29-05-2009

POLITICAL & REGULATORY REPORT for May 2009

1. News
2. 2009
3. May

Of particular interest to the Federation, the Bill has withdrawn previously controversial provisions (proposed under the then Labour administration) of limited tenant liability for damage and passing it on to landlords and the introduction of advocates in the tenancy tribunal.

Of a range of new elements, the Bill seeks to:

• retain the status quo of lawyers and real estate agents being allowed to charge a letting fee
• require landlords to disclose premises previously contaminated by “P” and for this fact to be recorded on LIMs and tenancy forms

On the former, the industry position remains that all property managers and real estate agents should be able to charge the fee. And on the latter element, there is a belief that if premises have been cleaned to the satisfaction of local councils then there is no need for details to be recorded against the LIM.

The Bill is to be referred to the Social services select committee who will invite early next month written submissions from the general public.

BUDGET 2009 – Home insulation

Following an agreement between the Government and the Green Party the Budget (announced 28 May) provides 3 million over four years for a programme to insulate 180,000 homes which will start on July 1 this year.

From a Federation point of view the energy efficiency measure appears to be sensible, as they could pay for themselves over time by reducing overall energy costs.

Moreover, rental property owners stand to be key beneficiaries of the $1300 insulation grant (for ceilings and floors) and $500 heating grant. It is estimated that 40% of homes built before 2000 are rental properties.

Separately, and earlier this month the Business Council for Sustainable Development launched a campaign to improve homes. Their aim is to insulate one million houses.

The Council presented research to the Government indicating that 670,000 homeowners would pay a loan from an electricity provider, bank or local government to insulate their houses.

The Council also continued its advocacy for the introduction of energy performance ratings for homes, letting buyers and prospective tenants know how efficient the home is.

Meanwhile, the Government has sensibly signaled a priority to improve the current state housing stock before looking to expand it.

TAX REVIEW – Capital Gains Tax & LAQCs

The Government’s Finance and Revenue Ministers announced (8 May) the establishment of a Tax Working Group to “assist the government in considering the key tax policy challenges facing New Zealand”.

Although there are no terms of reference, ideas already being talked about by the group include widening the tax base, possibly with a capital gains tax (presumably to reduce speculation in housing), to avert any possible rise in GST. A member of the group, Dr Gareth Morgan, said: "I would not rule out capital gains; it has to be considered again”.

Of specific interest to property investors, he also noted that: “The distortion towards investing in housing had been partly tax driven, including all sorts of "tricks" such as LAQCs (Loss Attributing Qualifying Companies)”.

It is understood that between June and November, through a series of meetings and papers, the working group will provide informed tax policy discussion that can feed into advice to ministers and wider public debate and possibly in time for Budget 2010.

The think tank is comprised of: Rob Cameron, Paul Dunne, Arthur Grimes, Rob McLeod, Gareth Morgan, Mike Shaw, Geoff Nightingale, Casey Plunkett, John Shewan, Mark Weldon, John Prebble and David White. Several members of this group have previously advocated for a CGT and restrictions on property investors.

UNIT TITLES BILL – Select Committee hearings

The Social Services Committee Select Committee commenced its formal consideration of the Unit Tiles Bill on 13 May. The hearing of oral testimony is expected to commence in the last week of May.

LABOUR – SPOKESMANSHIP ROLES UPDATE

Following the retirement of Helen Clark and Michael Cullen Labour leader Phil Goff has announced (5 May) a reshuffle of his caucus and their portfolio responsibilities.

Of note for the Federation, Moana Mackey replaces George Hawkins as the party’s Housing spokesperson.

Interestingly, there is no portfolio responsibility for Building and Construction, which was previously handled by Shane Jones.

MP – Property Investors

A Register of Pecuniary Interests of Members of Parliament was recently published. Of interest it showed the following MPs with rental properties in their name.

END

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