Friday, March 12, 2010

Mike Butler: Nats create enemy on the right

Glad to see that the NZ Property Investors’ Federation is going into battle over the proposed changes affecting property tax. The NZ Property Investors Association said landlords would lose on average $1750 a year if they lost the tax rebate and this amounted to $34 a week, which would be passed on to tenants, according to ONE News. Labour MP Trevor Mallard echoed the warning when he said the increase could be as much as $45 across 400,000 households.

While there are indications some owners have already put their rentals on the market, for those who stay there remain two options: Kick up a fuss and hope the Key government caves in, or see the problem as an opportunity, and eagerly anticipate the higher rents and even higher property values.

Regarding higher rents, one claim that is making its way around property investor circles is that when the Australian Labor government under Prime Minister Gough Whitlam (1972-1975) made a move against property by disallowing the use of property losses to offset profits in non-property income-earning activities, rents in Sydney went up 57 percent, and increased elsewhere in Australia by 37 percent.

However, further investigation revealed that the rent rise was more to do with the end of rent controls than ring-fencing property losses.

One thing that is certain is that treating residential property investors as scapegoats for the current government’s financial woes is going to create an enemy on the right among many National Party voters.

The NZ Property Investors’ Federation has operated as a support group for investors. It became a lobby group to deal with the drawn-out review of the Residential Tenancies Act.

Now it is a heartbeat away from becoming a nation-wide political organization with delegates, remits that are voted on at conferences, and national policies that represent its thousands of members.

It looks like the Key government, that has been steadily shifting to the left, has unwittingly created an enemy for itself on the right, among many of it's supporters.

1 comment:

Anonymous said...

Your comments on Australia are very interesting. Since this mad scheme was first mooted I have always thought that if John key is silly enough to go with it it will come back and bite him. In areas like this there are unintended consequences lurking behind every shadow - as the situation in Australia shows!