APRIL 2021 Have the new rules had any effect yet?

[McDuck]

APRIL 2021 Have the new rules had any effect yet?

I've got conflicting reports of how the new rules have affected auctions and the housing market in general.

Some say things are quiet, some say things have never been better.

I'm getting the sense of a bottleneck sorting itself out.

Thoughts?

[artemis]

Starting to see media reports of landlord decisions that benefit them, because they can - fewer costs, less potential hassle, CGT free cash in the bank. There will be more stories probably with the general intention of forcing the government to bring in more changes to protect tenants. Changes to the social housing waiting list and the to the number of households in emergency housing will be the first official indicator.

First home buyers maybe will benefit. Tenants and taxpayers not so much. These are not slum landlords:

Herald 31 March - Upper Hutt pensioner 'devastated' at $135 rent increase

Newshub 7 April - Terminally ill woman, WINZ families asked to vacate homes by Hamilton landlord after Government crackdown on property investors

[hawkeye]

There really is no choice but to bring properties rented at lower than market rates up to the market rates as it is likely they will stop you putting rents up on a house more than a % each year next so if that that happens and you aren’t at market rates you will never be able to increase it. Then what happens if interest rates go up? You have no buffer.

I have done some spreadsheets and you can see than the only reason all the costs have been able to be absorbed partially by landlords is that interest rates have been decreasing as the changes have come in so cashflow negative properties have become positive. But if interest rates go up again to where they were a few years ago it will bring on the full force of all those changes at once. If you don’t have a bit of a buffer built up in the rent there will be big losses.

the interest deductibility won’t really make much difference for a few years, timed I suspect to happen shortly after the next election so that it hasn’t had much impact before the election. Then if national wins it will look like it is their fault rents are rising! Tricky. And if labour wins it’s too late for renters once the big rent increases come through to vote differently. I think this is a very politically timed policy.

[hawkeye]

I have done a couple of spreadsheets with changes illustrated in them but would like someone to look it over and see if I’ve missed anything. I think it would be good to be able to show real case studies illustrating the changes over the years. Is there any spreadsheet users willing to have a look? Just in case I’ve missed something. Message me.

[crashy]

Just saw an article on newshub mocking landlords for being "wrong" because they were enjoying enormous capital gains which made the tax losses insignificant. So, property prices are still rising, the opposite of what the government wanted, and you think that landlords are the ones who are wrong?

[Sanya]

APRIL 2021 Have the new rules had any effect yet?

I've got conflicting reports of how the new rules have affected auctions and the housing market in general.

Some say things are quiet, some say things have never been better.

I'm getting the sense of a bottleneck sorting itself out.

Thoughts?

Thoughts?

Who are the “winners” from the Governments “housing policy” changes?

A quick literature review reveals:


FHB’s are still not happy. They still struggle to get a deposit together and housing value caps for grants are still too low in many locations.

Renters are not happy. They see rent increases coming and struggle to find rental accommodation in some locations.

Developers are not happy. The infrastructure fund is not enough, development costs are sky high with material supply constraints, labour and land costs not helping. Some projects aimed at converting commercial to residential accommodation are paused awaiting clarity of tax implications.

Landlords are not happy. Catastrophizing everything apparently. Various reports of landlords selling or planning to sell and a drop in interest of acquisitions. Some landlords putting up rents now. Its psychology.

Social services providers are not happy. The long awaited increase in public housing has not materialised. Social housing register has ballooned.

Government Department can’t make public statements about happiness :-). We know that IRD & Treasury advice was ignored and inadequate time was provided for proper impact assessments. MSD & MHUD sweating as Motel contracts up soon – where will the occupant go?

Should Governments care about happiness?

Jacinda’s plan to focus on Happiness and Wellbeing was revolutionary and received international acclaim.

[donna]

My prediction Jacinda is pregnant hence no vaccine and she’ll resign leaving Grant Robinson to face the music.

But it may not be that loud as all Labour needs is another COVID outbreak which is probable given the travel bubble/s.

cheers

Donna

[McDuck]

Thoughts?

Well, I was hoping for facts, data and thoughts, rather than emotions and predictions.
But I suppose it's good to get all these emotion off your chests.

My thought is that the direct effects of the changes will not be immediately felt.
Due to the staggering of the implementation over a number of years.
But also the the backlog of unresolved demand and changes in supply that are still in mid flow.

So I'm really looking for the faint hints as to what direction it's going.

[crashy]

Well I've already said numerous times that she created immediate demand, but delayed supply.

[Sanya]

Well, I was hoping for facts, data and thoughts, rather than emotions and predictions.
But I suppose it's good to get all these emotion off your chests.

My thought is that the direct effects of the changes will not be immediately felt.
Due to the staggering of the implementation over a number of years.
But also the the backlog of unresolved demand and changes in supply that are still in mid flow.

So I'm really looking for the faint hints as to what direction it's going.

Well, I don't have a crystal ball but the "thoughts" included consideration of three survey results plus television and media commentary.

Facts?

Not even the Government has "facts" - which is a bit of a problem when you create policy without them.

Did you see the Revenue Ministers embarrassment during question time in Parliament on Parliament TV? https://ondemand.parliament.nz/parli...?itemid=217350

Staggered implementation does not equate to no near term change. Psychology. Tell a women that a sale for her favourite fashion brand will end in one months time - do you think she will wait till the end of the month to act? Housing like fashion is too personal to fall into psychological distancing theory.

[donna]

Stuff article says the approx extra annual cost per property is $3140 (info from NZPIF survey).

The median expected increase in weekly rents $21-30 (seems low) and will only cover half the extra increase.

From the news item, info from CoreLogic analysis...Landlords have not been going all out with rent increases....

“CoreLogic analysis has shown that the average proportion of income spent on rents has stayed around 20 per cent to 21 per cent over the last 15 years, which supports that view.”

cheers,

Donna

[PC]

It's more likely to be $30 per $100 of rent.
$30pw increase - he's dreaming.
Hope the tenants like paying a lot more tax.

[McDuck]

Housing like fashion is too personal to fall into psychological distancing theory.

Ha!
I agree.
I'm not trying to minimize the effect of human emotions upon human actions.
It's just that there is a gap between what people would like to do and what they can do.
And another gap between what people say they will do and what they end up doing.
Of course, different people have different correlations between words and deeds.

Some people are not very rational at all.
Doesn't mean they can't cause a lot of trouble for everyone else.

[Bluekiwi]

This is the way I see it.

Mum and dad investors with 1 or 2 rentals with normal jobs, it will get too hard once they realize the extra tax is costing them an extra 33% on the Interest cost they already have.

The bigger investors with commercial property and shares and cash in the bank, restructure so they have no residential debt.

But the bigger investors see this as another chance to get richer, so great excuse for them to increase rents.

So the big losers are Tenants and the smaller Mum and Dad investors, or those who couldn't afford their own home and bought a rental instead (probably younger pre first home buyers).

Looks like great Policy for National and ACT, I can see why National is so quiet, Labour have stolen their thunder.

[Chris W]

Housing like fashion is too personal to fall into psychological distancing theory.

Personal wealth is too personal to fall into psychological distancing theory.