New Zealand’s government is playind down the impact of its housing policy changes on rents, despite economists warning that they are likely to rise in response.
In a report responding to the housing policy changes announced last week, the ANZ Bank identified “the big negative externality [as] the possible impact on renters – the very people the government is trying to help into the housing market”.
Some property investors’ response to the government’s closing tax loopholes might be to increase rents to recoup the higher costs, the report found.
Westpac also warned that higher rents could result from the housing market realignment, drawing parallels with the UK phasing out interest deductibility from 2017 – though it added that tenants’ ability to pay would act as a constraint.
Property investors have railed against last week’s announcement, which sought to dampen speculation in the market driving prices up, and said rent hikes are an inevitability.
But at a post-cabinet press conference on Monday, Ardern said those warnings were “speculative” and that the government had no plans for further action as yet.
“What we’ve seen in our rental market has not mirrored what we’ve seen with house price growth,” she said.
“In fact, more often than not, it’s tended to mirror wage growth and so we will keep an eye on the numbers closely, but at this stage, we have no further plans in that area.”
She would not be drawn on what level of growth she would rule unacceptable.
Earlier on Monday morning Ardern’s chief press secretary had accidentally sent an email to Stuff, intended for his staff, asking for quotes from economists that could be used to rebut “the assumption rents will go up”.
Stats NZ recorded a 3% increase to rental prices in the year to February. By law landlords can only hike rent once per year, but there is no limit on by how much.
Disputes can be taken up with the Tenancy Tribunal.
The finance minister Grant Robertson said over the weekend that the government would be monitoring rents for potential increases and would “take action if necessary”.
But both the Act and National parties are calling on the government to rule out rent control, with Act warning that the blow to investors’ confidence was an additional toll on top of the housing policy changes announced.
Judith Collins, the leader of the opposition, said Robertson was “on the verge of dictating terms to landlords”.
“The sad reality is, renters have been thrown under the bus by this Labour government. “As was the case with its changes to rental standards last term, Labour has failed to grasp that forcing more costs on landlords will ultimately reduce the number of rentals on the market, making renting more unaffordable and exacerbating homelessness.
“This policy-on-the-fly approach is eroding the confidence of property investors and, ultimately, discouraging them from building more houses, which is exactly what needs to happen to solve New Zealand’s housing shortage.”