Housing Minister all at sea on interest deductibility

Tue, 08 Mar, 2022

“Housing Minister Megan Woods danced with delusion when I asked her a simple question today: Why wouldn’t putting the average landlord’s tax bill up $4,000 affect renters?” says ACT Housing Spokesperson Brooke van Velden.

“I asked the Minister what she thought removing mortgage interest deductibility would do to the cost of living for tenants. She came up with every answer imaginable except admitting the obvious, it will increase.

“The Minister’s simply refused to believe what economists, landlords, renters, and the Government’s own advisors know - interest deductibility limitations will increase rents. We need a Government that listens, unites people behind good ideas and policy that works, not one that holds its hands to its ears.

“The Minister pointed out that rental increases from 2013-17 and 2017-21 were similar. That may be true but there was no mortgage interest deductibility change in that period so the Minister’s argument is irrelevant.

“Meanwhile, Inland Revenue has said limiting interest deductibility for landlords will “put upward pressure on rents,” and will “reduce the supply of new housing development in the longer-term.”

"The real problem is supply. ACT says the current generation of first home buyers do not need new taxes, but to Build like the Boomers. We need major reform in infrastructure funding and planning, resource consenting, and building consents.

"Without supply side reform, the Government’s policy is just an attempt to choose who gets to miss out in a supply constrained market. And the Government can’t even get that right. ACT would reverse Labour’s Mortgage Interest Deductibility changes immediately.”