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09-05-2011

King's Counsel

Landlords.co.nz

For the new Property Investors Federation president Andrew King, taking on the top job in an election year has given an extra focus to the Federation's role lobbying on behalf of property investors.

"We've got the election coming up and there's still quite a few calls from vested interest groups about increasing taxes or further taxes on rental property owners, so in the short term a big part of our lobbying activity is going to be focused on that."

King said that in the wake of tax changes to depreciation the biggest concern he hears from Federation members is about additional taxes hitting property investors.

Those fears have been heightened ahead of the next Budget on May 19, which the Government has flagged as a savings and investments Budget, and as voices within the financial sector call for measures to address Kiwi's bias towards investment property as the preferred investment.

"If they [the Government] bring in anything else I think it will have serious implications for the whole industry, and it'll be bad news for tenants as well as rental property owners, because they're not going to be able to get the rental properties they need" he said.

"If they don't want tenants to be locked into being tenants then they can't really increase the cost of providing rental accommodation because it'll mean that rents will rise and you will have a situation where tenants simply cannot afford to save for a deposit for their own home. It'll lock them in."

King said a recent survey of Federation members found the average cost of depreciation being removed was $45 per week.

"So if you look at the 33% marginal tax rate that's going to cost around $15 per week per property so over a year that's $750 per property. So it's around a 5% increase in rents just to cover that one point."

He also said that while the survey revealed just 8% planned to sell property to cope with the changes, 31% of those previously planning to acquire additional rental property had changed their minds.

While he was in favour of measures in the Residential Tenancy Amendment Bill, especially measures to bring in financial penalties for tenants who default on rent payments, his main focus remains on lobbying against further tax changes.

"I really hope that they do resist those calls from vested interest groups. It is ridiculous, at a time when the financial sector has wiped out the life savings of thousands of New Zealanders how can rental property owners be the villains in our economy?"

King believes financial services providers would be better off getting their own houses in order rather than calling for measures to penalise property investment.

"They've got to look at getting their fees down and actually get a better return, that's what they should be focusing on rather than looking for gains in their industry through trampling us. If they can lower their fees and improve their returns then people will gladly give their money to them."

King has one other warning for those looking to increase the cost of owning rental properties.

"At the end of the day the tenant will be the one that pays for it."

Tags: andrew king - residential tenancy amendment bill

Source: Landlords.co.nz

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