News & Updates

Recent updates

24-12-2008

Thomas Chin reports on legislation of interest in 2009

When Parliament resumes in February 2009 two major pieces of legislation of interest to the Federation will be on the business agenda, the:

Residential Tenancies Amendment Bill (No 2) and
Unit Titles Bill

Other business will include Parliamentary consideration of the:

Report of the Commerce Committee on the Inquiry into housing affordability in New Zealand. The Committee’s terms of reference included examining the “impact of increasing demand for residential properties by investors”. It was reported that submitters were divided on tax treatment of property investment; there were those that thought benefits such as expenses and losses coming off tax bills and the largely untaxed capital gain contributed to demand and raised prices, but others said any change would hurt tenants and deductions homeowners claimed were equivalent to those business would claim.
Report of the Finance and Expenditure Committee on the inquiry into the future monetary policy framework. As previously reported, the Committee found no evidence in favour of additional controls such as mortgage interest levies and they did not recommend a capital gains tax (although this is favoured by the Green Party). On ring-fencing losses, the Committee made no specific recommendation on this, but considered that the Government should be aware of this potential tax opportunity. As ring fencing has not been categorically ruled out this issue needs to be closely monitored.

POLITICS – RTA Bill

Housing Minister Phil Heatley has indicated that he is to personally take charge of the Residential Tenancies Amendment Bill and the Unit Titles Bill.

Elsewhere, it is understood that Greg Groufsky, previously Deputy Chief Executive Service Delivery has been seconded to the Department of Building and Housing Chief Executive’s Office to assist with the transition to the new Government.

CAPITAL GAINS TAX - Rejected

In a clear case that the Treasury still has an agenda to attack residential property investors, its recent briefing papers to the new Minister of Finance (see: http://www.treasury.govt.nz/publications/briefings/2008/big08.pdf) recommended that a capital gains tax be introduced for investment property.

Consistent with the National Party’s election policy, the CGT proposal was rejected by the Hon Bill English.

On other tax measures of interest to property investors, ring-fencing losses and the future of LAQC structures, the paper made no reference however, they remain preferred tools to be used by the Treasury (and IRD).

Elsewhere, in briefing papers to the Minister of Revenue (Hon Peter Dunne) the IRD recommend “auditing property transactions to ensure that tax rules are compiled with”.

This reflects IRDs continuing a crack down on property speculators for unpaid tax especially from those who have made a high number of buying and selling property transactions.

IRD have also noted the increased number of companies (including LAQCs) and trusts used to shelter income from higher rates of personal tax. (See: http://www.taxpolicy.ird.govt.nz/)

Home insulation – National Govt policy

The press reports that Environment Minister Nick Smith says work is under way to launch a home performance rating mark.

The Minister has also given an assurance that Energy Efficiency and Conservation Authority (EECA) insulation programmes will continue - although the new Government has made clear it does not support Labour's pre-election pledge to spend $1 billion on home insulation in the next 15 years.

To date some 50,000 homes since 1996. free insulation retrofitting has been available for low-income families. About 2,500 Auckland homes have been retrofitted in the past year.

Elsewhere, Housing Minister, Phil Heatley has announced that there would be a cap on the number of new state houses to be built.

HOUSING POLICY – Maori Party

In an early indication of the Maori Party position on housing matters, the Party has supported the National Government policy of upgrading the state housing stock, particularly in addressing the lack of insulation and heating.

In other areas, the Maori Party also favours a review of the accommodation supplement to address overcrowding and homelessness.

ENERGY EFFICIENCY – Building warrant of fitness

Adding to the debate has been the Association of Building Sustainability Assessors and the New Zealand Business Council for Sustainable Development.

ABSA and the NZBCSD recommend the introduction of a mandatory rating system for homes, similar to a Warrant of Fitness check for cars.

An element of a rating tool will be the amount of energy that a homes uses. The Home Energy Rating Scheme is a tool to analyse the amount of energy a home uses.

The Home Energy Rating Scheme was developed by the Energy Efficiency and Conservation Authority and launched late in 2007. It rates the energy efficiency of a home using a star rating, similar to that on an energy-efficient appliance.

Elsewhere, the NZBCSD has suggested that the Government's accommodation supplement would only be payable where rental properties comply with standards, and a rent supplement paid to the landlord of homes with the new warrant of fitness.

The good news for property investors is that Housing Minister Phil Heatley has said he won't be introducing a warrant of fitness for rental properties.

SELECT COMMITTEE – Personnel

Two important select committees of interest to the Federation include the Social Services and the Commerce Select Committee. These are the customary committees that examine housing and residential tenancy issues.

MP	Social Services Committee
Chester Borrows	National Party, Whanganui
Sue Bradford	Green Party, List
Jo Goodhew (Chair)	National Party, Rangitata
Annette King	Labour Party, Rongotai
Tim Macindoe	National Party, Hamilton West
Todd McClay	National Party, Rotorua
Rajen Prasad	Labour Party, List
Katrina Shanks	National Party, List
Su'a William Sio	Labour Party, Mangere

The National Party has majority on this committee.

MP	Commerce Committee
John Boscawen	ACT New Zealand, List
Charles Chauvel	Labour Party, List
Clare Curran	Labour Party, Dunedin South
Lianne Dalziel (Chair)	Labour Party, Christchurch East
Te Ururoa Flavell	Maori Party, Waiariki
Jo Goodhew	National Party, Rangitata
Peseta Sam Lotu-Iiga	National Party, Maungakiekie
Katrina Shanks	National Party, List

The Labour Party’s Lianne Dalziel chairs the Commerce Select Committee. National will need both major partners (ACT and the Maori Party) to have a majority.

END