Looking forward: government and property
As we look forward to the second half of 2019 it’s crucial that we have a look at government initiatives that could affect the property market. As we have seen in the first half of this year, proposed changes and actual changes from the government can have a ripple effect on the market – one only needs to look at the foreign buyers ban or the proposed capital gains tax.
So with that in mind, let’s have a look at some of the government initiatives that could affect the market as we head into the next half of 2019:
Vacant land tax
The only change to the tax system the Government’s considering making to improve housing affordability in the near future is the introduction of a tax on vacant land or property. Finance Minister Grant Robertson is a fan of the idea, classified as a “high priority” in the Government’s tax work programme.
It could be seen as a way for Robertson to please those that were upset with government not going through with the capital gains tax, but the vacant land tax has its detractors with both the Treasury and the IRD saying there’s no evidence to suggest it’ll stop land bankers and improve housing affordability.
But Robertson doesn’t seem phased by the pushback, stating, “Differences of opinion between politicians, the Treasury and the IRD are many years in the making, so we’ll have a look at it.” It will be interesting to see if this tax gets through parliament and what affect, if any, it will have on the market.
Build-to-rent schemes
Housing and Urban Development Minister Phil Twyford is seeking advice from officials and talking to developers about the possibility of the government getting involved in build-to-rent schemes..
The incentive is in its infancy, with some ideas being floated about how to get developers on board, Twyford stated the idea wasn’t to provide developers with subsidies, rather floating the idea that the government could make Crown land available to developers, allowing them to defer payments for the land until their developments were completed.
The opposition party is worried it will cut out so called “mum and dad” investors, but Twyford made it clear that the ultimate purpose of such build-to-rent arrangements would be to increase the supply of long-term affordable rentals.
KiwiBuild Retooling
Housing Minister Phil Twyford has states that the government will recalibrate the KiwiBuild scheme further after missing their initial goals by a considerable margin, with Twyford stating that “We are doing a reset of KiwiBuild, and are considering all aspects of the programme, and the broader housing programme”.
One KiwiBuild contractor has stated that the Government needs to broaden the criteria for KiwiBuild homes to bring in more buyers, Mike Greer Homes has so far built seven KiwiBuild houses in Canterbury. None of have yet sold, while five have been on the market for more than 80 days. Greer wants to see the criteria reworked and loosened so more people can qualify for the scheme “The best thing to do is to make it easier for people to qualify for KiwiBuild. It is too hard.”
It will remain to be seen what changes will come to the scheme as the government continues to recalibrate it in the coming months.