The current election campaign has been like no other. With the main players neck and neck in the latest polls, it is an interesting time with some of the key proposed policies potentially having a major effect on property investors.
National is largely sticking to the status quo but is looking to get tough on tenants including a new law that could see people who have smoked meth inside a rental property charged with willful contamination.
Not surprisingly the major changes come from the red side of the fence with Labour announcing a rental policy that would abolish letting fees, increase the notice period to 90 days and would limit rent increases to once a year, with the formula stipulated in the rental contract. This would mean a real shake up for the industry and a likely move towards the Australian model, where property managers bill the landlord for the cost of finding a new tenant, instead of the tenant. The clear aim being to shift towards a more long-term rental market, increasing stability for renters. Although not new policies in themselves, it’s clear there is some grandstanding going on, and with 40% of New Zealanders in rented accommodation this is set to be a major vote winner.
Labour has also pledged to increase from two years to five years the so-called “brightline” test that triggers capital gains tax on investment properties, and is planning to get rid of negative gearing. At this stage, no decision has been made on implementing a Capital Gains Tax with a tax working group due to be set up after the election. All signs however point towards change on the horizon should they get voted into Government come September 23.
Of course these are just a few of the discussion points on the election agenda at the moment. With the different parties’ policies on housing, migration and LVR restrictions all likely to impact on property investors.