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Ministry of Housing and Urban Development was asked for advice on temporary rent controls, as it warned the Government taxing investors more could increase rents

Ministry of Housing and Urban Development was asked for advice on temporary rent controls, as it warned the Government taxing investors more could increase rents
Grant Robertson

The introduction of temporary rent controls isn’t out of the question.

It’s been revealed the Government asked officials for advice on implementing temporary rent controls if measures it subsequently took to make residential property investors pay more tax sent rents through the roof.

A just-released aide-memoire prepared by the Ministry of Housing and Urban Development for the Housing Minister in December 2020, notes the Government asked for advice on extending the bright-line test, limiting interest-only mortgages, removing deductibility of mortgage interest and “temporary” rent controls.

The Government last month announced the bright-line test would be extended from five to 10 years and property investors would no longer be able to deduct interest as an expense when paying tax.

The Reserve Bank is due to report back to the Government in late-May on the option of restricting banks from issuing interest-only mortgages.

Facing backlash from property investors, Finance Minister Grant Robertson last month warned: “We will be monitoring the impact on the rental market closely and we will take action if necessary.”

The document from the Ministry suggests Robertson really meant what he said, as temporary rent controls were on the table.

The Ministry referred to Treasury advice that noted rent control measures "could be drafted to offset or limit negative impacts of adjustments to tax policy changes on rent prices".

"If the government introduces a temporary rent control then this could incentivise more investors to sell, but international evidence shows that those that retain rental properties will try to find other ways to increase rental income and/or increase rents up as soon as the period of rent control ends," the Ministry said.

Ministry recommended currently-owned rentals be exempt from changes

The Ministry raised concerns over how taxing property investors more could increase rents and cause rental “churn”.

To curb this, it recommended the removal of interest deductibility should not be applied to currently-owned rental properties.

The Government didn’t follow this advice. Rather it opted to propose the change be phased in over four years. The intricacies of the new rule are still being consulted on and are expected to be finalised by October.

The Ministry also recommended new builds be exempt. The Government followed this advice. Although the definition of a “new build” is yet to be clarified.

The Ministry also advised currently-owned rentals and new builds be exempt from any restrictions placed on the issuance of interest-only mortgages. 

A number of investors likely to feel the pinch

Ministry analysis suggested a notable portion of investors might struggle to absorb the costs of the policy changes, and thus react by hiking rents or selling their properties.

These could include investors who have entered the market recently. The Ministry said about 20% of current private rentals were purchased in the past two years.

Around half of these buyers have fewer than four properties.

The Ministry said cost pressures would also be felt more by the 37% of investors in tax loss positions. The average loss is $9000.

The Ministry maintained it was unlikely investors could pass all their increased costs onto renters. It said stressed renters would simply crowd houses to share costs, and better-off renters would buy.

In this sense, there would be limits to rent hikes.

Only some FHBs could afford to buy houses from investors

The Ministry made the point the Government’s aim to effectively push some investors out of the market to make way for first-home buyers has limitations.

It said a “generous” estimate was that up to 25% of renters could afford mortgage repayments, and thus buy the houses sold by investors. But “many” in this cohort may not be able to save for a deposit.

What's more, the Ministry said the situation is unlikely to change even if prices fell by 10-20%.

As for how this push for property transfers from investors to first-home buyers would affect prices, the Ministry said: “We won’t see a significant fall in prices if demand from investors with higher levels of equity and first-home buyers (with deposits) remains strong.

“The underlying demand drivers for these purchasers - low interest rates and high rents are likely to remain unchanged.”


The Ministry provided the following examples around how changes could affect a new investor:

a. Denial of interest deduction: assuming a mortgage of $500,000, which is around 70% of the national median sale price, at an interest rate of 2.5% would have interest costs of $12,500 per annum. Denying all interest deductions would add a cost of $4,125 at a marginal tax rate of 33%.

b. Limiting interest-only mortgage: assuming the same mortgage, moving from an interest only mortgage would add principal repayments of $11,200 per annum. By comparison the median rent for new bonds lodged over the last 12 months was $470 per week, or $24,440 per annum.

Disclaimer - supply-side measures weren't discussed in the paper

The Ministry was concerned about the Government pulling levers on the demand-side when New Zealand has a housing shortage.

However the Government in March also announced it would provide councils with grants for infrastructure to support the building of more houses.

This $3.8 billion Housing Acceleration Fund was not discussed in the aide-memoire.

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There is no housing shortage in New Zealand, just a population surplus.


How to fix a crisis? Well first you need to create it. And then you can intervene, supposedly justifiably. Reminds me of our family experience a few years back, having a house built. First of all you pay the professionals,architect,engineer, surveyor qs and on for the mistakes they make, and then you pay them again to fix em.

:) This made me chuckle, I had a very similar experience. However on my watch it was them correcting each others faults. Builder "no, if I build the stairs like that you wont be able to use them for storage" etc, Architect could get lights etc cheaper than the builder. A team approach is always best.

Clearly todays RBNZ mortgage stats for March which undoubtedly Mr Hargreaves will offer some insight on ,put everything into perspective.

It's alright I'm here.. what are your other two wishes?

The latest housing measures from the government were always going to increase rents to a degree. However they were/are aimed at lowering house prices by forcing over-leveraged landlords to sell. Therefore enabling FHB's to enter the market and landlords to enter at a price which would require less rent from tenants.

If the latest measures don't work [housing price number GO UP, lol] then you just have renters paying more in both the short and long term.

The worst thing the Government could do is increase accommodation supplements, benefits, first-home-grants, etc.. ALL these things enable house price and rent inflation to continue. The government currently buying existing housing stock is ridiculous and pushes prices up. Also, how many motel owners are now buying properties (with government money) to rent back to the government at an inflated price?

Obviously cheaper rent and affordable housing would result if house prices declined. Prices are largely determined by credit availability. Interest-only-loans need to be knocked on the head next, otherwise rent increases will balloon.

Rent controls just result in people burning their properties down.

Add kiwisaver withdrawals to the list that allows house prices to increase even more.Anything that actually allows FHBs to spend higher amounts just pushes house prices even higher when there is a lack of supply, because FHBs are scrapping it out with other FHBs. What we need is people not willing to spend those crazy high amounts. Interest rate rises also would help FHBs if it causes prices to fall, as then they wouldn't need such a large deposit. Then sellers have to sell for less than the $10k per month house price increase they have been getting.

In reality there is plenty of housing to support the population, there is just a lack of political will to pull the unoccupied homes into the market.

Does the threat of rent controls mean that if you don’t raise rents now you may be stuck with them at a lower level after your fellow investors increase their rents?

Bit of a self-fulfilling Govt prophecy. All Labour are doing is creating greater property shortages.


Why is it causing property shortages? Properties aren't destroyed once they're sold off the rental market. They'll be snapped up by other investors or FHBs.

Landlords constantly go on like they're apart of the solution because people want to be renting, ignoring a generation that are trapped renting.

Some are just turned into weekenders or AirBNBs. My town is full of them. Many people can potentially get more money in just a weekend as temporary accommodation, than renting it out full time, and I don't think the house has to meet the healthy home standards if you are renting it out as an AirBNB, although correct me if I am wrong on this?

Increasing them can only occur in line with the average otherwise you will be open to have them reduced by the Tenancy Tribunal. They will go up by 5% increments max, the dwell time for a rent level is the tenancy, normally 12mths, so it won't be a rush I don't think.

The rent I charge my tenants is already below market. I will be putting it up as a direct result of the government's policy.

And they will probably decide its time to live somewhere else.

yes but where ?… with other family ? in a tent ? a Motel ? I'm not making fun, these are the simple, sad realities

Really ? I have never had issue finding a rental, moved last August, no problem. 2404 rentals on Treadme in auckland right now

Likely to introduce a percentage limit per year. The UK currently has a limit of 1 increase per year up to 5%. This can of course be objected by current tenants but involves the tenancy tribunal who will provide a rental evaluation and 'suggested' weekly rental value...could be more trouble than its worth for everyone. Way around it would be to kick out existing tenants and market property with increase factored in.

Except you can no longer end a tenancy for no reason, so how you going to "kick out existing tenants"?

The cost of listing the house for sale on trademe isn’t that high. You can give them the 90 day notice because you intend to sell, then list for a price no one will pay and put new tenants in :)

Maybe worthwhile for troublesome tenants, however the listing fee is $719.00 (for Auckland houses), plus you'd need to sit it empty for several weeks. Not really a money spinner for raising the rent, but could be worthwhile in the right circumstances.

$719 seems exorbitant! How is it justified?

Open and shut case at tenancy tribunal sorry - been tried and failed in favour of Tenant

Link to tribunal decision?

A lay person like me would expect that it would be exceptionally challenging for a tenant to show that a landlord had no real intention to sell especially if the landlord lists the property for sale on a popular platform. I would further expect that it would be unlikely for a tenant to take the time off work to go to tribunal after they have moved out (presumably they decided that the landlord did not really want to sell when the online advertisement was removed, which would be after the existing tenants vacated the premise?)

Can't do this either, against the law, seen as taking retaliatory acton. If you did this and didn't sell or move in and were investigate as such, could be dire consequences, fines etc (up to 100k now) plus repayment of your tenants rent and moving costs.

Some really nonsensical comments coming out today from people not really up with the new RTA rules.

Failure to follow through on a sale does not by itself imply that you had no intention of ever selling. Just document your intent to sell ( email a couple of real estate agents, have a text convo with your wife about it,etc ). Essentially all you need to do is show that you genuinely intended to sell the property and then had a change of heart / circumstances later (text convo with a mate who suggests waiting to see what the market does?). The whole reason the bright line test was brought in was because proving someone else’s intentions is really hard, especially if they dot their “i” and cross their “t”s.
Recent policy changes provide a veritable smorgasbord of reasons to choose from as your reason for genuinely wanting to sell.

Yes of course it has to be a sincere action on your part. Many have gotten good at faking sincerity.

What are you talking about?

So you’d be fined now for not completing a sale.

The comments get more and more ridiculous on here by the day

Have you never heard of being able to sue for not completing specific performance of a legal contract?

Simply listing for sale and then not signing any contract will prevent anyone from being able to sue you for breach of contract? Ie, just don’t sign a sales document after listing on TradeMe?

Yes, that's true, but as we all know, many excuses are given under the guise of what is legal, to remove tenants for reasons that are not legal.

And the game has to be played to show that your actions equal your words, but not necessarily what you are really thinking.

Exactly, just like cannabis or abortions prior to 2020. It is just another box ticking exercise dreamed up by the bureaucracy. Although both having an abortion and using narcotics cost in lives whilst rentals have a cost in dollars.

Silly comment as you can't kick out tenants.

Yes you can very easily as demonstrated above.

Why ask for advice it's never taken anyway


To curb this, it [HUD] recommended the removal of interest deductibility should not be applied to currently owned rental properties.

Kudos to the government on not taking this horrible advice. Over-levered investors forced to sell due to higher tax bills will bring more properties on to the market than any new build programme is supposed to over the next few years.

Investors might push up rents as a knee-jerk reaction to tax changes but in the medium to long term, keeping migration low post-COVID and increasing inner city housing density should keep rents under control.

Yes, I agree they were right to ignore this advice as it is the part of the changes that is effective. If you do the numbers on investment properties at high debt levels there is no business case for housing investment using existing housing stock when these changes come into effect.

The only investors not affected by these changes are those at very high equity levels (above 50%) in their portfolio otherwise it makes the business loss-making.

This was the intent of the changes, therefore the changes will be successful, FHB's will be the beneficiaries of this change as planned.

That doesn't sound correct, rather investors will buy all the new builds leaving FHBs to buy all the old properties. More to the point the business case for buying rentals is not as affected as you seem to think, it's the same as a 1.2% increase in interest rates and when you account for the estimated recouping of some of that cost through rent that figure drops quite a bit. Perhaps more worrying though is the policy is out of step with tax philosophy in that taxing losses is completely at odds with the fundamentals of tax norms. Just tax capital gains like everyone else in the OECD, this policy is perverse.

Fhbs are a fickle bunch.

They only want to buy things while they are going up at 20% p.a

Any hint of a fall and watch them vanish faster than the dollars in your joint ac once the wife hits the mall.

Banks are also fair weather friends. Watch them find every reason not to fund fhbs paying what a bank thinks could be too much for a dodgy new built town house thats just one decent invasive inspection away from being condemned as a leaker.


Does this article mean that in addition to ignoring advice from Treasury, RBNZ & the IRD the government also ignored the advice of the ministry of housing and urban development?


This proves that government only ask for options and goes after advise if have no intent to act otherwise they do what they want to do, advise or no advise.

The moment Jacinda or Robertson says that waiting for advise, should be clear now that are not interested and are only trying to deflect for now.

So even though RBNZ is suppose to be an independent entity - bucks stop at Robertson's, even for Mr Orr's action - what he does or does not do.


the economic theories NZ government are using to run the country are totally out of date.


What is out-of-date is the 'hands off' approach to regulation.

I just hope that if they do bring in rent controls they are universally applied - and they take a formula approach such that the existing unaffordable rents being charged are brought down to an affordable level. Otherwise, we will never get out of the subsidy trap we are in presently.


Subsidies are self defeating. They distort natural market balance. No amount of, or any sort of intervention and/or controls can right the ship. Like a committed drunk, things that are off balance inevitably fall over. The only cure for subsidies is prevention, ie never introduce them.

We'd all agree there, article written back in 2008 when the government was looking at their introduction;

Good article. Swedish Economist Assar Lindbeck famously said “in many cases rent control appears to be the most efficient technique presently known to destroy a city except for bombing”.

Rent control has never worked anywhere ever.

Because it has always been applied in isolation. It won't work here either unless the Government stops investors just shutting up their houses when the tenants leave, and/or ensures that any property that is being rented meets a minimum standard. I suggest any person who wants to lease a house should be licenced too. Also the rent needs to be specified as being for a whole house/apartment to prevent them being applied to just rooms or part of a house.


Our government(s) really have snookered themselves.

So very true.

Yes, good example of the type of organisation pushing the out-of-date thinking.

Indeed .. facts are boring and outdated . Kate prefers to "innovate" ( in her own words ).

Haha ! Lets run the country on Hopes and dreams!

Old economic theory, based largely on the study of human behavior, can't be trusted she recons.

Let's just ignore all that stuff and dream up schemes that we hope might work or at least sound good on paper !

You'd prefer that we ignore the fact that the government spends $37 million taxpayer dollars per week on accommodation supplements?

There is an obvious way out, bring supply above demand...


So much sweeping. So little carpet.

Wonderfully expressed Rosey


Welcome to the United Soviet States of New Zealand, where jobs are offshored, migrants used for slave labour and property is the only game in town - until its not. Nothing productive in NZ, capitalism is dead and we sell the illusion of a better life - only its not. It's a life of debt slavery and an elected dictatorship.

It's not capitalism, and it's not communism, so what is it?


Well for many stuck renting, it's basically feudalism. They must live on rented land which they "work" for the lord (well they work, then return all that money to the lord), unable to have children (because the lord won't authorise children living in their house). Their labours and agreements can be sold with the land if the lord chooses to, use the small plot of land for subsistence farming and are subject to the whims of the lords will.

Wokeism in the age of hyper-political correctness


A mess, decades in the making.

Elected dictatorship? Try unelected rule by The Federal Reserve, where our 'independent' Reserve Bank apparently MUST do whatever The Federal Reserve does.
If the Federal Reserve slashes and suppresses interest rates, we MUST slash and suppress interest rates.
If the Federal Reserve does QE, we MUST do QE.
And no-one voted for it!
Sorry, where is the 'independence' in all this?


"The Reserve Bank is due to report back to the Government in late-May on the option of restricting banks from issuing interest-only mortgages"

1 : Why late May ( Are they waiting for new data to use to suit their narrative as normally Winter
months are quieter)
2 : Why asking for options, when is evident that most speculators fund their speculation through IO loan
3 : Even if Mr Robertson gave months, was it not possible for Mr Orr to respond sooner and throw the ball in Robertson's courtyard to respond.
4 : Mr Orr has always been asking for DTI, so why wait, were they not prepared to throw as soon as asked instead of delaying.

In short neither Mr Robertson nor Mr Orr has intent, so are playing a script drafted to be played by both the actor to create a smoke as long as possible with hope that may be a miracle will happen and the mess created by both will be sorted by God or maybe another major news / event occurs that will overshadow the housing ponzi and in current panademic situation, is possible.

Should ask the $#@% to stop playing passing the parcel as will eventually have to expose themselves in May.

"the problem with socialism is, you run out of other people's money" Margaret Thatcher.
I wonder whose money Labour are going to go after next? so far landlords are the bad guys, who is next? The banks are not NZ owned - scratch them, business is on its knees already. I hope they go after their own overpaid useless non productive local government bureaucrats.

I remember a time when local government actually represented their electorate. They listened and acted. Now we just bow to Jacinda

Well now they have formed a working group to review just that. It is comprised of exactly those old hat died in the wool bureaucrats that you abhor, and I do too. My opinion only of course. As always using other people’s money to furnish the nest. And there is not one representative on board, who might speak on behalf all those other people with the money. Man The Brown Cardigan once more rides forth, unbridled and predetermined.

They just keep printing press running hot and hope like hell the markets never wake up to fact the cupboard is bare

Basic economics dictates,

Falling price (or price control) → Reduction in supply (or supply stagnation)

You don't even need to know calculus to see the overall picture. Just frame it as a math question for a Form 3 student,

"With a ever increasing number of people getting on to the housing shortage list, what do you think will happen if there are same or less houses available for rent?"

I think FHDs are immoral. In their pursuit to ascend the property ladder, they stomp on those who could never by pressuring the government to do their bidding.

Except I’d hazard a guess that housing demand is relatively inelastic and people need a roof and will innovate to keep quantity inline with price


I can feel an almighty housing crisis coming up, conjured by the government

So... where have you been for the last decade?

If I have this wrong then I apologise unreservedly, but based previous comments posted, believe he is a motelier.

Motelier and sold an Auckland property last year making about a million in untaxed capital gains.

So the longer the problem goes on for the better! There's $$ to be made so who cares about actually solving the problem.

Goodness, gracious. Hope not a Boomer to boot?

Haha imagine that! Close but not quite, I'm a Gen-X. Yes, you're correct, I own a motel and also 2 other businesses and yes I have sold my house in July last year and I'm renting now, a big mistake. I also just sold another property which I will settle on in June.

I may not agree with much of what you write here but I admire your honesty, and many of your predictions have proved to be accurate.

Well thank you Ngrrk, I'm almost blushing. A compliment from a commenter with differing views, very magnanimous of you !


Rents will drop the day some landlord advertises a rental and gets no inquiries. That's quite achievable with a population policy combined with the building going on right now.
Rent's don't depend on the landlord's costs, but on demand.

"Rent's don't depend on the landlord's costs, but on demand"

That's simply not the case sorry. In the very short term under a shock perhaps but ultimately if landlords withdraw from the market then rent's will rise ceteris paribus. It's called demand and supply. Equilibrium will not be where landlords are losing money in the long run.

If our domestic wage structures continue to converge with those prevailing in Asia demand will stagnate at current rent levels, unless the government subsidises landlords with transfer payments to the increasingly impoverished majority.

You can have convergence with both samples rising at the same time but the higher rising slower than the lower.

Not to be denied, but the deflationary gap is iniquitous : What's Yours Is Now Mine: America's Era of Accelerating Expropriation

That's only correct in regards to marginal rent. Overall that's not the case in the NZ rental market because there is significant inefficiency in the mom and dad rental market with many rents lagging market rent. When a shock rolls through you would expect to see lagging rent start to catch up as mom and dads start to shore up their books against losses.

I agree (2nd time). Even the hint of rent controls is now going to trigger a lot of rent hikes. There is no elegant way to fix this problem without targeting supply or unwinding immigration.

You forgot credit creation as beautifully highlighted by the month-on-month record value of the bank's loan books.

Te Kooti - Exactly I've raised my rentals before our socialist government tells me I can't. Absolutely twats of course rents will rise the Government keeps loading rental owners with extra costs. Two things I'm hearing/seeing in the industry, lots of rentals being dumped and a black market for rentals emerging. Almost every rental that is sold to a FHB is just the same number of people across more houses, supply is the only answer !

Elegant way = universal weekly rent maxima with a formula of (GV/1000) +/- x%

x determined based on the lower third of valued properties to equate to 30% of the gross average household income in the area/region.

I can just imagine dwellings being converted into a bunch of studios of poor quality. When you remove the ability for higher quality dwellings to be priced higher than cheaper ones you risk having the entire rental stock adjusted into lots of bare minimum units. So whilst $500 a week may now get you a house, apply this formula and it’ll get you a studio out of the 3 that the house was converted into.

At bare minimum your formula needs to account for the size of the dwelling and even then it will likely make certain sizes more attractive than others resulting in everything being adjusted to fit the new optimum.

Your assumption is wrong as the formula does take into account higher sizes, higher land prices, etc. given it is based on the rating valuation which recognises those valuation differences.

Let's say 'x' in a particular area is determined to be -10.

Weekly rent maxima for a home with a valuation of $800,000 = (800,000/1000) -10% = $720/week
Weekly rent maxima for a home with a valuation of $500,000 = (500,000/1000) - 10% = $450/week.

With a formula like that you’d still get studios renting for more per square meter. Formulas like that also completely ignore the luxury end of the market!

I tested the formula on the Hutt market some months ago - as the rating valuations were last reviewed in 2019, I determined that 'x' would be 0 as simply RV/1000 got to that 30% of average household income for lower priced properties. What I found in the higher-end of the Hutt rental market, was that weekly rents were generally advertised at less than the weekly rent maxima. For example;

RV = 2,280,000
Asking a weekly rent of less than RV/1000.

In other words, in the limited research I did, the formula doesn't affect the higher-end as landlords at that end of the market are already advertising properties at below the rent maxima.


Meanwhile her $600,000 property has gone up $200,000 in the last 2 years.
The entire mortgage and interest she paid on the loan has all been covered by rent. So in fact
Her profit for doing absolutely nothing for two years is ---$200,000.
The only person who has worked is the poor tenant .
There is no benefit to the economy in property speculation.

If you read this site 2 years ago >90% were calling for lower house prices. So this person has got off their bum, put their money up, found a tenant and taken some risk. In fact she has had to put far more effort into this than most other investments. She's not Warren Buffet, don't get me wrong, but it wasn't the lay down you make it out to be.


So are property investors prepared to assume some risk? If they are, they will obviously have no objection to interest rates going up. They will have no objection to the state backing off and letting market forces assert themselves. I see people talking about 'risk', yet I've seen you post here that the Reserve Bank has 'no option' but to slash interest rates & print money. Everytime the state intervenes to prop up the property market, they increase moral hazard and they stop property investors from assuming the consequences of risk. You talk about getting off your bum: all I see is people attending some open homes, borrowing huge amounts of money, and then expecting the PTB to keep interest rates low and to bail them out whenever there is trouble brewing. 'Getting off your bum' to me involves work, not getting wrapped up in an entitlement mentality just because you've outbid someone else at an auction.

That makes no sense Tom. A property investor takes the risk that rates rise from the day they settle, they also take the risk of tenancy voids, bad tenants, regulation changes etc. It's not a risk free punt. Of course, an investor can fix their rates for 5 years, but what happens if rates fall? Everything has risk and to deny it is a rejection of reality. I agree the risk/reward is/was skewed in favour of the investor however

What if rates fall?? Bonus!
Look, if the government & Reserve Bank are committed to seeing that prices never fall then I fail to see where the risk is, I really do.

The RBNZ is committed to keeping inflation between 1% and 3% and keeping employment strong. They are not committed to keeping housing going up, but if they need inflation/employment to be higher than expectations they are required to increase the amount of money going int to the system. That process does not preclude housing from falling. If you built enough houses prices would fall.

That's 3 times Laminar..... The RBNZ has largely undershot it's inflation target for a decade now. Realising this and that higher rates were unlikely is all part of investing in property. Your remark that the prices never fall is largely infantile (Tom), if true that makes it free money so more fool anyone who didn't jam their blood funnel into the ponzi.

It is odd how far the national conversation has moved away from supply.

not odd at all -- Jacinda does not want to talk about kiwibuild and the current 4 yr total of just over 1000 homes actually built

One of the big problems we will face is our capital allocation is to people who don't want to do anything with it (property investors). They just want the capital and a tax free place to store it and gain more of it. Its a recipe for a financial disaster.

I wonder how many rentals senior employees at Treasury and HUD collectively own?
I am starting to think the state services might be the architects of the "crisis". Even though we are only starting to hear about it now, I would suspect that have watering down both Labour and National responses to the crisis for years.

Too many vested interests in the unproductive parts of the economy. It is high time to ignore all their threats, whining and self-serving scare mongering, and take bold action (both in taxation and monetary policies), in order strongly to re-balance the NZ economy away from this 19-th century obsession with parasitical housing speculation, and towards productive activities. And if, in order to do so, some pain has to be felt by some speculators, so be it.

When one can not see the reality, then nothing like starting a conspiracy theory. :)

You want to "debunk" this? Tell me what events don't fit...
I guess architects was a poor choice of metaphor. I did not mean a simple organized conspiracy to boost their own investments.
Think more a bunch of neoliberal group think that we must support this failing housing situation (until it eventual recovers) but the private sector should remain profitable and in control. Owning rentals is just a conflict of interest influencing their objectivity.

We only started getting leaks once Robinson started disliking what he was getting back from treasury and HUD. I think the impression that Labour wanted to give was these he no longer believed that the proposed solutions were viable to solve the problem. (Such as, extra CGT when your making 10 to 20% y/y is not a viable disincentive.) I would argue that this new path (implemented after the leaks) of attacking investor cash-flow is more likely to work than any attempt in the last 4 terms. (LVRs don't work with high capital gains either)

From what I have seen, it's nothing to do with vested interests around property ownership, and everything to do with an uncritical, neo-liberal world view.
A lot of the thinking and analysis in the state sector is very shallow, but dressed up as sophisticated policy wonkery. An awful lot of group-think, too.

And so the ongoing problems created by excessive credit/low interest continue to create all sorts of problems - yet the cause is ignored.

Akin to treating obesity with a Panadol.

Absolutely. If people were not able to borrow such huge sums at such low rates then of course prices would not have gone to these ridiculous levels.

None of this hand-wringing and intervening would be necessary if there was a fair cost on money and a restoration of the balance between saving and borrowing. People on moderate incomes would not be buying modest houses for $1.5 million dollars if the cost of money had not become so cheap that it was ridiculous. Overpopulation, lack of supply, a blue moon.....none of it explains how people on moderate incomes can pay eye-watering amounts of money for a bog standard house: they simply would not be able to without credit being exceedingly plentiful and exceedingly cheap.

Exactly. Elderly friends, in 80’s, of our family dropped off their useless term deposits & bought and moved into one of those two bedroom 70’s ownership flat thingys, and rented out their four bedroom family home. Doing much better now. Virtually forced into it though. Never ever owned anything more than their own home.


Housing is in a crisis on so many fronts:
- Homelessness
- High rents
- High risk tenants
- Housing supply
- FHB housing affordability.
However all the Government seems to be doing is tinkering with kneejerk reactions to individual problems which are not solving any of the interconnected issues and create further issues. They are sadly lacking any coordinated action plan.
Some examples of how things are not working:
- Homelessness (hardly mentioned on this site as it concerns few who follow it) to which the Government's reaction is to place them in motels. A generation of "motel children" with attendant social issues and problems are arising - a motel is not the ideal solution and additional supply of housing such as KiwiBuild has been ineffective.
Talking to a small group of landlord acquaintances over coffee the other day. With the new legislation introduced last year strengthening the position of the tenant (which arguably is a good thing) is creating an issue that landlords are not prepared to just find a tenant, but rather a good tenant. Those potential tenant who are long term in emergency housing are immediately being rejected as they are likely to be high risk as problem tenants.
The consequence of accommodation supplements is that it is putting upward pressure on rents and those who don't qualify - those economically independent on good incomes - are facing high and unaffordable rents for a good rental albeit on a good income. They are at a disadvantage to those receiving an accommodation supplement and MSD seems prepared to use the "bottomless pit tax payer funds" to pay market rents simply to provide accommodation. The group were of the consensus that they are not in a hurry to find just any tenant - they are relaxed and prepared to go as in one instance now over six weeks with the property empty on the basis that to just put any tenant is likely to cost more in rent arrears, repairs and other issues in the longer term.
To address affordability issues and slow the property market the Government's removal of tax advantage on interest has done nothing to address house supply issues. While it may appease potential FHBs, unsurprisingly this is likely place further upward pressure on rents and discourage investors to provide much needed houses for rental accommodation.
The removal of the tax provision has not addressed either housing supply, provision of rental housing (actually a negative), nor high rents.
It was highly likely the housing market would cool, but that was likely to happen anyway, as recent increases were unsustainable. Again, talking with the landlord acquaintances, for the past six months to a year they were not expecting continued capital gains nor are they now looking to sell properties as alternatives to their net yields of around 2-3% is still better and lower risk than other alternatives. In two instances the property had been purchased in the last two years; the tax due to the brightline test was a considerable factor in the decision not to sell. They are currently prepared to sit on their current portfolios as any future purchase of an investment property is going to mean a ten-year brightline test it is a definite disadvantage.
Meanwhile the Government continues to take action in a knee-jerk manner such as the rental controls mooted however it is not considering the consequences. While a rent control may seem a desirable and popular action, it is not going to add a single additional house, not provide a home for a homeless family, and only discourage the supply of much needed private rental accommodation.

If people were not able to borrow such huge sums at such low rates then of course prices would not have gone to these ridiculous levels, and all these dire consequences would not be getting worse by the day. End of story.

The 1700 people in Hawkes Bay (over 1.3% of the population) who are homeless in emergency housing has absolutely nothing to do with low interest rates. So not end of story.
Your many past comments indicate that you are one who needs to think beyond the issue of housing simply being about FHB and affordability issues.

As prices increase, as interest rates decrease, so these issues of homelessness increase. These issues are inter-linked.

I thought the housing crisis was a sign of success p8 - or were John Key and Bil English BS'ing us? (again).

A pathetic comment and you know it.

Four years on and the tactic is still 'blame National for everything'.

It was a crisis 5 years ago when National was in power and still is now. Imagine if they acknowledge the problem that was brewing and actually moved to do something about it - but that would mean hurting their landlord mates/voting base.

Thanks for the compliment! :-)

The best time for Govt. intervention, was at the bottom of an economic cycle post GFC which was on JK's watch, in fact, he campaigned on it, and then when he had the perfect timing given to him by the GFC, did nothing.

Labour's big mistake that they thought it was just a lack of action, ie any old silly ideology acted on would do. And so have just doubled down with one silly action after another.

There is nothing they can do to stop this using their existing methodology and in fact, at 8 x median for NZ and 10 plus median for Auckland, the instability can only get worse.

Correct IO. Even Adrian Orr described high house prices as a 'first-class problem'. Strange statement. First class only for existing home owners.

I believe that it was It was Grant Robertson who said that in late 2020.

So here is one reaction that is really happening out in the market.

The landlord and developer is selling all existing old stock and will build new housing stock.

The market for the old stock is owner-occupiers because landlords like him are not interested in 'non-new'for obvious reasons. This means when he sells the tenant has to find a newer dearer accommodation. He is hoping because he is out in the market first, then he can still get top dollar before it is other investors try to sell to what may be a reduced market.

New stock costs more to build than buying existing so the rent he will have to charge will be higher, even taking into account the tax savings still available, as the risk has gone up for a price correction, so yield has to increase to cover the risk.

And any existing he still does own, the rents have been increased.

All in all, prices on both existing and new builds have gone up, especially the price of new sections, which are the greatest point of restriction in the system, and the increase in the cost of which adds no added amenity.

At least with healthy homes input (marginal as it is), you at least got a marginally better house out of it.

'the rent he will have to charge will be higher'.
The times of rental owners being the market makers are coming to and end, the market will not care what he paid for anything.

House prices and rents should be lower, but Govt. policy is causing them to be higher, as the evidence shows.

We have not raised rents for 3 year. But Robertson wants us to put them up.

Haven’t put up the rents for years, might consider review annually from now on.

Isn’t it funny the whole “rent cap” idea, it almost seems like the government is setting up a “rent target”. Much like the highway speed limit of 100k/h. Everything they’re doing are speeding up the rent rise.

Meanwhile in a jurisdiction that does not have Govt. interference and has a non-restrictive land policy.

Young homeowner: See budget breakdown at 5:04

Or to rent:

The problem is that the rental houses that will be sold are not the same houses that wealthy tenants will be looking to buy. Those high income tenants who can afford to service a mortgage and have a 20% deposit will not be interested in buying the crappy old run down rental stock that will be the first to be offloaded by investors. Low income tenants who currently inhabit those homes will be made homeless. Those low income tenants also cant afford to move up the rental ladder and rent one of the nicer and more expensive rentals being vacated by home buyers. And those low income tenants most definitely won't be able to afford the rent on a brand new build - as these are all at the mid-high end of the rental market. So even if individual rents did not change, as low rent properties are sold and high rent properties are built, average rents will rise.

The increases I passed through last month where accepted despite being far higher than previous years.

One thing puzzles me though because the government only asks how much rent is charged when a deposit is initially lodged. From what I can see they have no data on increases within the term of an agreement? It would seem to me the government are flying blind on this.

I believe you are correct.

Rent controls can't come soon enough for taxpayers;

A Child Poverty Action Group report said payments were made to up to 30 per cent of private sector tenant households and these payments covered the cost of approximately 10 per cent of estimated rents paid into the private rental market. “Thus the supplement represents a significant government subsidy of the private rental market.”

Kiwi. Noun. /ˈkiːwi/ /ˈkiːwi/ ​ (informal) a bird focused on a single investment class, that thinks he still punches above his weight, when in reality his whole economy is built on a property market of cards, dependant on immigrants to service his ever increasing laziness.

In my opinion, this whole mess has largely been caused by John Key and the mass immigration he inflicted onto NZ without ever campaigning on it and never asking us Kiwis and they gave him a Knighthood for it and now we are on this awful roller coaster catch 22 situation with immigration. We don't even have a Population Policy for NZ probably because its racist to do so. I despair for the country I love so much.

It was Helen Clarke who gave a whole bunch of overstayers a free citizenship despite them having less than a snowball’s chance in hell of qualifying under any skilled migrant category.

Jacinda Ardern is also responsible for issuing the highest number of immigrant visas ever. Immigration under this Govt is even higher than under Key. The only reason why nobody has noticed is that under Key New Zealanders stopped departing for Australia (and in fact, many returned home) while under Ardern the flight across the Tasman resumed, so NET migration numbers look like they havent changed much.

When Grant was asked whether he thought rents would increase as a result of his no interest deduction policies he said that they had received no such advice. This is what we are having to deal with. God help us

The PM said that rents had not increased to the same extent as house price. But they have increased 10% in just a year, which is at least triple inflation, and that increase was before the changes to the interest expense deductions. If house prices rise due to emergency interest rate drops, and then the government removes interest rates deductions, which many investors appear to have been relying on, then rents have to increase, because the shortfall has to come from somewhere. Or maybe they will get around rent increases a different way? But I guess many investors are in it for massive the capital gains anyway, and rent is just a bonus.

Its not triple the official inflation and that is the problem. Triple is the actual inflation, its probably more. The method they use to measure inflation is a crock so the sooner they fix it the sooner they may be able to actually manage the economy. The current situation is like trying to play darts while blindfolded after someone has spun you round in circles a few times.

House prices will fall a little, leveraged investors will be forced to sell, the only ones that will be able to still aford to buy will be the rich investors. Rich will get richer.

NZ Initiative study points out how rent controls, if implemented, need to be universal:

Another was that, if the control was not universal, excess demand for rent-controlled accommodation could spill over to accommodation that was not rent-controlled, forcing up prices there.

kate ,
Can u point me to where the NZ initiative says this.?

Quoted above.

I cant find that quote in ur linked article.?


Its okay, Ardern cant touch Australian rents, and Australia is where NZ investors will soon be buying rental properties. Those proposing rent control think they are so clever but they forget that money is mobile and can travel anywhere in the world. And New Zealanders are free to buy houses in most of Australia with no tax or foreign buyer restrictions. Not sure where all the NZ renters will live though, perhaps they will have to leave for Australia as well?

We rely too much on Govt actions! A good governance is about seting a constructive framework for the economy to run for itself while keep monitoring medium-long term issue. Less abrupt intervention on specific issues is the way. I feel like there are more and more people hoping that the Govt could interven almost anything comes up. Feel like living in a communist society with socialism policies everywhere.

Amateurs... warming up voting pen in anticipation

40,000 'Ghost Houses' sit empty in Auckland alone! Some are used as AirBnB's for 'cash' and many are investment properties and are 'Land Banked' properties.
A Stamp Duty on all dwellings other than the family home is a start.