As the political football of a capital gains tax continues to be thrown around, we thought we would take a step back and have a look at what the Tax Working Group actually recommended. Obviously any change to taxes which may affect a huge numbers of kiwis will face some opposition on it's way to becoming law, but below is a summary of the major takeaways the Tax Working Group has suggested for New Zealand.
'The banks are at it again' as they say, with both Kiwibank and Westpac both putting out low mortgage rates of 3.99 percent in the last couple of days. First it was Westpac with a one year 3.99 percent fixed rate, and now Kiwibank has gone one better with a two year rate of 3.99 percent. This is all on top of record low mortgage rates throughout the New Zealand banking system last year.
So what does this mean moving into the rest of 2019? It's always to look into a crystal ball when it comes to mortgage rates, but given the fixed term one year rate of 3.95% ANZ offered last year was the lowest rate from a major bank since the middle of last century, these are definitely very competitive rates being put forward.
It's also important to keep in mind that there is currently $64 billion in debt throughout New Zealand. That's a 10% increase last year, so we might be getting close to a point where the banks have grabbed every quality customer available to them. Right now that means very competitive rates to keep the increase of customers and profitability, but as customers thin out, that model may need to change.
Either way, it certainly seems like an extremely competitive time to be in the market for a mortgage.
As we were browsing through the news the other day an article caught our eye. The story was about an Australian Masterchef finalist getting caught in a conveyancing property law scam. Australia is moving towards an electronic system nationally at the moment, so this sort of story is definitely a concern on that side of the Tasman, but there are a few differences between Australia and New Zealand that should give kiwis a bit of comfort in their next property transaction. Here is a quick overview on why New Zealand has a far more robust system than Australia, and how Conveyonline & Langley Twigg Law operate to keep the transaction scam free:
In this digital age it seems like there will always be scammers trying to find situations to take advantage of. It pays to be cautious when it comes to your email account and as Langley Twigg outlined in an earlier blog, there are definitely a few things you can do at your end to avoid being caught in email scam.
With the election over and NZ First/Winston Peters looking like the king maker, we thought we'd dig a bit deeper into their policies when it came to the housing market. So what would NZ First do when it comes to housing?
PLACES TO CALL HOME
Initiate the New Zealand Housing Plan to revamp the New Zealand housing market covering housing availability and affordability as well as rental homes supply and affordability.
Reduce pressure on housing by slashing 72,400 foreign migrants net, who entered New Zealand over the past year with most settling in Auckland.
Ensure that only New Zealand citizens and Permanent Residents can buy freehold land.
Recognise that there is a housing crisis by establishing a new state agency to acquire and develop land for residential development:
Provide first home buyers with affordable residential sections under long term low interest sale and purchase agreements of up to 25 years.
Purchasers would build their own homes using normal bank financing, with title to the section transferred to them and the amount owing for the section, secured by a second ranking statutory land charge.
Provide subsidies to insulate 53,000 houses ever year.
Review building standards to ensure better building quality including earthquake and landslip resistance.
Require compulsory and adequate insurance cover be acquired by all building owners.
Fully monitor and enforce the terms and conditions of existing approvals by the Overseas Investment Commission for the ownership of land by non-residents.
BETTER RENTAL STOCK
Assist local authorities to develop aged-care housing and public rental housing projects.
Provide accelerated deprecation for landlords to invest in energy efficient housing from insulation to HRV systems.
So - in a nutshell...make sure foreigners don't have as big of a stake in our housing market...and make more land available for first home buyers. If you're a New Zealand citizen or permanent resident, there's not much too much change coming if NZ First have their way.
Of course...with how unpredictable this election has been, there's nothing to say the Green's won't swoop in with National and make Winston irrelevant. As always...watch this space!
This election season property affordability has been a massive talking point. Naturally, most of the parties have come up with a plan for what they'll do to 'fix the housing crisis'. Below is a bit of a summary in a nutshell of what each party is proposing when it comes to housing and property.
In a nutshell, it's a steady as she goes approach. National stress that the work they've started doing should continue and will start to have effect. The approach seems to be based on the premise that housing supply and red tape is the issue.
Build 20,000 new houses for private sale in NZ.
Make it easier to build houses by tweaking the RMA.
Keep using Special Housing Area, lending to local Council's to build infrastructure and selling Crown land for new housing developments.
Labour seems to be sitting on a fence a bit between the issue being housing supply, versus speculator demand. Their solution combines building more houses and looking into taxation - but without giving firm specifics of what that tax might be.
Build 100,000 houses to sell to first home buyers.
Restrict residential home ownership by non-residents.
Tax capital gains on investment properties sold in the first five years.
Expand programs that support Maori home ownership.
Remove limits on Auckland urban boundaries and density.
Create a tax working group to look at a Capital Gains Tax (that wouldn't include the family home).
The Opportunities Party
Gareth Morgan and TOP seem to have the plan that differs most from other parties. They point out that demand from speculators and a tax loophole when it comes to property is the issue.
TOP want to tax income from all assets (including the family home) at a rate of about 1.5%.
The extra earned from that Wealth Tax will then be redistributed as income tax (about 30%) - making 80% of NZ better off.
For over 65's, the Wealth Tax could be paid off, or accumulated into a loan that became payable upon the sale of the house or death (effectively becoming and estate tax).
Morgan points out that these measures are what the last 2 tax working groups have recommended.
NZ First also falls in the housing supply being the issue camp. More houses and easier building is their focus. They don't really identify how they are going to pay for the plan.
Build 140,000 houses for first home buyers.
Restrict land ownership to non-residents.
Change the building process to allow faster approvals for new housing.
Encourage local authorities to provide more affordable housing and land.
The Greens have a pretty similar approach to Labour with it geared up a little bit more. They want a Capital Gains Tax, but again, it doesn't include the family home.
Build 10,000 homes to sell to low income earners through a rent-to-own scheme.
Introduce a Capital Gains Tax on all assets except family homes.
Restrict residential property ownership by non-residents.
Close negative gearing and combined collateral exemption loopholes.
Allow student loan borrowers to defer student loan repayments to save for a home deposit.
The Maori Party also focus on the supply issue, with their Maori focussed twist to it. They want to build more homes, but also give Maori and Pasifika a bigger voice and more jobs in the construction sector.
Build 90,000 more homes for social housing and private sale.
Establish a Minister for Maori and Pasifika Housing.
Increase financial support for low-income first home buyers.
Subsidise private developers to include affordable houses in new developments.
Add more Maori and Pasifika in the construction sector.
As you'd expect, ACT takes a less invasive approach - focusing on the tools to let individuals and businesses self correct the market. By cutting down on rules, they also focus on the supply side of the equation.
Replace the Resource Management Act with less rules.
Abolish the rural-urban boundary.
Share GST from housing construction with local councils.
Replace building safety and quality standards with mandatory private insurance.
When you run through all those approaches to housing, there is a definite trend from the 6 established parties - that supply is the issue and by building more houses, the market will correct itself. While the more left leaning parties like Labour and the Greens do look at the demand side of the equation, TOP is the real outlier with a dramatic tax change proposed.
Hopefully this gives you a bit more insight and understanding into what all the parties want to do when it comes to housing this election!
Buying or selling a home can be one of, if not, the biggest transaction that you might make. At times it's easy to get lost in the blur of legal jargon, or the excitement of making such a big purchase or sale of real estate, but it's hugely important to stay on top of it all and understand what's going on. You'll hear agents telling you one thing, or friends in family maybe saying something else, but at the end of the day the property will be yours, and so you have to be comfortable with the end result. In that regard, knowledge is power in the conveyancing process.
Every now and then we come across some words of advice that are too good not to share. To get this blog kicked off we just want to share a few sage words of advice from the New Zealand Law Society. They advocate heading to a lawyer whenever you are undertaking a big transaction like buying or selling property and we tend to agree. The kiwi do it yourself attitude can sometimes get us into tricky situations when corners are cut, and when hundreds of thousands of dollars (or millions for the Aucklanders reading this!) are at stake, even a straight forward contract is worth a quick once over.
So - make sure a lawyer is involved in your transaction. At conveyonline we use a trusted Hawkes Bay law firm - Langley Twigg Law. They're our choice because they've been around for decades, but have a modern approach to getting the job done. It's a mix of reliability and flexibility and that's really important to our customers. You can also rest easy knowing they are part of the Lawlink group of lawyers - meaning they are a provincial firm with national ties, combining the cost effectiveness off the regions, with the knowledge and structure of a big law firm.
Here's a few tips from the Law Society on why you should use a lawyer (from their Buying or Selling Property document from 21 March 2013). "Remember:
While you are out scouring New Zealand for the best property deals, or just looking to find a purchaser for your house, our team will be hunting the airwaves keeping our eyes and ears open for any news in the property world.
We'll aim to keep this page regularly updated with all the property news and views that are humming around New Zealand. If something major happens in the conveyancing world, we want to make sure our customers and followers know about it.
Are you ready to conveyance? Have you figured we'd be a good property law option? Our conveyancing team is ready to help!