Property Institute supports policy ‘tweaks

Sunday, 17 May 2015

Property Institute supports policy ‘tweaks’

Property Institute of New Zealand Chief Executive, Ashley Church, has applauded the suite of tax and property measures announced today – but says that they are more in the nature of welcome ‘tweaks’ than major policy changes and cautions that they will not impact on house price inflation in Auckland.

He points to the central plank of the announcements - the decision to tax capital gains made on property sold within two years – as a change in emphasis rather than a new policy.

“It’s been Government policy to levy tax on anyone buying an investment property with the intention of selling it at a profit, within ten years of purchase, for as long as I can remember. So the real change here is that the Government is giving the IRD more resource to police that policy within the first two years of that purchase”

He says that’s not an unreasonable step to take and may even bring in a little more tax income – but believes it won’t have any impact on house prices.

“I wouldn’t imagine that there are too many speculators buying and selling quickly in this market because capital growth is so strong. It’s more likely that most investors will hang on to their properties for a few years – at least until this current boom has run its course”

Mr Church says that moves to identify foreign investors by requiring them to have a New Zealand tax number are also welcome – but also doubts that this move will make any noticeable impact on the market.

“We’ve been calling for some form of registration of foreign investors for a while – not because we necessarily believe that they are skewing the market –but because all of the various opinions are based on guesswork until we actually have that information”

Mr Church says the evidence, once collected, will probably show that foreign investors are actually a far smaller problem than generally believed.

“Overall, the changes get a tick. They’re good, sensible, measures which amplify existing policy settings and allow for the collection of important information – but they’re not going to lead to a halt in Auckland house price inflation”

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