Tenants already taking the hit

Written By: - Date published: 4:45 pm, March 18th, 2010 - 79 comments
Categories: benefits, gst, poverty, tenants' rights - Tags:

I got a call from a friend today, thanks to National his rent is going up.

I’ll call him Ned. He’s retired and rents a two bedroom home for $310 a week. He recently received a letter from his landlord advising him of a rent increase of $40 a week. He’s sure his landlord is preempting proposed GST hikes and changes to tax on rental properties. Ned’s landlord is a family trust that owns a lot of property in his area. Ned took a straw poll and found most other tenants had got the same letter.

In the past his rent might increase be perhaps $10 a week a time, never anything as steep as $40 a week extra. He did some more asking and found that other friends who rent from different landlords were also getting notice about rent hikes. A young immigrant family operating a corner shop dairy have been hit with a $70 a week increase. That’s a lot of money to find from nowhere.

It seems in the absence of any detail before the Budget, landlords are just making up figures to offset coming changes to the way rental property is taxed. Seems they’re covering every angle to make sure that if anybody’s losing out, it sure won’t be them.

So it looks like a 2% increase in Ned’s pension isn’t going do much to offset his almost 13% increase in rent.

79 comments on “Tenants already taking the hit ”

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  1. irnswn 1
    18 March 2010 at 5:16 pm

    Why doesnt Ned move into rental accomodation that is more suitable for his needs? If he is livign alone and /or is retired he will have no children then why does he need a pricey 2 bedroom flat?

    • ghostwhowalksnz 1.1
      18 March 2010 at 5:31 pm

      One bedroom flats are harder to get or even find

      • Bright Red 1.1.1
        18 March 2010 at 5:50 pm

        yeah there was something on the wireless this morning about the council in wellington getting rid of a whole lot of bedsits, changing to one room, two room.

        • Lanthanide 1.1.1.1
          18 March 2010 at 8:12 pm

          My understanding is that those bedsits were set aside for people with disabilities, and were temporary accomodation only. Not sure how “temporary” though.

    • Galeandra 1.2
      18 March 2010 at 9:24 pm

      Relevance nil, irnswn. (He could live in the town belt under a cardboard box, too, and save money – but that doesn’t address the issue of landlord gouging.)
      Inflation doesn’t justify the increase, but the fall out from the real estate bubble might explain it, as it seems rental supply is currently contracting.
      Love these rich ‘n greedy families who no doubt expect to increase their holdings as the over- leveraged crash and burn. It’s an ill wind…

    • A Nonny Moose 1.3
      19 March 2010 at 12:40 pm

      Sometimes, due to circumstances, just “up and moving” isn’t that easy. Perhaps you are elderly, perhaps you have a disability or you’re sick, perhaps you have kids and need to stay in a particular area for the school; perhaps you actually LIKE the house you’re in because, you know, it doesn’t have shitty rising damp, crap neighbours, it’s close to transport, or it’s reasonably warm in winter.

      Moving COSTS. It takes time to find and negotiate a new place; it takes money – bond, rent in advance, moving company (if you can’t do it yourself), phone, Sky, internet, power; the act of moving is time consuming and stressful, having to live “in between” and unsettled, and sometimes your services aren’t available for a few days (power etc). A financial outlay like that is hard on people who are budgeted to the max.

      Catch 22 – stay, and take the hike hit, or move and take a painful outlay in the hundreds. Yeah, it’s just SO easy to move /sarcasm

    • Paul3 1.4
      19 March 2010 at 3:46 pm

      Yes and the rent increases for his one bedroom flat go up he can always live in a cardboard box in the street! Get a life – this is a person you are talking about. He is elderly, retired and settled in his home. Does anyone really think that it is ok that he would be priced out of what, though not his house, is his home?

      There but for the grace of God go you (or your parents). Where have people gone from all of our equations and where is your compassion and empathy?

  2. Thomas Beagle 2
    18 March 2010 at 5:20 pm

    I wonder what would happen if he wrote back to the landlord and made a counter-offer of $40/week under the current rent.

    It’s all about the local rental market…

  3. torydog 3
    18 March 2010 at 5:31 pm

    Yeah why doesnt Ned live on the streets…or get a box in a park somewhere….thats what the right wingers would like….they simply couldnt careless!

    I sometimes wonder if John Key hasnt taken a bet with one of his foreign money mates to see how quicky he can run NZ into the ground!

  4. freedom 4
    18 March 2010 at 5:59 pm

    It never ceases to amaze me how many people think rents froze in 1982 or some-when.
    The quality of properties and the rents that are being charged are not balanced in any sense of the words that i am aware of.

    go look for a 2 br under $300pw, try looking for a 1br under $200pw that is not a bedsit. Now tell me with a straight face that you believe it is a fair rent for the property. Before you begin your soundbite response, i am not talking abput the ability of the property to meet the mortage you took out, that is your problem and the banks problem. I will not share what i really think of the property pigs wallowing in the accommodation needs of other New Zealander’s

    I am talking of a fair percentage of a person’s income spent on accommodation

    I thankfully have one of the last fair rents i know, but i live in my studio and my circumstances most definitely do not suit most people

  5. Bill 5
    18 March 2010 at 8:57 pm

    Isn’t there a legal limit on the amount that rent can be raised in any twelve month period? And isn’t it somewhat below 13%?

    I know it doesn’t make too much of a difference unless there has already been an increase within the previous twelve month period, but hey….

  6. Eddie (the plonker from the past) 6
    18 March 2010 at 9:04 pm

    Oh my giddy Aunt! A hypothetical rent rise is the gubbermints fault. I despair at the quality of youse commie trolls these days, under Auntie Helen you were at least an organised rabble, these days its just a joke!!!!!!!!!!

    [Please change your handle, there is already an “Eddie” here who is an author on the site. Please lift your game too, that comment didn’t add much to the sum total of the human condition I’m afraid — r0b]

    [lprent: I extended its name to reflect its attitudes. It sounds like something left over from the McCarthy period. ]

    • uddie 6.1
      18 March 2010 at 9:42 pm

      & your posts improve the ‘human condition’ r0b bro tell u what u lift your game a few inches & stop blogging bollx and I’l do tha same bro. ka pai.

    • Phil 6.2
      30 March 2010 at 5:40 pm

      Oh come on Eddie or Uddie – the extra revenue gained by the landlords – it’s their property, why not get as much as they can for it, that’s the market economy, which you may have heard of in some ultra-right wing tract “What the market will bear” – is going to trickle down to the market and stimulate the economy. It’s economics you should be well aware of. The words “you” and “drongo” keep coming to mind here; not sure why.

      There’s no commie trolls left old son, and Helen was at least a leader with a depth of intelligence not seen in the present glove puppet. Why the extra-low shot?

      And let’s face it, governments get voted out, not in – that means that we got the little money market supermouse by default – and I sincerely believe it was the sleepwalkers like you with entrenched, narrow-minded and mostly ill-conceived opinions that put him and the desperate last-hoper miners in there. And Paula “I was in HR!” Bennett. Cripes!

      If you were like me – self-employed, two teenage kids, mortgage and rent to pay, major health problems to boot as well as an Mba – you’d have a wider view and probably gain a glimpse into this century.

      Stop putting the boot in and contribute to our society – all of it – or will you be moving to another planet soon?

  7. Cactus Kate 7
    18 March 2010 at 9:08 pm

    Thank you Tammy for providing a superb example of how government’s extorting more money from landowners through higher tax and less deductions doesn’t help the poor.

    As I have predicted costs are just passed on, and look for the corner dairy owner to amp up prices to pay for rents.

    What is a fair rent? If Ned don’t like it he can move and someone else will move in or the landlord will be forced to drop the price of the rent. Ned has the power. That is fair.

    More examples please…..

    • SPC 7.1
      18 March 2010 at 10:59 pm

      Maybe this is just the fruit of government inaction to stimulate the economy through state house building – despite knowing that private sector building was in decline and global recessions attract home ex-pats who have lost jobs.

      In the environment of a growing housing shortage it is possible for landlords to extract higher rents to compensate them for loss of depreciation write-offs. Thus the government can survive the fall-out.

      As for the tenants who will be worse off because of this.

      Of course it is important to the government that these rent increases occur prior to the budget to minimise the PR damage from reports of people worse after the budget.

      Otherwise the no one will be worse off line would be exposed for the shallow and empty promise it was. The government is full of experts in rorting the accommodation market.

    • Sam 7.2
      19 March 2010 at 8:49 am

      Translation: He can’t afford an unjustified rent hike and this is his fault so he must pack up everything he owns and find a new place or live on the street. Meanwhile, the landlord can fuck around doing what he or she does anyway, completely unaffected because he or she knows that the pensioner is unlikely to move out, and if he does then some other poor soul will pay for it because not everyone has the security of a roof over their head. This is a fair and balanced relationship and there is no power imbalance whatsoever.

      Peyote Kate is on the magic tea and again, has no idea whatsoever of the real issues affecting ordinary people in the real world. Much like the rest of her ilk.

    • prism 7.3
      19 March 2010 at 1:04 pm

      You think like a robot Cactus Kate.

  8. infused 8
    18 March 2010 at 9:18 pm

    I smell bullshit. You can’t just up rent like that on someone. Also, he has an opptunity to move. Pre empting GST rise? Give me a fucking break. That’s ages away. Why would someone do it now? Sounds like you need something to blame a rent increase on.

    I live in a 3bdrm house in the hutt for $270 a week.

  9. Wilson Philips 9
    18 March 2010 at 9:20 pm

    Hey Katus, why should the government provide more deductions for landlords and thereby reduce tax revenues and force up tax demands on those taxpayers who are not landlords? You’re talking shit.

  10. Wilson Philips 10
    18 March 2010 at 9:21 pm

    infused, OMG, why would you live there?

  11. Jollies 11
    18 March 2010 at 10:52 pm

    GST isn’t payable on rent on residential property. This story is bunkum from the get-go.

    • lprent 11.1
      18 March 2010 at 11:13 pm

      Nope GST isn’t payable on rent. However it is payable on just about everything else (apart from interest payments) that goes into maintaining a property. Everything from rates, water bills, paint, taps, windows, etc… GST goes up, and the rents will follow costs and go up as well.

      Your point is what? That you are a bumpkin who really doesn’t know much about property?

      • jedi 11.1.1
        18 March 2010 at 11:38 pm

        Iprent leaves you in the dust buster with his withering attack and special moves otherwiseknownas being a prize old fool

        • lprent 11.1.1.1
          19 March 2010 at 1:35 am

          Yeah and I notice that you contribute such a lot to the debate. What is the value of sweet 5/8th of fuck all?

      • Lanthanide 11.1.2
        19 March 2010 at 12:04 am

        It is difficult to see that a 2.2% price rise in all of those things would translate to $40/week. That’s $2080 a year, meaning that the landlord must be paying $95,545 on maintenance/rates of that house in order for a $2080 rent raise to cover the higher GST cost.

        Clearly the rent rise is not *just* to cover GST, although it may be a small portion of it.

        • luva 11.1.2.1
          19 March 2010 at 1:29 am

          As Lanth demononstrates, this guy’s issue is with an arsehole landlord rtaher than the government. The increase in rent is a hell of a lot more than the increase in GST on rates etc.

          I find it quite disturbing that intelligent people blame every disaster and credit every success in society on the government, depending on what side of the very high fence they sit. Blame the man who put up the rent, credit the boss who put up the wages, blame the man who sacked the employee, credit the company that takes 100 new unqualifed employees. Not everything happens as a consequence of what John Key say’s or does.

          • lprent 11.1.2.1.1
            19 March 2010 at 2:00 am

            Actually, not really. The price increase is probably also (as the post points out) going to preempt the increased property tax forecast for this year. Why bother putting in a separate rent change for each.

            Between the rises in cost structures from GST, and a shift in property taxes impacting landlords, it would not surprise me if the total cost change is not heading towards a few thousand a year on a property.

            I’d assume that the owner dropped a increased profit percentage on as well to maintain or even increase their ROI as well.

            But in this case, I’d would suspect that most of the rent increase is directly related to anticipated tax changes (and rates changes as well probably). The orders of the costs to the landlord are probably about correct based on what we currently know about eventual tax changes for both GST and property taxes. Of course the rent increase will be higher because there is always risk in having imperfect information. At this point Bill English hasn’t announced what his economic direction for the country is, so we’re just left with the yammerings of a clueless Key. Who by contradicting himself each week (or having his ministers do it for him) increases the uncertainty and risk levels to landlords

            In other words – this rent rise is probably largely due to the government increasing taxes. Specifically so they can give large tax reductions on the people who don’t need them, to be paid by raising costs like rent and GST on the people who can’t afford to pay them.

            • TightyRighty 11.1.2.1.1.1
              19 March 2010 at 9:28 am

              couldn’t have anything to do with a ten year property boom that was encouraged by the last government as a way to increase prosperity? and when the market needed correction and homeowners and landlords saw that capitals gains would not provide a decent return on investement, then of course the tenants had to pay their fair share.

              interesting though, for less than 250k, which ned will be able to service the mortgage on fairly easily, there are houses all over the country which are two bedroom and he could purchase and then not have to worry. but of course, rather than be proactive and help himself out. the lazy old shit suffering from entitleitis, if he even exists, gets used to score political points by blaming it all on the governemnt.

              • lprent …
                19 March 2010 at 10:46 am

                I thought that Ned was retired, or did I read that incorrectly? Try finding a bank that will lend to someone on a pension. I suspect that you’re speaking crap….

              • felix …
                19 March 2010 at 11:10 am

                I love the implication that Ned can just go and live somewhere else, anywhere in the country will do according to TR.

                See according to the likes of TR there’s no such thing as society, and Ned is just a rational self-interested economic unit. This means we can completely ignore things like Ned’s links to his community, his friends, his family etc and pack him off to Westport where he can afford a house. How convenient.

              • TightyRighty …
                19 March 2010 at 1:36 pm

                well not given any information on where ned lives, and seeing the preponderence of homes available throughout the country that fall within neds budget, i don’t see how your comment has any relevance at all. maybe if ned wasn’t fictitious, we could focus on his situation more. and lprent, could someone on just the pension alone really afford $620 a fortnight to live on his own? fixed income maybe, pension doubtful.

                of course let’s not think rationally about that, lets just blame someone else for a situation that is within neds control

                • lprent …
                  19 March 2010 at 1:54 pm

                  Same point really regardless of if it is a fixed income or pension, the banks won’t lend a mortgage to someone in that age-range. Which is what your original point was – that Ned should buy a house or apartment or something. He is retired – the ability to do that is likely to be severely constrained.

                  But even that is not all that relevant. Quite simply people have their support networks set up in the area that they live. It is often more expensive and a lot harder to set those up in a new location. Plus there are a lot of studies that show that the elderly death rate is a *lot* higher after a move from their old neighbourhood (actually it is everyone, but the elderly are more vulnerable). You’re looking purely at the financial, and that is the least of the costs involved in moving.

              • felix …
                19 March 2010 at 1:41 pm

                It doesn’t matter where he lives, moron. The fact that you think anyone can just pack up and go wherever the cheap houses are shows the ignorance, naivety, and arrogance so typical of the privileged when discussing the rest of us.

              • TightyRighty …
                19 March 2010 at 2:06 pm

                it does matter moron. what if the house next door to him is for sale? instead of being negative about an option and refusing to explore other alternatives and generally blaming everyone else, why not be proactive?

              • felix …
                19 March 2010 at 2:13 pm

                Can’t afford the rent on this house, think I’ll buy the one next door.

                Just shows how removed you are from the real world issues most people have to deal with.

              • TightyRighty …
                19 March 2010 at 2:30 pm

                down the streeet, round the corner, next block over. whatever. your attitude shows what you think of positive action. situation: grumpy old fuck not liking market forces, complains to someone who writes blog post saying it’s all governments fault. solution according to felix: rather sit there and grumble than make a proactive move. don’t look at options except of options of who to blame.

                solution according to sensible person: weigh up options, decide to stay in neighbourhood, look around for more sensibly priced accomodation given budgetary constraints. do a bit of looking, discover that house can be bought that suits needs for same amount of money, but actually having owenership.

              • felix …
                19 March 2010 at 2:35 pm

                That’s because you have a religious-like devotion to the supremacy of market forces, hence your inability to take notice of anything else being discussed in this thread.

                In short, you are a death-eyed zombie and there is no hope of anyone extracting anything close to a human response from you.

              • TightyRighty …
                19 March 2010 at 3:16 pm

                what a facile thing to say felix. if that’s the best you have because you want the last word you truly are plumbing new depths of pig headedness. you’ll never get the response from me that you think this deserves because you don’t understand that unlike you, some people are proactive in making a bad situation ok. the government doesn’t need to be there to handhold you each time something you don’t like happens. it’s an ugly thing the abrogation of personal responsibility.

              • felix …
                19 March 2010 at 4:24 pm

                And you don’t understand, from your obvious position of privilege, that many of the solutions you find so abundant are simply not available to everybody else.

                It’s the height of irony for you to accuse me of being facile when your entire contribution to this thread thus far has amounted to saying “If he doesn’t like it he can fuck off”.

              • TightyRighty …
                19 March 2010 at 5:06 pm

                hilarious, when you can’t fault the message attack the messenger. privilege is earned felix. every day thousands, no millions of people adapt to adverse circumstances, and most will blame someone, but change anyway. you on the other hand, sit there like some weasel and make sure that some one else should do the hard work. you miserable prick.

              • felix …
                19 March 2010 at 5:35 pm

                I think you’ll find I’ve attacked your message (what there is of it) pretty thouroughly.

                You’re actually the one advocating a passive stance, TR, not me. You’re the one who believes each individual should be thrown to the whims of the market under the guise of personal responsibility and may the richest man win.

                Some of us have a more humanist view of society. Do not mistake that for passivity or advocating a lack of action.

                Care to point me to a comment you’ve made here which goes beyond “If he doesn’t like it he can fuck off”?

        • lprent 11.1.2.2
          19 March 2010 at 1:34 am

          Agreed that GST is unlikely to be the full amount. There is also likely to be property tax changes as was pointed out in the post. And after all you have to make a profit on any money paid out as well :twisted:…

          I was more annoyed by jiggles being stupid enough to forget that GST is a double sided system. Regardless if you don’t receive GST, it is in almost all of the goods and services consumed by landlords (and home-owners and tenants).

          It mounts up pretty fast. Just thinking on what I pay for my apartment annually. Ummm about a grand and a bit for rates. Just over two grand for body corporate fees (including water and sewerage). Usually a thousand or so for various repairs a year – fixing waste disposal units, toilet seats, carpet cleaning, etc. What else – insurance!

          Ummm, 2.5% of that alone would be a few hundred bucks. And my property is pretty new after they finished fixing up the leaky building problems last year. Older properties require more maintenance, and maintenance costs.

          Of course the property tax changes will probably hurt landlords more – if they didn’t preemptively pass them on to tenants. I’d expect to see quite a jump in rental prices over the next year in the stats.

          Anyway any change to GST or property taxes (or rates or…) flows through into the cost structure, and will eventually result in either increased rents or decreased numbers of rental housing.

          • blinded by the right 11.1.2.2.1
            19 March 2010 at 8:52 am

            for 2.5% to be a few hundred bucks, you’d need to be spending around $12,000 a year. From the figures you supply, your increase could be expected to be roughly $120, spread over the full year.

  12. ropata 12
    18 March 2010 at 10:52 pm

    Maybe the rental market is humming right now because nobody wants to BUY houses at prices inflated by Labour policy designed to overheat the economy, such as Welcome Home and WFF. Perhaps rentals are inflated by the Accommodation supplements too.

    • SPC 12.1
      19 March 2010 at 12:56 am

      Just one thing ropata – most of the increase in house values occured 2002-2006 before WFF came in. Possibly caused by the amount of credit in the world economy banks could on-lend to people buying houses – which explains housing bubbles occuring around the world at the same time. Thanks for coming.

      • ropata 12.1.1
        19 March 2010 at 8:37 am

        The point is that the property market has been filled with speculators and rent seekers .. which successive governments have either openly endorsed, or done nothing to restrain. A lot of foreign capital has been sloshing round buying up NZ assets and shutting Kiwis out of the chance to have their own home.

    • Sam 12.2
      19 March 2010 at 8:50 am

      Wait, so WFF fuelled the property boom?

      Who taught you economics?

  13. Barnaby Bennett 13
    18 March 2010 at 11:51 pm

    There are some international agreement that housing should be considered excessive or unaffordable if it makes up more than 30% of someones income. I’m not sure of the economic reasons behind it but a good chunk of the nz population, those on student allowance, the dole, or minimum wage in Auckland or Wellington fall into this category. Despite the relative abundance of land in NZ and Aus they are two of the least affordable places to be housed in the world.

    Partially this I think this is caused by an uneven spread of ownership, creating two classes of people, owners and renters. Worryingly though is rent has been suppressed in the last decade by explosive growth in the capital value. As this starts to slow and disappear the land owners are going to start demanding more to pay for those excessive mortgages they bought their third house with.

  14. pollywog 14
    19 March 2010 at 7:57 am

    “Maybe the rental market is humming right now because nobody wants to BUY houses ”

    …made in the last decade out of shit materials that wont last 15 years. Hiking rents in the short term might be a way of paying off that crappy investment property faster before you can charge stuff all for it.

    • Bored 14.1
      19 March 2010 at 8:11 am

      Perhaps our bloated middle classes were encouraged by the ability to offset tax against rental properties prior to and into the boom. Maybe they thought that they could have it all ways, a tax break, an increasing capital return, and an income later. All paid for by us, the taxpayers and our societies speculative fascination with the idea that prices would only ever go up.

      Now that the chickens have come home to roost it is entirely predictable that as the gravy train dries up and the chill winds of lower income and capital losses appear that the landlords will demand that somebody else pays, that anybody but them foots the bill.

      Me, Im with the Dead Kennedy’s little ditty “Lets lynch the landlord”..easiest way to do it is to refuse the increases enmasse and overload the procedings of the tenancy tribual.

      • scrote 14.1.1
        19 March 2010 at 8:35 am

        The bloated middle classes that pay all the tax to ensure the beneficiary classes can enjoy their subsidised lifestyles? That middle class?

        • ropata 14.1.1.1
          19 March 2010 at 8:44 am

          scrote,
          Next you’ll be claiming that people who own 50 rentals are doing it from the goodness of their heart to support society.

          • scrote 14.1.1.1.1
            19 March 2010 at 4:04 pm

            I didn’y say anything about landlords or house owners or rental landlords.

            I said that the middle classes pay the taxes that support the beneficiaries subsidised lifestyles.

            Try and keep up and debate the argument and not words you place in others mouths.

            • ropata 14.1.1.1.1.1
              19 March 2010 at 11:01 pm

              “bloated” middle class = landlords = tax avoiders = subsidised lifestyles = beneficiary class
              != taxpayers or the actual *working* class

              Maybe you didn’t notice that rental tenancy is the title of the post?

  15. andy (the other one) 15
    19 March 2010 at 8:09 am

    Tell your Friend that it is illegal under the Residential Tenancy Act 1986to charge more than ‘Market Rent’ for any property, he should call tenancy services and they will advise him if the rent is above or at market rates.

    Next step is to apply to the tenancy tribunal to have the increase overturned. The rental market is very hot at present because there is a lack of rentals because of uncertainty of what is going to happen in the may budget, but If I was your ‘friend’ I would prepare to move anyway.

    If the rent is excessive, the tenant may apply to the Tenancy Tribunal for a market rent assessment. If the Tribunal finds that the rent is too high, it may order a reduction in the rent. Market rent applications can only be filed for fixed-term tenancies within 3 months of the beginning of the tenancy or 3 months of the date of the last rent review.

    http://dbh.govt.nz/sorting-out-problems

    • blinded by the right 15.1
      19 March 2010 at 8:45 am

      Except market rent is usually quite high, and it’s entirely possible that Ned is getting the place for less than market anyway. I know that our apartment is rented to us at less than market rates (as we challenge our proposed increases and make them smaller, and know what apartments in Wellington can cost) but it has still increased by 25% over the last 2 years (total).

  16. Cam 16
    19 March 2010 at 8:47 am

    This is a curious post. If Labour really cared about housing the poor then they would have stopped the property bubble from escalating during the 9 years they were in power. Instead Labour did absolutely nothing while property prices spiralled higher and higher. No capital gains tax, no ring fencing, no controls on depreciation- Labour did absolutely nothng. Labour even continued to let foreign speculators buy our residential property which was utterly shamefully. With foreign ownership we get the people with favourable exchange rates being able to outbid local buyers, and then the final insult of large amounts of money (rent) flowing out of the NZ economy. Shame on you Labour.

    And now we have a mess that I hold Labour responsible for. Yes- there is going to be some pain and yes the poor will be impacted (not that you really care- I get the impression most of the angst over this issue is coming from property speculators within Labour). But in the end people will only be able to pay what they can afford and I think landlords are going to struggle to get more money. Property prices will drop (unless foreign speculators buy from local distressed sellers and even more of our residential property falls into foreign ownership- a real risk). Once property prices drop then low income people can afford to buy property ,and landlords can also afford to buy property at a price that gives them a reasonable return without needing a taxpayer handout to make ends meet. A win-win for the country- maybe a lose-lose for some Labour politicians.

    [lprent: What makes you think that this post was written by someone associated with Labour? I read all of Tammys posts and I have no idea what her politics are except in a general way.

    Read the about and make less of a fool of yourself next time.

    Of course the rest of your comment is at a similar level of pig-ignorant stupid assumptions as the one I just noted. It is pretty obvious that your politics are those of making stupid assumptions and passing judgements on people that you don’t know. Sounds like ACT to me.

    See how easy it is to be as intellectually lazy as you are… ]

    • SPC 16.1
      19 March 2010 at 11:26 am

      Cam, do you have any idea how many foreigners own housing here and how many of them that rent out their properties? I have never seen any statistics on this.

      I was under the impression that most people buying houses with forex were ex-pats returning from OE, there were some foreigners who had holiday homes here but they did not rent them out. There were a few reports about Australians looking at rental property (real estate agency advertising was going to them) – how many bought and do they still own here?

      Labour was responsible for not acting, but remember that National in opposition was not advocating any action either (NZ First and Greens did advocate change). Note now that National is intending to act – all Labour is saying is that, people need to be compensated for rent rises in the budget.

    • Cam 16.2
      19 March 2010 at 11:43 am

      Well- I don’t think ad hominem is very helpful in this instance. I don’t regard myself as ignorant nor do I think I have made a fool of myself. I have been a reader of “The Standard” since the beginning and it is very much associated with the left and with Labour- the caption on the website used to read “The NZ labour movement used to have its own newspaper – a group of us thought that now might be a good time for it to be digitally reborn.” Are you saying that this blog doesn’t represent the left at all now and all comers of any political persuasion are welcome to post articles?

      And instead of attacking me why don’t you argue my points instead? What was incorrect about what I said?

      [lprent: The statement is still there in the source. It is also in the about. However the “labour movement” is not the Labour party as you’re asserting. That is an error of basic fact.

      If you’ve been reading the site for any length of time you’ll be aware that conflating the two together in the manner you did is guaranteed to get a response from me. Experience has told us that anyone not bothering to read about the site, but who rather prefers to express their own prejudices, is unlikely to be useful at writing comments or fostering debate.

      All they ever do is to assert their own opinions as facts without bothering to debate at all. In particular people with that attitude don’t respond to being requested to show links supporting their opinions when requested. That makes them trolls in my book, and you just triggered my troll detector.

      I haven’t bothered to even read your ‘argument’. If you’re stupid enough to not understand the site and site rules then you’re too stupid to write here. You’re a guest on the site, and you’re acting like you own it. The probability of you taking the same stupid attitude to other people leaving comments is too high to be bothered with. I’ll just preempt and add you to moderation for my personal attention.

      I’ll expect that I won’t see an attitude change and will eventually drop you into banned. For me this is less work that banning you later. ]

      • shakes head 16.2.1
        19 March 2010 at 3:52 pm

        Jolly jeepers Batman! Iprent is really mentally disturbed.

        • Bright Red 16.2.1.1
          19 March 2010 at 4:08 pm

          have some manners. You come to someone’s site you don’t behave like a dork towards them.

          and lynn, maybe reply in the comments, rather than in the black if it’s going to be so long? it’s unreadable in bold.

          • shakes head 16.2.1.1.1
            19 March 2010 at 4:13 pm

            Maybe being less of a Stalinist would help too Bright Red. Ya know?

            [lprent: Shakes head… Maybe not using antique language out of another age would help your McCarthy time-warp syndrome… But I suspect you stopped thinking decades ago. Otherwise you wouldn’t say things that get caught in auto-moderation. ]

          • lprent 16.2.1.1.2
            19 March 2010 at 5:40 pm

            I got carried away.

            One of the more stupid inanities that I’ve had the pleasure to be sarcastic over for a while. Maybe the drought has broken. I can resume being the cruel and unkind BOFH that I truly am at heart….

      • ropata 16.2.2
        19 March 2010 at 11:11 pm

        Can’t fault your comments Cam, clearly you’ve struck a nerve

  17. Indiana 17
    19 March 2010 at 9:15 am

    One cost that a proportion shold be passed on to tenants is city coucil rates. If you rent a comercial property the tenant pays the rates in full. Private tenants avoid this cost somehow, even though they get the benifits of city council services. Andy (the other one) sums up exactly what “Ned” can do. Tenancy laws in NZ are very much aligned to be favour of tenants. Rogue lanlords only exist because the tenants they attract are ignorant of their rights.

  18. Herodotus 18
    19 March 2010 at 10:06 am

    So from many comments here and on Red Alert regarding property taxes. There will be no changes or suggestions to review this aspect of rorts. As we will be to frightened of the effect that this COULD have on tennants. Give me a break.
    Perhaps it has something to do with supply and demand. Look at immigration figures and that with the lowest level of housing for many a generation. perhaps it has to do with spec builders having to fundfor a $550k dwelling, $475-500k of this, thanks to new rules it takes 8+ months to build when it was done 5 years ago it was easily achievable in under 5 months from S224. And we think that to risk $500k to make $50k less GST and the risk is a good option, perhaps that is why builders are going labour only, add ons, repair leakys ( where there is a pot of gold)or bugger off overseas.
    What will happen when these same dwellings require maintenance to sort out the leaky issue. Will rents go up then to cover the costs that the tax payer either in subsidies or tax w/o does not cover.
    House prices in NZ do not make any logical sense, and they haven’t since about 2002/3, for me when the fin crash eventuated prices had to drop 25+% not the 12% and rebound back up within 18 months. Perhaps that is because (in AK at least) town planning is crap there is no involvement with central govt we have these issues.
    Being constructive we need a total review of the tax system (esp in resid housing) and to apply taxes accordingly, limit immigration as ZN cannot substain the net levels that have occurred within the last 10 years (This would also assist in our co2 footprint as we have one of the highest levels in the world per cap) not just hit the PAYE worker which LAb and NAt have, are, and will do.

  19. Herodotus 19
    19 March 2010 at 10:38 am

    From reading all the issues NOT to continue with GST and Depn and any other review on this sector, the only solution I can see is a CGT (And it could be placed very high say 50% to compensate the tax payer(Read PAYE) for all the assistance we have given to this sector)as this will have no impact on tennants as landlords are only concerned with operating cashflow!!!

    • SPC 19.1
      19 March 2010 at 11:46 am

      This year should be seen as a trial run for tax reform, not an end play.

      The property changes this year are financial changes within the existing system – depreciation claims limited and ring fencing property losses and GST/income tax changes. This will place pressure for a transfer of some housing stock from rental to homeowner.

      We need so much more. Carbon tax until any ETS accord with Oz. A FTT. A CGT (excluding the family residence and one other property owned for more than 5 years) at the company tax rate (with a surcharge on mortgages – not equity, how wrong are those experts – held by landlords). GST at 20% – and exemptions (once you see it as a de facto import tariff you know what to exempt). This should afford the necessary – small business loan insurance, R and D tax incentives, tax only applied on half the interest income of savings/corp bonds and some significant change to income tax rates.

  20. RedLogix 20
    19 March 2010 at 12:21 pm

    Property prices will drop (unless foreign speculators buy from local distressed sellers and even more of our residential property falls into foreign ownership- a real risk). Once property prices drop then low income people can afford to buy property

    To put it in a nutshell house prices were historically about 15 times the annual imputed rental value. The median rent at present is $15k pa; this means that the median house price SHOULD be $225k. Instead it is about $350k. This means that in order to restore historic ‘affordability’ for first time buyers by deflating the property market, prices would have to drop about 35%. (350-225/350 *100).

    At any one time about 33% of people rent and the other 66% own. Of the 2/3rd that do own about 2/3rd of them have a mortgage, or about 50% of the total. Because of the way most table mortgages are structured, of this 50%, around 20% of the total have a relatively small equity in their property.

    If the property market deflates 35% then around 20% of dwelling occupiers will find themselves ‘under water’ with their mortgage. In the short-term the bank usually doesn’t worry too much, but inevitably something forces their hand… illness, loss of job, forced to move to a new job, pregnancy, relationship break-up… and the property undergoes a forced sale leaving the owner with no equity, or due to the iniquitous nature of commercial law in this country, a substantial debt.These people are then forced back into renting and if overseas experience is anything to go by, will likely never own a home again.

    Moreover property deflation does not benefit first home buyers much either. In any one year they barely amount to 2% of the total market, but when prices are dropping banks demand larger deposits, ie LVR ratios of at least 80% to cover themselves, which makes it proportionately no easier for the first home buyer at all.

    New first time buyers will remain scarce, and would likely be heavily outnumbered by those being forced out of home-ownership.

    Deflation is the most destructive condition any economy can fall into… be very careful what you ask for.

    • Herodotus 20.1
      19 March 2010 at 3:42 pm

      I agree with you regarding deflation, but how else do we get a correction within this market when it is so severely overvalued. WE cannot mange this so that there is a nil increase within the market until a time comes when this stagnation of price/value allows market fundamentals to marry up. This management must also not allow for external influences (i.e. Tax treatment) to alow one sector unreasonable advantage over another, which for me under the current regime there exists. The longer that fundamentials remain out of balance the more severe any correction will be.
      In summary there will be coleteral damage it is just a question of do we take an active part with expected consequences (I hope) or just allow the beast loose and take whatever eventualtes?

      • RedLogix 20.1.1
        19 March 2010 at 4:02 pm

        Keep it simple.

        1. The Reserve Bank regulates banks to lending no more than 12 times the imputed annual value of a property. Introduce this gradually at starting at 2o times this year and reduce it by an increment of 1 annually for 8 years until the 12 times ratio is met. This would link property prices to rental values and impose a maximum LVR ratio of about 80% ie, 12/15.

        2. For the same period make all mortgage interest, including the family home tax deductable as long as the deduction is used to reduce the principle and term of the loan. In essence a form of enforced national saving to reduce the ridiculous $180b of home mortgages we owe to foreign banks.

        3.

      • RedLogix 20.1.2
        19 March 2010 at 4:07 pm

        The root cause of the problem is excessive debt. We either pay it down, inflate it away or default on it. Only three options.

  21. prism 21
    19 March 2010 at 1:27 pm

    Certain people on this thread are extremely smug and take a derisive attitude to people renting. These renters are not gay young things happy shifting and sharing, or comfortably off older people making a judicious decision between the house that has been beautifully restored or the one with a spa pool in the grounds.
    Years ago when the Nats were putting up state house rents to market level, and were maximising usage looking for greater efficiency, an elderly lady was shifted from the town were she rented a two-bedroom state house, to another town two hours away where she was allocated one with one-bedroom. When she left she would be leaving behind friends, her familiar neighbourhood and amenities, and these things mean much to people with little money for discretionary spending, holidays and consumer pleasures. Only trouble is, with the rise to market rent on the one-bedroom place it was going to be unaffordable and she was wearily looking at moving again.

    People need security of tenure, neighbourhoods with people who aren’t anti-social with amenities available, not to be treated like pawns in an investor’s game. House prices need to come down to a level that gives the investor a reasonable net return, I think at the moment it is 8% on capital value. The government subsidises a certain amount of the rent, and it is possibly that and not putting that money into state houses with say five year leases and mortgage offers to suitable tenants, that have helped the housing boom. What a vicious circle.

  22. Brett Dale 22
    19 March 2010 at 1:38 pm

    A two bedroom home for $310 a week??? I think this penisioner needs to look for a place in a different area, or a smaller home.

    Does he live bny himself??

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