30-06-2009

POLITICAL & REGULATORY REPORT for June 2009

1. News
2. 2009
3. June

Of interest in this announcement is the deep ideological division on housing of the major opposition parties.

Take for example the comments from Sue Bradford the Green party spokesperson on housing who said:

• “(The) proposal is the thin end of the privatisation wedge”
• “Selling off existing state houses may also create ghettos”

And Labour similarly opposes the idea. According to that party’s housing spokesperson Moana Mackey:

• “Creates risks to the long-term provision of social housing and could see new tenants pushed to city fringes”
• “Labour had serious concerns that some of the increasing state housing stock would be made up of long-term leases from private property owners”

Residential Tenancies Amendment Bill - Introduced

The Residential Tenancies Amendment Bill completed its first reading in Parliament on 2 June. The Minister particularly acknowledged the contributions of time and effort made by the New Zealand Property Investors Federation (and others) in the development of the bill.

The Bill runs to 63 pages and contains 92 clauses. Of the many issues, the following would be most important to the Federation:

• Enabling all property managers and real estate agents to charge a letting fee
• Defeating the proposal to require landlords to disclose premises previously contaminated by “P” and for this fact to be recorded on LIMs and tenancy forms and
• Ensuring tenants are responsible for water and waste water charges

Interestingly, the Labour Party and Green Party have both indicated that they will work hard to allow tenants to have professional advocates go to Tenancy Tribunal hearings with them. That provision has been removed from this bill.

The Bill has been referred to the Social services select committee for examination. Written submissions from the general public have been invited with a closing date of 3 July. The Select Committee is to make its report to Parliament by 5 October.

HOME INSULATION – New details

Following last month’s budget announcement that $320m would be made available to fund home insulation and a heating program, the Government (18 June) announced more details of the scheme. From 1 July:

• 180,000 homes to be retrofitted with insulation and clean-heating devices
• Government grants of $1300 towards a third of the cost of insulation and a $500 grant for clean heaters for homes built before 2000
• The scheme will be run by the Energy Efficiency and Conservation Authority (EECA)

It is understood that for landlords with tenants who have a Community Services Card they will receive double the funding, with 60% of the cost of insulating the house fronted by government.

With the above insulation scheme, there have been calls for houses to be arbitrarily “star-rated”. It has been argued by the Tenants Protection Association and the Business Council for Sustainable Development that this tell tenants and potential home buyers whether a house was well insulated or not. It would appear that “Star ratings” would significantly impact (all) landlords.

Elsewhere, Otago educational institutes in conjunction with the city council have been reported to be developing a (5) star rating system (of insulation, heating, energy efficiency, amenities, condition, etc), for Dunedin student housing. Landlord and property investor support has yet to be secured.

UNIT TITLES BILL – Select Committee hearings

The Federation presented its oral testimony on the Unit Tiles Bill to the Social Services Committee Select Committee on 3 June.

The next Parliamentary steps in the bill include:

• Committee Report back to Parliament by 5 September
• Second reading of the Bill expected Q4 09

TAX POLICY – Capital Gains Tax & Land Tax mooted

Following the establishment of the Tax Working Group, last month, to “assist the government in considering the key tax policy challenges facing New Zealand” the Secretary of the Treasury has suggested, in a speech to the Institute of Directors, (3 June) that there be a tax on the capital gains from property investment.

He said that capital gains, or property taxes, would encourage investment into productive activity.

However on 8 June at his weekly post-Cabinet press conference Prime Minister John Key ruled out a capital gains tax by saying:

"My view about capital gains tax is that they don't work, they don't stop property bubbles; they do stop people moving their assets around, and they are hideously complex”.

And in recent days both the Finance Minister Bill English and Minister of Housing Phil Heatley have said introducing such a tax is simply not on the Government's agenda.

Related, Treasury (speech to the Tax Working Group Session: The Fiscal Framework – 8 June) has also suggested “moving towards a tax system ... with a greater contribution from property taxes”. In a follow-up radio interview the clarification given was for a “tax on land value” to be introduced. This would not be dissimilar to rates (a partial wealth tax) where a small flat tax would be applicable each year.

Meanwhile, the Green Party (and the Alliance Party) has both restated a policy of capital gains tax and a tightening of the rules around Loss Attributing Qualifying Companies (LAQCs) and equivalent tax deductions.

END

Tags: political report