New Zealand - A warning

not an impossible scenario , and such a strategy may equally turn toxic imagine a corporate slum lord with hundreds of thousands of unhappy tenants

could you imagine a government disciplining a bad actor that say housed 10% of the population

 

or 10% of the population if they became unruly ?

 

Let's take another scenario
Purchase a commercial property at a $1m cost 7.5% net yield interest cost at 2.7pc
Rental $75k less interest $27k net profit before tax $48k (less depreciation tax effect so taxable profit $38k) less tax (@28%) net profit after tax $38K.
If interest rate goes to 6% then profit after tax $14k

Warning; be prepared to make lots of money

 

Hi Beano. You seem to be assuming this is a company holding (tax 28%)? Yes for sure companies holding commercial would fare much better, and it does seem to me like the lowest political risk.

That said I think you've missed the point entirely? Interest is not deductible. Unless that applies only to resi not commercial?

 

The proposed NZ new tax rules will be:
1. Residential only and some new resi is excluded
2. Not apply to some business entities. A comany does not mean there is a business..
3. It will be phased in (like the UK) over a period of 4 years
and the precise law is yet to even be drafted and then appoved. It was an announcemnet by the NZ PM of proposed measures to assist first home buyers and limit speculation which has driven some NZ prices 25% in the past year. (Not unlike the predictions here)

 

Does anyone know in NZ is the ratio of private/investor to state/government provided rental accomodation similar to Aus?
I believe Aus is approx 97% - 3% ( stand to be corrected on that split).

 

Approx 30% of homes are rented in Australia. Bankwest did a good research paper on the Australian rental market particularly as relates to the "private" sector. Australian ranks quite high in private ownership of rentals v NZ (which isnt even on the top 37 countries list). NZ also doesnt have a "state" system and their housing authority is a national one and also city based for regional co-ordination only but is funded by the Commonwealth Govt so comparison is somewhat different. The Bankwest report indicated in Australia 11% of renters rent from state housing but there are also other non-state sources of accomodation such as co-ops, churches etc. Variance on a state to state basis is significant eg NT has a very high % of state rent v total market but is a low % of population.

https://bcec.edu.au/assets/BCEC-Private-Rental-Sector-in-Australia-Report_final_web.pdf

NZ have substantial raw data (Corelogic) available as well. It has different sources and measures and may be difficult to compare side to side.
Housing market indicators

 

“We need to incentivise property investment in WA so we can meet the demand for rental housing.”
https://www.smh.com.au/national/per...st-they-have-in-15-years-20210401-p57fu9.html

 

Damn those investors for pulling out in 2017!

 

Seems to be quite a few pulling out now also, as well as moving back to Perth to their old homes

 

Interest is deductible for commercial and some residential properties.

The example I used is for a commercial property.

I will comment more on this when I read the legislation (which has not yet been drafted)

 

Joh Belkiepetersen was trying to do this 30 years ago (The government should be encouraging employers to diversify their workforce into regional centres,) once the Gerrymander was stopped and the Nationals lost power we now see the results of not continuing his vision. More congestion and water scarcity in the Southeast.
now insurance companies and banks are making it difficult to lend and insure in the north further driving the development dollar South.