Housing Announcement and Reforms 23/03/2021

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2degrees

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#2682459 29-Mar-2021 12:41

GV27:

SJB:

It seems to have lasted for the several decades that I have been lucky enough to own a house so why should it end any time soon?

Eventually the consequences of some things became so garrish that they cannot be ignored. History has shown that things seem like they are forever going to be the way they are, until suddenly they are not.

I'm not saying we go down the route of dealing with things the same way the French chose to, but we might get a decent national anthem out of it.

Indeed, I think Dee Snider said it best.

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rayonline

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#2682570 29-Mar-2021 15:42

sir1963:

Germany, Switzerland , Hong Kong, Denmark, Japan, UK, all have lower rates of home ownership, but far better economies. We are about on par with the USA, France, Sweden

2/3 of HKG residents live in public housing.

Paul1977

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#2682576 29-Mar-2021 15:50

GV27:

Things weren't exactly too rosy for renters and aspiring FHBs before this announcement, so I'm not sure I buy this. Rents and house prices are already massively unaffordable, am I meant to believe that this was supposed to endure to the benefit of investors forever without intervention? We're a low wage economy, are we suggesting rents would be any higher than they are now if interest rates were not lower? Or have we seen some big drop in rents as the interest rates dropped dramatically over the past two years that I'm not aware of?

Investments have risks, if the sharemarket crashes and my Kiwisaver is wiped out, then tough, noodles in retirement for me if I'm lucky to even live that long. I fail to see property investment deserves golden goose status when it comes at such a massive social cost. Untaxed gains, price floors through accomodation supplements, shortages of supply through nimbyism in central areas - how long was this party meant to last with more and more people standing on the sidelines?

I'm not saying things were great before this announcement, nor am I saying laws and rules should favor investors/landlords. All I'm saying is that actions have consequences, and I believe a major consequence of this policy change will be rent increases.

The government could try to regulate this, but I don't see it ending well.

GV27

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#2682660 29-Mar-2021 16:43

Paul1977:

I'm not saying things were great before this announcement, nor am I saying laws and rules should favor investors/landlords. All I'm saying is that actions have consequences, and I believe a major consequence of this policy change will be rent increases.

The government could try to regulate this, but I don't see it ending well.

Why are people so insistent that government intervention is the 'action'. The 'action' is decades of property investors driving up prices and elbowing FHBs out of the market.

This first set of reforms are the consequences. May there be many more.

Handle9

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#2682694 29-Mar-2021 18:20

GV27:

Paul1977:

I'm not saying things were great before this announcement, nor am I saying laws and rules should favor investors/landlords. All I'm saying is that actions have consequences, and I believe a major consequence of this policy change will be rent increases.

The government could try to regulate this, but I don't see it ending well.

Why are people so insistent that government intervention is the 'action'. The 'action' is decades of property investors driving up prices and elbowing FHBs out of the market.

This first set of reforms are the consequences. May there be many more.

The (in)action is lack of supply. Investors are responding to that incentive, nothing more or less.

The changes are around removing some of the other incentives.

703

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#2682782 29-Mar-2021 21:17

Handle9:

703:

You overestimate the power of policy makers. Policies can be undone just as fast as they get done. RBNZ has got nothing to do with taxation policies nor the IRD, why would they get involved?

Why would the IRD get involved in tax fraud? Really?

No stop putting words where they don't belong. Unnecessary.

RBNZ does not and will not get involved with the tax policy

IRD is only there to enforce a policy which they have been told about at the last minute (if they chose to they can enforce it - not when you tell them to - they determine if and who they go after, not central government).

Remember this is at an extra expense to IRD, as they need to have systems and processes in place to filter out what is mortgage interest and what is not as part of how they audit. That extra effort might not even been funded - i.e. additional work they don't have resources for.

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703

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#2682787 29-Mar-2021 21:31

Fred99:

Paul1977:

@sir1963 isn't asking for sympathy, he's pointing out the inevitability that the increased cost of being a landlord will ultimately be passed onto the tenant. As the cost of business goes up, businesses charge more for their goods and services - the rental market is no different.

Nope, He's arguing that will be the case, there's nothing "inevitable" about it. It might happen, it might not, if it does then expect to be the target of further regulation.

Maybe if these so-called "business people" landlords actually had some real trading/market business experience (as opposed to "rent seeking" - in its most literally correct form) they'd be aware how fickle the real business world is, how hard it is to make a profit, and how you're often at the mercy of changes in the market outside your control (be that due to government or something else), in which case you need to suck it up and adapt to if you want to survive.

There are plenty of landlords who run their rentals like a real business. And business people don't just 'suck it up'. They also don't take kind of rules imposed on them that defies how 100% of other businesses are run. You should know that plenty of landlords actually helped their tenants with reduced rent through covid-19 by absorbing the cost.

You seem to be very anti people who are there to provide an accommodation and that they should not be treated like a business entity with the same tax rules. Perhaps when the market gets regulated and the bottom income tier becomes homeless, you can fed and shelter them in your own home. Or perhaps when there is overcrowding and there is a increase in crime and you become a victim of said crime, you came back here and tell us how awesome these policies are.

Handle9

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#2682790 29-Mar-2021 21:54

703:
Handle9:

Why would the IRD get involved in tax fraud? Really?

No stop putting words where they don't belong. Unnecessary.

RBNZ does not and will not get involved with the tax policy

IRD is only there to enforce a policy which they have been told about at the last minute (if they chose to they can enforce it - not when you tell them to - they determine if and who they go after, not central government).

Remember this is at an extra expense to IRD, as they need to have systems and processes in place to filter out what is mortgage interest and what is not as part of how they audit. That extra effort might not even been funded - i.e. additional work they don't have resources for.

You were specifically describing tax fraud. As has been pointed out to you this type of tax evasion has been litigated and proven to be fraud.

The reserve bank is responsible for supervision of banks and that they are operating in line with good banking practice.

It appears you have very little idea about how the financial system works.

703

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#2682799 29-Mar-2021 22:25

Handle9:
703:

No stop putting words where they don't belong. Unnecessary.

RBNZ does not and will not get involved with the tax policy

IRD is only there to enforce a policy which they have been told about at the last minute (if they chose to they can enforce it - not when you tell them to - they determine if and who they go after, not central government).

Remember this is at an extra expense to IRD, as they need to have systems and processes in place to filter out what is mortgage interest and what is not as part of how they audit. That extra effort might not even been funded - i.e. additional work they don't have resources for.

You were specifically describing tax fraud. As has been pointed out to you this type of tax evasion has been litigated and proven to be fraud.

The reserve bank is responsible for supervision of banks and that they are operating in line with good banking practice.

It appears you have very little idea about how the financial system works.

You seem to be unwilling to accept that the market and opposition leaders will want to contest the legality of such policies by introducing vehicles to bring these policies into the court system.

Income tax for a business is deducted after profit. When you do a tax grab regardless of profit (or the lack therefore), it becomes more than a tax issue, as you have the potential to bankrupt a business by asking for money that just isn't there in the first place. A tax system is not designed to make a business go broke, its designed to take a cut of your profit - for sustainability and long term income stream for the government. This new tax policy does align to that at all - hence IRD is not supportive of it.

So reflect on that instead of acting like you know it all regarding accounting, tax and finance - you don't.

Handle9

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#2682804 29-Mar-2021 22:54

703:

You seem to be unwilling to accept that the market and opposition leaders will want to contest the legality of such policies by introducing vehicles to bring these policies into the court system.

Income tax for a business is deducted after profit. When you do a tax grab regardless of profit (or the lack therefore), it becomes more than a tax issue, as you have the potential to bankrupt a business by asking for money that just isn't there in the first place. A tax system is not designed to make a business go broke, its designed to take a cut of your profit - for sustainability and long term income stream for the government. This new tax policy does align to that at all - hence IRD is not supportive of it.

So reflect on that instead of acting like you know it all regarding accounting, tax and finance - you don't.

Lol. The opposition is going to test the legality of laws passed by parliament? Tell me more about this, it sounds fascinating.

703

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#2682816 29-Mar-2021 23:16

Handle9:
Lol. The opposition is going to test the legality of laws passed by parliament? Tell me more about this, it sounds fascinating.

You don’t seem to know the difference between a law and a bill. That is very fascinating. Tell me more.

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GV27

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#2682839 30-Mar-2021 06:38

703:

You seem to be very anti people who are there to provide an accommodation and that they should not be treated like a business entity with the same tax rules. Perhaps when the market gets regulated and the bottom income tier becomes homeless, you can fed and shelter them in your own home. Or perhaps when there is overcrowding and there is a increase in crime and you become a victim of said crime, you came back here and tell us how awesome these policies are.

It feels like this really shouldn't need to be said a dozen times or so, but here we go again:

The problem is when every man and his dog sees residential rental investment as a means to using tax-free capital gains to finance their retirement. Why diversify, why invest in anything else, why do anything when you can just keep leveraging and keep buying rentals? In a market that is fundamentally incapable of supplying demand, a high investor presence mean aspiring FHBs miss out, or pay more to try and compete with investors who can claim costs that home-owners can't.

We already have overcrowding.

We already have homelessness.

We already have massive unaffordability issues.

These aren't particular effective threats.

We have specific tax treatments for lots of industries and a bevy of different rules that relate to housing (development vs investment, main residence vs. others, mixed used assets, etc). Investors should consider themselves lucky that they've managed to escape special attention until now.

sen8or

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#2682873 30-Mar-2021 08:32

So essentially, people should stop trying to improve their own financial situation so that others can?

GV27

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#2682892 30-Mar-2021 08:39

sen8or:

So essentially, people should stop trying to improve their own financial situation so that others can?

This might come as a shock to many, but you can invest in things that aren't residential housing.

And at some point yea, when what you're investing in pushes something as fundamental as 'shelter' out of reach for other people, then it's time to reign that in.

sir1963

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#2682893 30-Mar-2021 08:43

The other things that needs to be considered is, if this will apparently have on average a $6000 impact on landlords, and we have 800,000 rentals, how much of that $4.8 Billion is no longer going back into the economy.

Worse, this will also encourage landlords to pay off mortgages faster, so money going to the IRD and Bank is no longer money being spent.

How many people will loose their jobs through this flow on effect.

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