Brooke van Velden
ACT Deputy Leader and Housing spokesperson
The Government is rushing through the Housing Tax Changes (Interest Limitation Rules) before 1 October under urgency in order to lay their hands on an extra $800 million.
From October 1, most residential property investors will no longer be able to deduct interest as an expense when paying tax.
On Monday, Grant Robertson said that there would be no Select Committee process for mum and dad investors to have their say on the proposed new law.
Removing interest deductibility is a tax grab. It is intended to line the Government coffers at the expense of Mum and Dad investor to the tune of an estimated $800 million.
We still don’t know what the rules look like, and what the Government deems to be a “new build.”
These changes are divisive and unfair. They’re about blaming investors and are a new source of revenue for the Government, but won’t do what they’re touted to do – improve housing affordability.
A majority of economists, academics and property experts believe the Government’s housing changes will be paid for by tenants. This divisive policy targets residential property investors but it will actually squeeze the middle class and hurt some of the most vulnerable people in New Zealand.
Since signalling these changes, house prices have reached their highest levels yet. The average value of a home across New Zealand is now over $1 million and increased 27 per cent since September 2020.
ACT believes the changes won’t address housing affordability. They will hurt renters and make it harder for Kiwis to save for a first home.
The Government should be asking ‘how do we create an environment for investment and development?’ Instead, this Government has targeted mum and dad landlords and investors with new housing taxes. By failing to ask the right question, it has failed to deliver on the very thing New Zealand needs it to – meaning change so New Zealanders can build more homes.
The official advice the Government received on interest deductibility changes said that it would put rents up, force landlords to sell and hurt renters. It estimated it would add a cost of over $4000 to the average landlord, it’s likely renters are the ones who will have the costs passed on to them.”
Our petition to stop Labour’s Interest Destructibility changes can be found here.
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