Property Institute rejects land tax proposal

Tuesday 26 April 2016

Property Institute rejects land tax proposal

Property Institute of New Zealand Chief Executive, Ashley Church, is urging the Government to consider options other than a land tax if figures to be released over the next few days show that foreign property investors are affecting the Auckland Property market.

Data on property transfers and tax residency is due out this month and is expected to show that the impact of foreign property investment is greater than first thought. Prime Minister John Key has pre-empted the release of the data by indicating that he would be prepared to apply a land tax if there is evidence that foreign buyers are pushing up house prices.

However, Mr Church is warning that imposing a land tax is the wrong way to approach the problem.

"Taxing foreign investors might make a few people feel better - but it will do little to slow down house price inflation in the Auckland market".

Mr Church is a long-time advocate of the policy adopted by Australia in December 2015 and is urging the Government to adopt it here. Under the Australian policy non-resident investors are allowed to invest in the residential property market - but only by building new homes or purchasing new property. They are liable for large fines if these rules are breached.

Mr Church says that this would be a much more effective way of slowing down house price increases in the medium term because it would address the shortage of supply rather than trying to artificially dampen demand.

"The only way to slow the growth in Auckland house prices is to build more homes as quickly as possible - so rather than penalising those who want to invest in our real estate market, we should be channelling that investment into getting more homes built, more quickly".

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