TAURANGA RENTALS LTD
MREINZ
  • Home
  • Our team
  • Rentals
    • Tauranga Area
    • Papamoa/MT Maunganui
    • Rural
    • Tenant Application
    • Tenant Responsibilities
    • Tenant Login
  • Landlords
    • Healthy Homes
    • Landlord Login
  • Newsletter
    • Media
  • Contact

May 2018 Newsletter

May 22, 2018Tauranga Rentals

Woe is Us For Being a Landlord

This week one of our Owners sold their rental property.  It was something of an emotional event, as it had been their first home, their first home until their little family outgrew it.

It’s a fairly humble home in a humble area, but it’s saved by its location, a jaw-dropping view of the sea. They fell in love with it on the spot.

Rather than sell it, they did what lots of Kiwis do – suck out some equity to buy a new home and rent the old one out.

Twenty years later, they’ve decided to let it go, hopefully to a first-home buyer.

As a landlord, they don’t expect any sympathy. They hardly breathe the word when others don’t have a home.

And it’s true, bad landlords do exist. But they did try to be a good one and take a business-like approach.

Tenants – they were lucky. Most of them were good, one was not.

Maintenance, there was plenty. Like all ageing houses, it had disasters: the header tank blew, flooding the house, a corner of the deck slumped, a leak in the bathroom went unreported, turning the bathroom and toilet into very costly mush. They’re not rich, but they fixed it all.

Of course, they’ll get some payback in terms of capital gain so again, no sympathy sought.

But it does bug me that running a rental is still not really viewed as a business, especially as the tax laws tighten.

In any other business, you can claim things like maintenance, losses and interest on your loan payments.

But it’s also true that the nature of property has given it a couple of big advantages that aren’t really related to tax at all.

For one, banks will lend a lot more on a property than they will for other forms of business.

And two, the capital gains – while not always as great as they have been in recent years – are untaxed.

However, capital gains are, in truth, often what makes the hassles of being a landlord worthwhile.

Many rental properties run at a loss because there’s only so much that tenants can afford to pay.

The Tax Working Group is looking closely at whether we have taxed income too heavily and capital too lightly but in the meantime, successive governments have skewed the playing field against property, arguing that too much has gone into housing when it could go into more “productive” parts of the economy.

The ability to claim depreciation has gone, even though buildings do lose value (it’s the land value that rises).

Proposed ringfencing rules will nix the ability for landlords to offset their rental losses against other income.

Upping the “Brightline Test” to five years, officially an income tax, is considered by many to be a capital gains tax by another name.

But if the tax does come in, fairness dictates that property should not be the only form of wealth that’s targeted.

In the meantime, we have to ask what effects these measures will have on our critically short rental market.

If we penalise landlords too heavily, will they go away? It’s hard to imagine that Kiwis will easily give up their addiction to property.

We believe they won’t because the banks have already ensured that anyone still in the game has plenty of equity and is therefore financially stable.

But as the capital gains flatten, I believe some landlords will definitely dip out.

That’s great news for first-home buyers, but it means a shrinking number of rental houses against an ever-growing pool of renters.

There is no single fix to our housing shortage. Ultimately, I think we will finally see the rise of corporate landlords with deeper pockets who can build houses specifically for the rental market.

They are common overseas and it’s well past time they came here.

Ma and pa landlords will always be around, but they’ll think twice now before they leap.

 

 

Archive

  • May 2022 (1)
  • April 2022 (1)
  • March 2022 (1)
  • February 2022 (1)
  • November 2021 (1)
  • October 2021 (1)
  • September 2021 (1)
  • July 2021 (1)
  • June 2021 (1)
  • May 2021 (1)
  • April 2021 (1)
  • March 2021 (1)
  • February 2021 (1)
  • November 2020 (1)
  • October 2020 (1)
  • September 2020 (1)
  • August 2020 (1)
  • July 2020 (1)
  • June 2020 (1)
  • May 2020 (1)
  • March 2020 (1)
  • September 2019 (2)
  • August 2019 (1)
  • July 2019 (1)
  • June 2019 (1)
  • May 2019 (1)
  • April 2019 (1)
  • March 2019 (1)
  • February 2019 (1)
  • November 2018 (1)
  • October 2018 (1)
  • September 2018 (1)
  • August 2018 (1)
  • July 2018 (1)
  • May 2018 (1)
  • April 2018 (1)
  • March 2018 (1)
  • February 2018 (1)
  • October 2017 (1)
  • September 2017 (1)
  • August 2017 (1)
  • July 2017 (1)
  • June 2017 (1)
  • May 2017 (1)
  • April 2017 (1)
  • March 2017 (1)
  • February 2017 (1)
  • December 2016 (1)
  • November 2016 (1)
  • October 2016 (1)
  • September 2016 (1)
  • August 2016 (1)
  • July 2016 (1)
  • June 2016 (1)
  • May 2016 (4)
© 2016 Tauranga Rentals Ltd. taurangarentals.co.nz: Web Development Tauranga: CreativeQ.co.nz