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Summary
- Increasing rents could further deepen the housing crisis.
- New government policies and home loan costs could be contradictory.
- Need for balance to be struck to control the housing/rent situation.
With the housing crisis in New Zealand beginning to become a nagging concern for the government and the people alike, there are new developments in terms of rent. According to a new research, the increase in rents could be a cause for further concern. After the recent announcement by the government about investors not being allowed to offset their home loan costs against the rental incomes, it was being predicted that there shall be a rise in rents.
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Also read: Housing Market Set to Turn Bullish as Demand Skyrockets
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To raise the rent or not?
The rise in rents would be detrimental to the current situation. There is also a prediction of entail properties becoming lesser in number. As a result of this, Chloe Swarbrick, the Green Party MP, along with other tenants, advocates to further press on the matter of rent controls. On the other hand, the Finance Minister Grant Robertson is of the view that the Government shall have to take measures to control the situation if rents were to be raised to deal with the changing rules of tax change.
It was further found that Meghan Woods, the Housing minister, consulted with the Urban Developments officials along with the ministry of housing, about imposing temporary control on rents while the tax policy changes are put in place by the government. However, there are many that feel rent control is not the answer to this problem. They are of the view that rent control would mean either placing an upper limit on how much the rent can be increased in a course of time or an upper limit to the total rent. This is, however, clubbed with a restriction about eviction from the property.
Maintaining the system balance
Dr David Law from NZ Initiative was of the view that most economists would agree with the fact that charging a rent lower than a certain figure would in turn put the entire system in a fix, putting strain on the quality of rental accommodations in the long run.
One of the consequences of this development could be that the landlords would sell their properties to the owners/occupiers, which would reduce the rental supply. The other case could be that if the control on rents was not uniform, there would be a rise in demand of properties that were rent controlled and would result in increasing prices again.
Also read: Housing Unaffordability Rising Faster In Western Countries
