Saturday, January 30, 2010

Maximum rent

Stephen Franks is musing about the proposed property tax and its effect on the rental market/ housing availability. Which prompted this comment from me (I risk broadcasting the idea to deter National, not to encourage the statists);

I have also pondered this in a vague sort of way. A great deal of rent is currently paid for with the accommodation supplement ( $1 billion annually). If rents rise as a result of a property tax, under this government's approach of compensating the 'poor' for any rise in their living costs, the accommodation supplement will also have to go up. How much of the extra revenue raised will be offset by the extra expenditure?

The Left puts up two irreconcilable demands. As you put it "soak the rich", and subsidise the poor. But while the landlord has freedom of pricing, nothing has been achieved except more cash transfer. The same happens with employment. While on one hand the Left wants workers topped up by the state, they also rail against subsidising the employer. Hence a minimum wage is legislated.

So don't be surprised if the Left start talking about a maximum rent. If National go down this road they will have to contend with this demand, and as Mr Key has already fiercely asserted that the 'poor' will be compensated for any rise in GST, he will be in a very weak defensive position.


Anonymous said...

Land tax - what it could mean for you

By Anne Gibson View as one page
4:00 AM Saturday Jan 30, 201

Owners of the Auckland's 443,200 homes would have to give the Treasury an extra $443 million if they were subject to a 0.5 per cent levy. Photo / Herald on Sunday

Aucklanders would be hammered by a proposed land tax, with households facing an annual bill running into thousands of dollars.
According to conservative estimates, owners of the region's 443,200 homes alone would have to give the Treasury an extra $443 million if they were subject to a 0.5 per cent levy.
A land tax was one of several in the tax working group's recommendations to the Government this month.
An economist has also given warning that such a move would lead to falls in property values and an increase in rents.
If the value of land was taxed, the rich would pay more, but people on low incomes who have property would be the hardest hit.
Superannuitants living in the wealthiest eastern and northern suburbs of Auckland and others on low incomes would be particularly affected as they would not necessarily benefit from the proposed tradeoff of lower income tax.
Remuera households could be paying $6500 each and those on the North Shore $1300-$4000 a year. Financier Mark Hotchin of Hanover could be paying almost $100,000 a year for his three-section block in Paritai Drive, Orakei, and Prime Minister John Key would be up for much the same on his slice of St Stephens Ave in Parnell.
Southlanders, living on New Zealand's lowest-price housing land, would be paying just $30 a year for the average section.
With Auckland's scarce land supply commanding the country's highest prices, residents would pay comparatively more than other New Zealanders.
Real Estate Institute figures show Auckland's median section price is $227,000, so the proposed 0.5 per cent land tax would draw a new annual $1138 payment.
December's national median section price of $170,000 would draw $850 in land tax a year.
Bryan Thomson, CEO of Harcourts real estate, said such a tax would penalise people who had scrimped and worked hard to get ahead.
Peter Thompson, a director of Barfoot & Thompson, said low-income homeowners in Auckland's poorer suburbs could suffer the most because their house values were low and sections were worth more.
Westpac economist Dominick Stephens said a land tax might cause house prices to drop 4.4 per cent nationally and push up rents only 2.2.
The Victoria University-led tax working group recommended taxing the unimproved value of property - the land, not the house. It said a 0.5 per cent levy would raise $2.3 billion.

Why land tax won't fly. Suit Bill of course and also guarantee his safe seat but not going to reelect Key.
More @

Anonymous said...

Warwick Quinn, chief executive of Master Builders, said the building recession was not over and any recovery was still fragile but he expected consent numbers to rise slowly throughout this year.


2004 - 31,423
2005 - 26,023
2006 - 25,952
2007 - 25,590
2008 - 18,456
2009 - 14,425

Year to December, all dwellings including apartments
-Source: Statistics NZ.

At some point very soon the grapgh lines between no's of houses, no's of people and house prices are going to clash.
Rents up with a bang. New houses costing more.
Business as usual.

Anonymous said...

People on low incomes don't deserve property.

A land tax, higher GST, and a drop in the top tax rate - ideally make it zero, or at least lower than the other tax rates - all sounds good!

Anonymous said...

I have been a landlord for 30 years. The tenant always pays.

So whats new?


Manolo said...

Key will dither and hesitate before doing nothing.

The PM and the National government are an utter waste of space.