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Recent updates

31-07-2009

Political & Regulatory Report for July 2009

Residential Tenancies Amendment Bill – Select Committee processes

Written submissions to the Social services select committee considering the Residential Tenancies Amendment Bill closed on 3 July.

The Federation filed a comprehensive document commenting on 24 separate issues.

In the Federation’s oral testimony to the Committee on 29 July, 3 key issues were identified and elaborated on. These included:

  • Ensuring tenants are responsible for water and waste water charges
  • Defeating the proposal to require landlords to disclose premises previously contaminated by “P” and for this fact to be recorded on LIMs and tenancy forms and
  • Enabling all property managers and real estate agents to charge a letting fee

The Committee is scheduled now to receive a further departmental report (by mid August), drafting of its report and recommendations (during September) and finally tabling its report with Parliament by 5 October.

RTA BILL – Government position

In a recent speech to the Wellington Property Investors' Association, the Minister of Housing the Hon Phil Heatley reiterated that it was:

“the government's priority is to ensure letting accommodation is not too tough for the thousands of property investors who provide houses for almost one third of the population”.

He also said:

“We are committed to ensuring that legislation supports private sector rental options and encourages the supply of affordable and decent rental housing”.

To achieve this he said that the Government would:

“Retain the status quo on capital gains tax.
“Retain deductions for those whose rental properties run at a loss, as these provisions are also available to a number of other investment types”.

PROPERTY MANAGERS REVIEW – No regulation

The Ministry of Justice has completed the review of the regulation of property managers that commenced in October 2008.

The review focussed on the relationship between property owners and property managers, the risks for property owners and whether property managers should be required to comply with any specific duties and obligations.

Following completion of the review, the Associate Minister of Justice, Hon Nathan Guy, announced on 2 July that no new occupational regulation would be imposed on property managers.

The Minister noted that occupational regulation would likely have meant additional compliance costs which could have led to job losses. The additional costs would probably have been passed on to owners and tenants through rent increases.

HOME INSULATION – Star ratings

The Government has announced that three local councils are in the process of rolling out schemes which will allow ratepayers to pay off insulation, and in some cases clean heating, via their rates bills.

Of interest to the Federation, the New Zealand Business Council for Sustainable Development reckons 61% of rental property owners say their properties could be warmer and more comfortable - but 59% don't have the financial means to improve them.

Using the government’s insulation initiative announcement the NZBCSD also advocated for upgraded houses to be issued a star or performance rating “so potential buyers and tenants can see how healthy it is and how much less it will cost to heat each year.

TAX BILL – Associated persons rule

Parliament received the Finance and Expenditure Committee’s 854page report on the Taxation (International Taxation, Life Insurance, and Remedial Matters) Bill earlier this month.

The Bill proposes a number of big tax changes however of direct interest to the Federation, are the reforms around the definition of “Associated persons”. The changes are highly technical and designed to stop primarily land dealers, developers and builders escaping tax by operating through closely connected entities (e.g. trusts). Changes are to be effective 1 April 2010.

Some commentators have said that the bill’s proposals were discriminatory because they forced one group of property developers to pay tax while others would escape - "a capital gains tax by stealth”.

The proposed changes will not have retrospective effect and should not affect the status of existing investment property or property acquired before 1 April 2010.

The Bill’s next stage includes its second and third readings, both are expected next month.

Insolvency Amendment Bill – No Asset Procedure

Parliament concluded the committee stage debate on the Insolvency Amendment Bill during the month (22 July) and is expected to pass the draft legislation shortly. Of interest to the Federation, the bill amends the No Asset Procedure (NAP).

To recap briefly, the No Asset Procedure (NAP) scheme, cancels most debt if it totals less than $40,000 and the debtor has not previously been bankrupted or used NAP. NAP, lasts for one year rather than three.

An issue for landlords is that there is an increasing number of young people and prospective or past tenants using NAP to escape their debts.

A public register containing information on people who are in the NAP may enable landlords more information to make better-informed decisions on prospective tenants. People who have been on the NAP will have their names on the register for 4 years.


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