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Ardern sceptical that changes to interest tax deductibility rules will lead to rent increases

Prime Minister Jacinda Ardern is sceptical that a move to block landlords claiming mortgage interest tax deductions will result in a spike of rental prices.

The Government announced last week that property investors can no longer offset their mortgage interest costs against their rental income when calculating tax.

Property investors, the National Party and Act Party have all claimed that landlords will increases rents to recover these costs.

Ardern told TVNZ’s Breakfast that this change is being phased in over four years and with other favourable conditions for landlords, now was the right time.

“Now is a good time to do that because interest rates are low, we don’t want the jarring effect on those existing investors, so we don’t see people being suddenly turfed out of their houses,” Ardern said.

“The other important thing to remember is that we’ve put in changes that said you get one rent increase a year, and so that’s also to try and make sure that we don’t see those big impacts on tenants as well.”

Ardern pointed out that that the Healthy Homes Standards also led to claims that rents would increase but she said that wasn’t the case.

“There we had similar things over the changes that we made to make rental properties healthy by requiring them to be insulated, warm and dry,” she says.

“We didn’t see that level that people claimed we would. I see a lot of speculation of what might happen in the rental market and we’re going to keep a close eye there.”

National Housing Spokesperson Nicola Willis disagree and says rents have increased since the Healthy Homes Standards became law in July 2019.

“Usually good to have the evidence before you make the claim,” Willis wrote on Twitter.

“On 1 July 2019 median rents were $450 per week. Median rents now are $520 per week.”

According to Infometrics data, rents have gone up 3.2% in the past year.

 

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