Labour property tax plan will hurt mum and dad investors, association says
Labour's plans to tackle rising property prices by cutting tax breaks to rental property owners has been labelled an election-year ploy.
Manawatu Property Investors' Association president Pauline Beissel said the policy does not target the people Labour leader Andrew Little has dubbed "speculators".
Beissel said she was angry after hearing Little speak about Labour's tax policy, which would see tax breaks allowing investors to claim tax deductions on other income for losses on rental properties phased out.
Little, who made the announcement at Labour's election year congress on the weekend, said $150 million would be raised every year.
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Only "big speculators" would be hit in the pocket as "mum and dad" investors did not use the loophole, he said.
He doubled-down on the comments on Monday, saying the move was about stopping speculators outbidding first home buyers.
But Beissel said that was not the case.
"A lot of people would use [negative gearing], along with any of the tax provisions available to any investor."
Many smaller investors were under pressure already thanks to laws requiring better insulation and smoke alarms, rising bank interest rates and Reserve Bank limits sometimes requiring investors to raise deposits as large as 40 per cent before buying a house.
"I have asked my members if they are buying properties and I have not had anybody putting their hand up at the moment because it's just so tough."
She doubted Little's plan would help first home buyers, as landlords would have to raise rents to offset losses.
Some landlords kept rents low, sometimes running at a loss, so they could hold on to good tenants, she said.
She felt commentary around housing issues had lumped "mum and dad" investors and property speculators together.
She described speculators as people buying properties with one goal in mind – flicking them on as fast as possible for a capital gain.
"The people I represent are providing a service to New Zealanders for a long duration," Beissel said.
Little's move was about grabbing votes, she said.
"It is for political gain, trying to win the election."