Ring Fencing Matters

[Learning]

Where are you expecting to buy?

Here and other social media sites plenty of property investors were saying "if Labour gets in I'm going to sell". Labours in. So who's selling?

[Don't believe the Hype]

The Labor impact will be minor for a few reasons:

> From memory Labor has said they won't implement a CGT until after the next election.

> There will be no major change to population growth due to a huge part of the NETT influx of people over the past few years has been Kiwi's returning (often with a foreign partner and child/ren) and Aussies coming to NZ

>The impact to direct foreign investment could be a major dampener on things if you believe the populist opinion but if you believe the numbers being spouted by the powers that be it wont have a big impact - so you can flip a coin on this one.

> Lower levels of immigration is only going to put pressure on wages - NZ is at FULL EMPLOYMENT - if you can't get a job in NZ today you either don't want one or are unemployable. This immigration squeeze will drive wages up, driving the highest input cost of housing up - higher house construction prices puts a floor under the price of existing houses.
If it costs $2500/m2 (min) to build a house today a 100m2 house costs $250k before you purchase the land which has an inbuilt cost of subdivision - council costs, professional fees, services to the boundary etc. Today these costs of subdivision cost at least $50k which will head up...
So we're at $300k before you have paid a cent for the land to put your new house on.
In any major city you're not going to get land any bigger than a postage stamp for much less than $200k so now you're up for $500k for the most basic of homes.

The healthy homes stuff is in some part common sense that will require equal parts commonsense from tenants (i.e open windows and curtains, turn on heating etc). Most of the other initiatives are either neutral impact meaning we as landlords just need to find a different way to do things. i.e. Longer eviction notice time = need to plan better. Annual vs. bi annual rent increases = increase $10/wk once vs. $5/wk twice (in fact that works out mathematically in the landlords favor i.e 52 weeks at $10 vs. 26 wks at $5 and 26 wks at $10).

[Nick G]

Just starting to get word from my PMs that my rents will go up 7-10% this summer letting season and in the Herald I see my tenant pool will all have more money next year.

Yippie kay aye.

[Don't believe the Hype]

Just starting to get word from my PMs that my rents will go up 7-10% this summer letting season and in the Herald I see my tenant pool will all have more money next year.

Yippie kay aye.

not to mention more students cause 1st year is now Free - the new OE is first year

[Learning]

The impact to direct foreign investment could be a major dampener on things if you believe the populist opinion but if you believe the numbers being spouted by the powers that be it wont have a big impact - so you can flip a coin on this one.

Foreign investors will just buy through a NZ based company.

[Perry]

Foreign investors will just buy through a NZ based company.

However, it is possible that at least 51% of the shares will need to be owned domestically. I dimly recall that was the way it was, many years ago.

[Nick G]

I'm more concerned about foreign capital being blocked from businesses and commercial property and infrastructure projects than whether someone can or can't buy some houses. That means either projects won't go ahead or costs will rise because the funds will need to be raised domestically and there will be more competition for fewer dollars? Or are they only planning to Keep Foreigners From Buying Our Homes?

[sidinz]

I want to know if it's all foreign buyers or just foreign investors. I'm thinking of all of those foreign rich-listers who buy a getaway pad here. Their extravagant lifestyles mean that they will drop a lot of cash into the local economy, even when they're not here. Are Labour planning to turn that tap off, too? And how will they distinguish between offshore investors and magnates wanting another mansion to add to their collection in London, New York, provincial France and the Mediterranean?

[Beano]

However, it is possible that at least 51% of the shares will need to be owned domestically. I dimly recall that was the way it was, many years ago.

I thought it was 75.1pc had to be local

[Perry]

Quite possible. I was surmising, based on hazy recollection.

[flyernzl]

So if/when I die and leave my properties to my daughter, who has lived overseas for 30+ years, would she be classed as a 'foreign investor'?

[Davo36]

Spend the money while you're alive mate!

[flyernzl]

Exactly.
Hence my spend on the Mercedes.

[Perry]

So if/when I die and leave my properties to my daughter, who has lived overseas for 30+ years, would she be classed as a 'foreign investor'?

If she was born in NZ, I doubt it.

[Wayne]

So if/when I die and leave my properties to my daughter, who has lived overseas for 30+ years, would she be classed as a 'foreign investor'?

If she's a Kiwi - No.