New Zealand Property Investors’ Federation, (NZPIF) is the umbrella body for 20 local Property Investors' Associations throughout New Zealand.

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Monday, Jan 11, 2010

POLITICAL & REGULATORY REPORT for December 2009

As previously reported, the Committee’s key recommendations to improve the bill included changes to the following provisions:

  • Cleansing orders: Omitting clause 9(1) requiring landlords to disclose to prospective tenants whether a property has been subject to cleansing orders
  • Abandoned goods: Permitting landlords to immediately dispose of foodstuffs and other perishable goods, where abandoned goods are not collected, a landlord be allowed to immediately dispose of the goods where the cost of removing, storing, and selling them would be more than the proceeds of sale and should the cost of removing, storing, and selling the goods be less than the proceeds of the sale, and the landlord be required to store the goods for 35 days before disposing of them. [Landlords still retain the right to seek a disposal order from the Tenancy Tribunal].
  • Letting fees: Allowing all “letting agents” to charge a letting fee to tenants (not just real estate agents)
  • Tenant responsibilities: Making it an offence for a tenant to interfere with, or rendering inoperative, any means of escape from fire.

Unfortunately, the second reading debate has been interrupted because of Xmas and the holiday recess and will now be completed sometime in February. It is likely the Bill will be passed by early March.

2025 Taskforce report – No CGT

The 2025 Taskforce report - prepared by former National Party leader Don Brash, who was also a Reserve Bank Governor has proposed a range of measures increase productivity and close the wage gap with Australia.

Of interest to the Federation, the report recommended against a capital tax.

Tax Working Group – Property tax options

The Federation attended a public conference hosted by the Tax Working Group held in Wellington on 1 December. The TWG recommended various options to the taxation of investment property.

Although leading Government Ministers and other authorities including the 2025 TaskForce (led by Don Brash) have ruled out or rejected a capital gains tax on property the option was recommended by the TWG. It did however concede “administrative and other difficulties make this approach unattractive". Despite this, the Treasury and Opposition politicians (especially Progressive and Green MPs) favour the imposition of a CGT.

Other TWG tax options included a land tax, a tax on the net equity in rental properties at a deemed rate of return of, say, 6 per cent (the Risk Free Return Method), and denial of rental loss offsets (ie ring-fencing losses on rental properties so that taxpayers cannot offset them against their wage or salary income), and changes to limit depreciation allowances.

Elsewhere, the Capital Market Development Taskforce (16 December) similarly recommended in its final report, denial of depreciation deductions on buildings, application of the RFRM, and a targeted capital gains tax.

Any changes to the tax system, as proposed, will have major implications for Federation members.

The Government will now consider the various proposals, along with recommendations of the Australian Henry Tax Review, and announce any changes at Budget 2010. Beyond that, some of the recommendations may be used in the Government’s election manifesto for the 2011 election.

 Finally, IRD’s public consultation on depreciation of items on residential rental properties closed 18 December. (see: http://www.ird.govt.nz/public-consultation/).

NZPIF National Conference – Minister of Housing confirms

The Federation is able to confirm that the Minister of Housing, the Hon Phil Heatley has agreed to open the Federation’s 2010 annual conference (to be held in Blenheim 15-17 October 2010) and give the key note address.

END

Tags: abandoned goods - cleansing orders - letting fees - tenant responsibilities - don brash - capital gains tax - tax working group - phil heatley - political report

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