I have just got home from the NZPIF conference in Rotorua. What a positive event it was, with the mood assisted by a great All Black win on the Saturday night, enjoyed by many of the attendees.
I had the honour of making the first presentation on the Saturday morning. The topic was legislation and I was dreading starting the conference on a bit of a downer. However, when preparing my talk I was pleasantly surprised at just what we had achieved through all the industry turmoil we had been through over the last few years.
Granted we didn’t win all battles and we didn’t get everything we wanted, but when you stop to look at the negative industry changes that appeared to be inevitable, we managed to get many of them either moderated or removed completely.
These changes included tenants no longer being responsible for damage they caused to rental property, giving back rent for minor or technical consent problems, methamphetamine, plus common sense and a sense of reality with the Privacy Commissions guidelines on what we could ask from prospective tenants.
The big win of course was showing that the rental property industry does pay its fair share of tax and convincing the Tax Working Group and critical political parties that a Capital Gains Tax on rental properties was unjust, un-necessary and ultimately bad news for tenants.
I was disappointed that we couldn’t convince Government that extending the Bright Line Test to five years and Ring-Fencing tax losses would lead to higher rental prices and fewer rental properties for tenants.
It amazes me that at a time when we need more rental properties for tenants, unwarranted tax changes are being implemented that will encourage the opposite.
During the last election, the NZPIF warned that proposals to disincentivise the provision of rental property would result in fewer rental properties and higher rental prices. We were told that we were scaremongering, yet our predictions have, unfortunately, been proven correct. I sincerely hope that our genuinely reasoned concerns on proposals such as having to provide a contestable reason for issuing a 90-day notice will no longer be seen as scaremongering.
Being keenly interested in housing market data, I couldn’t resist the opportunity to include some thoughts on housings economic direction. With the volume of property sales starting to fall and the number of days to sell increasing, history would point towards a slowing and declining market. However, persistently high migration levels, low interest rates, rising rental prices and improving home affordability would indicate that this property cycle could be a lot longer than usual.
While LVR restrictions have made it harder for some to buy either a home or a rental property, it has meant that mortgage interest rates have stayed low.
At the same time, fewer people buying rental property and high migration has seen rental prices rise at a faster rate, meaning rental yields have been maintained when they usually fall when property prices increase.
While it appears that many people are selling their rental properties, as Tony Alexander pointed out in his presentation, with few better investment options this is likely to be more anecdotal than real.
Hopefully Government will work out that we are actually good at providing rental properties for tenants and stop trying to push us out. With a mostly positive economic conditions for providing rental property it will only be ill considered new laws that will restrict us doing our job and providing people with homes.