No benefits for renters in the 2023 budget – NZPIF

The federation calls for policy changes

No benefits for renters in the 2023 budget – NZPIF

The 2023 budget has done nothing to alleviate the pressure on tenants as property owners grapple with surging costs, forcing them to increase rents in order to stay financially afloat, according to the NZ Property Investors Federation.

The industry body said the budget has turned a blind eye on the increasing rental prices with policies that have pushed up rents while owners cope with a new tax on top of interest rates doubling and expenses increasing faster than inflation. 

NZPIF said this is why scrapping tax deductibility of interest on mortgages has been referred to as a “tenant tax” – because it is “unfairly targeting” a mortgage, which is the biggest legitimate business expense for investment homeownership. The federation said making it hard for property owners is also making it tougher for tenants “by increasing costs in a big way.”

“The majority of our members are investing in property with long-term aims such as helping children through university, ensuring they have an income in their retirement, or taking care of other family members,” said Sue Harrison (pictured above), NZPIF president.

“However, a survey of members earlier this year showed that the loss of the ability to deduct interest as a legitimate business expense and substantial increases in expenses, such as interest rates and insurance, have forced many rental property owners to increase rents, or to sell in some instances although long-term hold was intended.”

Harrison said the policy not only affects the long-term plans of investors – it also takes properties out of the rental market, worsening the housing crisis.

NZPIF noted that state-owned homes and community housing are being constructed in all parts of New Zealand but said that it’s private rentals that substantially represent the major proportion of the available properties in the rental market.

“It’s time there was a better understanding that it makes sense to have policies in place which incentivise private investors rather than making it harder for them to continue to provide much needed homes to tenants,” it said. “It’s not realistic or good for the country for the state to own and control the rental marketplace.”

NZPIF said all its affiliated property investors associations are worried for the wellbeing of both tenants and property owners, which is why it is imperative to urgently change some of the current policies.

These policies are the ability of rental property owners to deduct interest as a legitimate business expense as well as sections of the RTA which heightened the risks of being an owner. 

“Property Investors Association members look after their tenants and strive to give them good homes at reasonable rentals, which the recent survey shows is often below the level of the market rental in their area,” NZPIF said. “In return, they need tenants who respect their properties and government policies which enable them to survive.”

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