How you pay for MP's properties

Members of Parliament are building up their property portfolios on the taxpayer by dipping into the public purse for rent on electorate offices they own.

In a fresh twist on accommodation allowances, an investigation by The Dominion Post shows seven MPs have bought properties they use as out-of-Wellington offices, billing the taxpayer for the rent.

Some are owned in the MP's own name, while others are held through superannuation funds or companies. The loophole allows them to walk away with substantial capital gains.

MPs are given a capped allowance to cover the cost of renting and running offices, and must declare if they have a pecuniary interest. Parliamentary Service general manager Geoff Thorn said an independent valuation was used to determine rents.

Some of the arrangements go back more than a decade, but it appears a new intake of MPs is stepping up the practice. Most are from National, but Labour uses a variation of the practice by buying properties in its name and using them as electorate offices, charging the taxpayer rent and building up the party's property assets.

The MPs involved include Housing Minister Phil Heatley, who charges Parliamentary Service $15,000 rent on his electorate office in Deveron St, Whangarei, owned through a company he owns.

Taxpayers also pay up to $1000 a week rent for a ministerial house for him and his family in Wellington, which is provided because he is an out-of-Wellington minister.

A Wellington flat, which he owns and lived in before becoming a minister, is rented to fellow National MP Louise Upston for $355 a week, also paid by the taxpayer.

In all, Mr Heatley is receiving more than $33,000 in taxpayer funds for properties he owns, plus another $48,000 in rent for his official Wellington residence.

Mr Heatley declined to comment on his arrangements, but it is understood he moved into his present office about 10 months after he bought the premises when the office he had been renting was sold.

Another five National MPs, including third-ranked Gerry Brownlee, also own or have a pecuniary interest in their electorate offices.

Labour list MP Stuart Nash has bought a property in Napier to use as his office, which he owns through his personal superannuation fund.

Mr Nash defended his arrangements saying he was charging only $12,000 a year in rent, significantly less than the market rate valued by Parliamentary Service.

"If you do the sums, it's a better use of taxpayers' money because it is less than the market rent."

National whip Jo Goodhew said Prime Minister John Key owns his electorate office, and rent was independently valued in 2003.

"The rent received is less than that independent valuation. This arrangement is in accord with Parliamentary Service rules," she said.

The Dominion Post understands it is set at "peppercorn" levels.

Ms Goodhew said six National MPs have declared a pecuniary interest in their electorate offices. All had independent rent valuations, with five charging less and one charging the same as the valuation.

She did not disclose the other MPs. However, title searches by The Dominion Post showed that as well as Mr Key, Mr Heatley and Mr Brownlee, they are Environment Minister Nick Smith, Selwyn MP Amy Adams and list MP Aaron Gilmour.

Ms Goodhew confirmed that list.

The average rent is $24,000.

Ms Adams and Mr Gilmour were elected last year and bought their offices within months.

Dr Smith appears to have made a big capital gain on his Nelson office, which he bought in 1996 for $165,000 and was valued in 2006 at $310,000.

A Labour spokesman said the party rented offices it owned to MPs Ross Robertson, Chris Carter, Ruth Dyson and Su'a William Sio. Two other Labour-owned offices – in New Plymouth and Wanganui – were used as hubs for list MPs.

Parliamentary Service figures show the average rent for the Labour offices was $13,500.

Another two Labour MPs – Hutt South's Trevor Mallard and Palmerston North's Iain Lees-Galloway – sub-leased from the Labour Party, but the properties were not owned by Labour.

Other parties said none of their MPs used the arrangement.

BACK AT THE OFFICE

All MPs get allowances for offices in their electorates or home towns. These can be used for rent and costs such as advertising services and policies.

MPs can claim for office space they own personally, but the Parliamentary Service requires independent valuations to ensure they are at market rates.

MPs in Maori seats bigger than 10,000 square km or general seats bigger than 20,000 sq km get up to $105,192 a year. Other electorate MPs get up to $64,260 and list MPs up to $40,932.

Staff costs are paid directly by the Parliamentary Service. MPs in big Maori and general seats get three full-time staff, other electorate MPs get two staff and list MPs one.