POLITICAL & REGULATORY REPORT for January 2012
POLITICAL & REGULATORY REPORT for January 2012
THE YEAR AHEAD
As is traditional for at this time of the year, the following paper previews some of the regulatory, tax and policy matters that may effect the Federation and its residential property landlord members in the coming 12 months.
Politics
Late last year the Government announced its full Ministerial line-up. Ministers of key importance to the Federation include:
· Phil Heatley – Housing
· Tarian Turia – Associate Housing
· Maurice Williamson - Building and Construction
· Peter Dunne - Revenue (responsible for IRD)
· Chester Borrows – Courts (responsible for additional court sitting days to address tenancy tribunal waiting times)
Of the larger opposition parties, the following members have responsibility for “housing” issues:
· Labour – Annette King (previously Moana Mackey)
· Greens – Holly Walker (previously Gareth Hughes)
· NZ First – to be advised
Other relevant Parliamentarians are MPs sitting on the Social Services Select Committee. This body traditionally considers housing and residential tenancy matters, amongst other topics.
Social Services Committee members
· Jacinda Ardern Labour
· Jo Goodhew National
· Dep-Chair - Melissa Lee National
· Jan Logie Green
· Sam Lotu-Iiga (Chairman) National
· Tim Macindoe, National
· Alfred Ngaro National
· Rajen Prasad Labour
· Richard Prosser NZ First
· Mike Sabin National
· William Su'a Labour
The Select Committee may further consider the wider issue of boarding houses during this term of Parliament.
Parliament resumes from its summer recess on Tuesday 7 February.
RELEVANT matters – Watching brief
Affecting all aspects of the rental property industry in some shape or form, in the coming year, will be:
- The Productivity Commission’s final report on housing affordability
- The Law Commission review of family trusts
- The Government’s home insulation program
- Energy standards proposals
- Pressure on the Accommodation supplement
Productivity Commission
The Productivity Commission released its draft report into housing affordability in December 2011. The report is open for public comment until 10 February. A final report will be submitted to each of the Ministers of Finance, Environment, Housing, Building and Construction, and Regulatory Reform by 16 March 2012. Of particular relevance for the Federation will be the Government response to the Commission’s findings and recommendations on the tax treatment of rental properties. The response is expected by mid-year.
Trusts
During 2010-2011 the Law Commission published a series of discussion papers in its review of the law of trusts (especially family trusts).
The Commission has considered submissions and comments on the papers and has been particularly interested with the transfer of assets to trusts that may avoid tax and other obligations.
The Commission is currently seeking comments and submissions on its fifth paper ‘Court Jurisdiction, Trading Trusts and Other Issues’ by2 March 2012.
Home insulation
The Government’s current home insulation and clean heating programme will continue in 2012. There will be a specific focus on low-income households, as agreed with the Maori Party. The goal is for every State house built before 1978 that can be insulated, to be insulated.
The Government has also committed to insulating every home that isn't insulated. Private landlords will continue to be able to access the insulation subsidy.
Members’ Bill
To be a major focus for the Green Party in the coming Parliamentary term will be its private members’ bill “The Energy Efficiency Conservation (Warm Healthy Rentals) Amendment Bill”. The Bill, if enacted, would make it mandatory for landlords to meet minimum energy efficiency standards. The Bill would also introduce penalties for those that did not fulfil the requirements.
The Bill is expected to be sponsored by Green Party housing spokesman Holly Walker. Post-election, Walker has publicly reiterated that there is a need for mandatory minimum standards for rental accommodation.
Accommodation supplement
We will continue to monitor the issue of the Accommodation Supplement (a government payment of around $2.2billion per annum to assist people to afford their rent). There is considerable pressure from various groups for the subsidy to be overhauled, be only available to people who rent “accredited” (ie meeting minimum performance standards) houses[1] and for the cost to the Government to be contained. For example, the Green Party views the AS as a “landlord subsidy”. Notwithstanding this, early intelligence suggests that the Government is broadly comfortable with the AS.
TAX MATTERS
At the time of writing, the Government has not signaled any significant or new tax changes for the short to medium term (following 2011 changes to the depreciation regime and LAQCs arrangements). Importantly, during the election campaign the Prime Minister rejected the imposition of a Capital Gains Tax. For the duration of the National-led administration a CGT is off-the-table.
Meanwhile, the Labour Party and Green Party’s, economic policies were rejected by voters including their 15% CGT policy and the ring fencing of property investors’ losses. The policies should gather dust, at least for the time-being. That said, the CGT debate should slow a little with the Productivity Commission draft report finding no grounds for a CGT or ring fencing of rental loses.
In other developments the Government has given additional resourcing of $100m to Inland Revenue to enforce existing property tax laws. One area IRD are targeting are individuals who may have sold properties within a short period of ownership.
END
[1] Families Commission 11/1/12