Ring Fencing Matters

[Anthonyacat]

You were (are) going to put the rents up as much as you can whether or not ring fencing of some sort come in.
If the tenant (and more particularly the market) can afford it you will charge it.

But he does have a point that the ringfencing will take some supply out of the market with landlords thinking it's just not worth it, so rents may be able to rise faster than they otherwise would have.

[Wayne]

But he does have a point that the ringfencing will take some supply out of the market with landlords thinking it's just not worth it, so rents may be able to rise faster than they otherwise would have.

Maybe - maybe not.
There are a lot of other things that make rentals 'not worth it' - maybe ringfencing is the straw that breaks the camels back.

[Perry]

. . . . so rents may be able to rise faster than they otherwise would have.

The way I see it is that the pool of tenants will shrink when prices are increased on a just-because-I-can-basis. Also, that may just be what Taxcindarella & Slyford need to introduce rent controls.

[Don't believe the Hype]

The way I see it is that the pool of tenants will shrink when prices are increased on a just-because-I-can-basis. Also, that may just be what Taxcindarella & Slyford need to introduce rent controls.

rent controls only further distort the market. Right now with rents heading up the way they are we are seeing the result govt meddling with the market. Rent control will have a positive impact for some while having a negative impact on other renters, take a look at the impact rent controls had on San Fran market as just one example

[Don't believe the Hype]

Maybe - maybe not.
There are a lot of other things that make rentals 'not worth it' - maybe ringfencing is the straw that breaks the camels back.

there are many straws at the moment... ring fencing is only one of the many anti landlord interventions being implemented... all having an impact of driving up rents.

[Don't believe the Hype]

But he does have a point that the ringfencing will take some supply out of the market with landlords thinking it's just not worth it, so rents may be able to rise faster than they otherwise would have.

our rents are so much above where i expected them to be... Wayne is right, I would raise the rents if i had the opportunity without ring fencing but i'm shocked at the level i can achieve.

As they say make hay while the sun shines.

[Bluecoat]

This could do a number of things:

1 - drive rent increases over the 5 year phase out period to negate the tax impact - as this tax impact will impact almost all investors in the market (I.e yields in any given suburb are similar) landlords will be able to lift rents with the confidence of knowing their 'competitors' i.e. Other landlords will be wanting to do the same thing. If CGT benefit is greatest at the top tax rate and the target of these reforms then the impact of removal could be around 30% increase in rents over 5 years. This increase will. It just happen in areas where houses are negatively geared... any positive geared property will then be able to hike rents too making them even more profitable from cashflow Point of View OR drive prices of these properties up as point 2 below happens

2 - encourage investors to balance portfolios between negative and positive cashflow properties by balancing out their central city negative geared property with cash flow properties. This could drive demand for high yield properties driving up prices and down yields.

3 - Drive some investors out of the market reducing the supply of rental properties which would put further upward pressure on rents.

Knowing labour they can cap the rent increase too

[Perry]

Knowing labour they can cap the rent increase too.

Right. It can be done.

Some forumites are likely old enough to remember Muldoon's MRP scheme.

How?

Just yet another RTA amendment.

Perhaps by making all rent increases must be approved via a TT appln?

That would keep the Hearing Rooms busy.

[flyernzl]

The usual way to do it is to empower some highly-paid Public Servant to be The Oracle.

Once a year he announces an allowable percentage. You are then graciously permitted to increase your rents by no more than that percentage for that year.

That's how they do it in British Columbia (and probably elsewhere).

[Don't believe the Hype]

Here is a good article clearly articulating the increased costs of providing a rental property in NZ.

https://thespinoff.co.nz/business/01-03-2018/pushing-landlords-out-will-only-make-renting-more-expensive/

And finally some data to show that there isn't a net sum game of supporting first home buyers over landlords. from the article, 3.9 ppl in the average rental vs. 2.1ppl in the average owner occupied home.'


great job Flyer & team

[Perry]

Spin What?

That Spinoff item is dated: 1 March 2018 (today).

In it, Andrew King says:

Ring-fencing tax losses has just been announced. This means a rental property owner cannot use losses from a rental property against tax paid on other income (a practice that is available for other investments or businesses).

That quote references a Scoop item dated Monday, 15 May 2017.

Just been announced?

Really, Andrew?

The (now 9 months old) 'announcement' could be just political rhetoric.

Announced is not the same as legislated, either.

[annie brookes]

are there any views on what the healthy homes act will actually result in, in terms of the actual regulations?

[Perry]

This thread . . .
Warrant of Fitness for rentals (including details)
. . . is more about that sort of thing.

[Bluecoat]

Meanwhile

MPs generally use these super-exclusive super schemes to buy a property they can then rent to Parliamentary Services as their Wellington residence, said Prosser, who is no longer an MP but whose entry in the 2017 register showed his trust was "not yet active".An MP's accommodation allowance – currently $28,000 a year – can be legally paid to the super scheme as their landlord.In addition, MPs can ask for their superannuation contributions to be paid into the private super scheme. MPs get a contribution of 20 per cent of their salary, and only have to put in $1 of their own money for each $2.50 contribution from the taxpayer.It's a far cry from the 3 per cent employer contribution ordinary KiwiSavers have to put up with.

https://www.stuff.co.nz/business/mon...dges-to-wealth

[Perry]

MPs generally use these super-exclusive super schemes to buy a property they can then rent to Parliamentary Services as their Wellington residence. An MP's accommodation allowance – currently $28,000 a year – can be legally paid to the super scheme as their landlord.

A very nice racket, that.

Rally round, all you social housing activists.