Will the reintroduction of interest deductibility for landlords benefit renters – or is that "not really how the property market works?"
The Government on Sunday announced the policy's return.
Interest deductibility relates to the ability of landlords to claim interest on mortgages as an expense in their tax return. It was removed under the previous Labour-led government. The $2.9 billion tax break for landlords will be phased in over the next two financial years.
Prime Minister Christopher Luxon yesterday said the Government's move will increase rental supply and lower renters' costs.
"We care about renters... I think if you're a renter, you're very grateful for the fact that actually costs that have been passed on to landlords are not being passed on to you," he said.
Luke Somervell from advocacy group Renters United pushed back on that claim this morning.
He called Luxon's comments "out of touch" and "insulting".
"The argument kind of is that you give these tax breaks to landlords and that'll sort of trickle down," he told Breakfast.
"But that's not really how the property market works.
"Basically, it's set by supply and then by how desperate renters are to get a home."
Somervell said renters won't benefit from the changes.
"Renters won't get a discount when interest rates go down or when landlords pay off their mortgage, and we won't get a discount from this either," he said. "It's gonna just be a tax handout for landlords with no Ts and Cs [terms and conditions] attached really."
But NZ Property Investors Federation President Sue Harrison disagreed.
"We would absolutely love that," she said of Somervell's "handout" comment. "Of course, it's not the case.
"Over the last few years, we've had interest costs increase massively on mortgages... we're also facing rate hikes and insurance hikes and other cost hikes, and had many other tax incentives taken away," Harrison continued.
"We're fighting to try and get back into the marketplace with more supply."
She said a lot of older investors in particular have come under "extreme pressure" and are trying to hold on.
And it's a "personal decision" whether a landlord will lower their rents in light of the changes, but some are, Harrison added.
"It's certainly something that goes into the budget and you have to look at seriously.
"We actually enjoy the process of working with renters and enjoy the process of providing accommodation," she said.
"I'm not there for the capital gains and neither are the [federation] members that I know."
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