24 Mar 2021

Housing package opens door to investor angst, renter despondency

6:55 pm on 24 March 2021

Real estate agents say the government's housing announcements are causing angst and confusion amongst property investors, with some dropping listings or trying to rush sales through.

Masterton house - generic housing, houses, state house, home, homes

Photo: RNZ / Logan Church

The government has brought in changes to the housing market including closing a tax loophole, and extending the time investors need to hold on to homes to avoid a tax on their capital gains, called the bright line test.

The change to the bright line test comes into force on Saturday, causing some to want to get in quick and avoid paying the cost.

From Saturday, people who buy an investment property and sell it within 10 years, will have to pay income tax on any profit made.

This does not, in most cases, apply to the family home or inherited property.

The rule is also different for investors into new builds, who will only get taxed on the profit if they sell within 10 years.

In Wellington, Tommy's Real Estate director Mark Hamilton said the move had some people in the market for investment properties scrambling to get on and do it before Saturday.

"Certainly for some people it's put a spanner in the works. There is, for some people, a sense of urgency even though the timeframes are pretty tight. That's the angst that it's causing with not knowing what's going to happen, and then deciding 'well, if you can get someone in this time frame, lets go'. "

Tall Poppies real estate owner Debi Pratt, in Christchurch, said the rapid timeframe for the new rules to come in had left many with questions.

"I'm waiting for my own accountant to call," said Debi Pratt, "and he was just swamped yesterday. And we are all literally just trying to work through the specifics, but we have already had owners call up and say 'we've talked to our accountant and we need to pull our property'."

In Auckland, Barfoot and Thompson managing director Peter Thompson said he expected it to take three to six months for any real impact to start to be seen.

"It is making people have second thoughts, so some vendors that are still thinking they may get that little extra than they thought they might need to review their thoughts, and buyers will now know there might be a little bit more opportunity and they won't have to rush into buying a property just for the sake of buying a property."

Thompson said the changes may cause the number of houses on the market to dip slightly, especially if people thought prices might drop. He said there might be a slight fall in house prices, but he was not expecting anything significant.

Renters spoken to by RNZ were also not confident the changes would cool the housing market.

Nikki Mortenson, who rents in Hawke's Bay, said some of the changes were positive but it was only a start.

"It's not going to help the little guy really. I've kind of written off any chance of owning a home. It's just depressing, really depressing," Mortenson said.

"The landlord of the house I'm living at, at the moment, has already put the rent up and she was around the other day and she was threatening to put the rent up again."

Mckenzie Grant, 23, who is studying in Wellington, said homeownership was a far-fetched dream for her generation.

"Genuinely the only reason that anybody my age that I know has ever has owned a property is because of their parents. And I really don't think that what the government is looking to introduce will change that way of accessibility.

"Its really the only way I have ever known for someone to successfully get their foot in the door with the bank. It's really so disheartening at every turn."

Wellington renter Zoe Woodfield said she was gutted there was no help for renters in the government's new housing plan.

"The announcement yesterday, it just makes me a bit disappointed as a renter because there was really nothing in it that was geared towards helping renters right now, no mention of rental caps, no real mention of renters at all in the announcement. I think home ownership is still a pipe dream. I think the announcement yesterday, it's a start but it needs to go much further."

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