into the Act.

Key reasons for changes to the RMA are to:

  • Improve resource management decisions by streamlining and simplifying the RMA
  • Ensure council decisions on medium sized projects are made within six months.
  • Require councils to consider economic factors before enacting rules that restrict the use of land and resources.
  • Remove frivolous and anti-competitive objections that add to costs and slow down development.

 National has wanted to change the RMA for some time, but was unable to do so in the last term due to lack of support by the United Future and Maori parties for aspects of economic development over the environment.

National can pass their legislation this term with just the Act party’s support. However they are committed to hearing alternative views before the election. They also want wider acceptance of the changes.

Options for change include more use of National Policy Statements and National Environmental Standards, which are already included in the RMA. This would be a simpler and faster process while still obtaining the same outcome. 

Nick Smith has retained his Environment portfolio as well as that of Building and Construction. The Prime Minister said to scoop.co.nz that “I’d expect Nick to go and have a look at his whole building and construction portfolio and see how that ties in ultimately with the RMA reform. He’ll obviously go and talk to the other interested groups on both sides, from business right through to the environment, and see how that looks.”

 

Nationals priorities for the next term

The following is a summarised version of a speech delivered by His Excellency Lieutenant General The Right Honourable Sir Jerry Mateparae, at the opening of Parliament.

 

The Government is focused on returning to surplus and its long-term fiscal objective remains to reduce net core Crown debt to 20 per cent of GDP by 2020. Around $1 billion of the operating allowance in each Budget will be used to increase spending, with the remainder set aside for tax reductions and further debt repayment, depending on economic and fiscal conditions at the time.

The Government’s plan to build a more productive and competitive economy, supporting more jobs and higher incomes, is set out in the Business Growth Agenda. This contains around 350 individual initiatives. These initiatives will be progressed, and more will be added, in this term of Parliament.

Legislation will be introduced to amend the Resource Management Act to provide more certainty, timeliness and cost-effectiveness around resource allocation decisions. The Environmental Reporting Bill will also be progressed.

The Government has 10 priority goals and targets in the areas of long-term welfare dependency, supporting vulnerable children, boosting skills and employment, reducing crime and improving interaction with government. Good progress is being made on these targets, and two of them – in the areas of crime reduction and educational achievement – will be made more challenging.

The Government is committed to helping more people get off a benefit and into work. It will work to reduce the number of people receiving a benefit and reduce the lifetime costs of the welfare system. Legislation will be introduced to extend the Youth Service approach to 19-year-old sole parents, and to many other 18- and 19-year-old beneficiaries who need more support, or who are at risk of long-term welfare dependence.

The Government will also have a focus on housing in this Parliamentary term.

More special housing areas will be created – and therefore more new housing developed – as a result of Housing Accords signed between the Government and local councils. Changes to the Resource Management Act will assist housing supply in the longer term.

The new KiwiSaver HomeStart Grant will be introduced next year to double the support a first home buyer can get if they are buying or building a new home, which will encourage the supply of more affordable new housing. House price limits around the country will be increased. Legislation will also be introduced to allow first home buyers to withdraw their KiwiSaver member tax credit to put towards a deposit. The Government’s extended home insulation scheme will make another 46,000 low-income households warmer and healthier.

The Government will continue working to ensure that vulnerable New Zealanders have access to good quality housing, whether those houses are owned by Housing New Zealand or by community housing providers. The Government sees community housing providers playing a greater role in the provision of social housing over this term of Parliament.

Tags: politics - national - housing - housing affordability - social housing - warrant of fitness

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