No auction was brought forward to settle the sales until the dramatic changes took effect, said Antonia Brown, partner of Harcourts Wellington. Photo / Maree Mahony, RNZ
Investors who bought a home today will have managed to avoid the government’s extension to the light line test.
On Tuesday, the government extended the test to 10 years for properties purchased from March 27, 2021, but also granted an exemption for new homes, which will remain for five years.
Harcourts Wellington partner Antonia Brown said the announcement had done little to change the behavior of buyers and sellers so far, with no auction brought forward to settle the issues. sales before the changes take effect.
“We’ve suggested it to a few, but most people in the market are there for the long haul, so we haven’t tempted anyone to do it… we tried though.”
Real estate investor Steve Goodey agreed, saying most investors had a long-term portfolio plan, but the policies had caused some to reconsider.
“Some people have canceled their plans to sell properties, a lot of people are watching when they bought their property with this clear new test issue.
“There is a lot of confusion there though.”
He said that overall, the changes introduced to discourage investors would not help the housing crisis.
“I certainly think this will give people a break to think about future investments in real estate in New Zealand, but it also puts tremendous pressure on developers.
“We don’t have the materials, the trades people, the apprentices to meet this need in the market.
Change in “unfair” interest deductibility
Another real estate investor, Lindsay Calvi-Freeman, started a petition with more than 8,000 signatures calling on the government to reverse its planned policy on interest deductibility, saying it was unfair.
“Any business can deduct interest as an expense. If you are a trucking business and need to borrow money to purchase a truck, you can deduct the interest from your taxable income as it is a cost incurred to provide this service. It is the same. if you are borrowing to buy a house for rent.
“The general principle of income tax is that the government gets a slice of what you get. What they’re doing here is wanting a slice of something that you don’t even get.”
He said the majority of landlords were hobbyists and therefore had not raised rents in line with what the market would tolerate and that if they were to suffer a loss under the new changes, he would not be left out of the process. increase rents.
He said it was either that or an exodus from the real estate market.
“If the investors all left the market, there would be a big problem because not everyone, even if the prices fell, would not be able to buy a house and unless the government found enough money to buy all rentals there is going to be a problem. “
He said the planned changes caused him to rethink buying another property.
Property attorney Michael Hofmann-Body said he has seen some clients decide not to make purchases since the announcement and he has also had inquiries about the progress of settlements so that ‘they are finished and dusted before the weekend.