The Government’s housing plans, announced this week, will have adverse effects on renters, says ACT’s Brooke van Velden.

ROBERT KITCHIN/Stuff

The Government’s housing plans, announced this week, will have adverse effects on renters, says ACT’s Brooke van Velden.

OPINION: This Government came in with two noble promises: fix housing, and show us a warmer, kinder style of politics. We know housing’s actually got worse, but the surprise this week was the divide-and-conquer tactics they used to cover it over.

The Government’s new housing package is designed to ‘tilt the balance’ towards first-home buyers by targeting investors. The problem is, when you meet those people you realise how connected we all are.

I know a newly married couple who hopes to one day teach a child to ride a bike on their driveway and hear dinner table stories of who the fastest swimmer at school is, and the names of new friends. They’ve found a small but comfortable home to rent while putting away money for that future first home and family.

This week a widow told me she’d invested in one rental to help build a nest egg for her retirement. She has her own home with just enough space for the grandkids to visit in holidays. But she hopes her investment will provide that little bit more stability for the future on top of Super.

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Now imagine the widow is the couple’s landlord. Tax her harder and she’ll raise the rent. She’s not mean-spirited, she yearns for her tenants to have what she and her husband had. What will they cut back on? Their first home deposit.

The Deputy Prime Minister talks about choosing sides, but as the Prime Minister famously said in another context, we are one.

So, what taxes have the Government proposed?

There will be an increase in the bright-line test from five years to 10. Even Treasury says this is likely to put rents up, which will make it harder for tenants like that young hopeful couple, saving for a first home.

They’ve also brought in a rule that means you might be a ‘speculator’, as the Government likes to say, even if you didn’t know it.

Imagine a young professional who’s worked hard to afford a unit on the train line to the city. She’s being considered for a posting at her company’s overseas office. Now she’ll have to consider paying a de facto capital gains tax, too.

The median house price is now $780,000, up 22.8 per cent on last year. If her property goes up that much again, she’d get a tax bill of around $60,000 for just one year away (at the 33 per cent tax rate). That’s going to affect decisions, such as getting experience overseas.

The Government will also remove interest deductibility. If a landlord was paying 3 per cent on a $500,000 mortgage, they’d now get a $5000 tax bill, every year. That’s a $100 per week increase in cost.

In a tight rental market, the widow will pass on that cost to the young couple. The Government thinks it has put a new tax on landlords, but tenants will pay.

Landlords’ tax bills are set to rise, says van Velden.

Abigail Dougherty/Stuff

Landlords’ tax bills are set to rise, says van Velden.

The ‘tight rental market’ is the clue. It’s why we need to build more homes. New Zealand isn’t short of land, but sections to build on. Investment is needed to get infrastructure like roads to vacant land so more houses can be built.

In fairness, the Government mentioned this. I say mentioned, because they haven’t done anything. The fine print says they’ll think about the detail of funding more infrastructure in June.

Even then, it will be just for housing projects the Government favours. ACT says we need wholesale reform of all infrastructure funding.

Rather than dividing and telling people to ‘chose a side’, the Government should be uniting New Zealanders behind good ideas.

The answer is not to punish, subsidise or reward depending on which voter is in front of a politician at any given time, but ask what rules make the boat go faster for all?

The answer is to create conditions where the current generation starting families can build like the Boomers did.

Brooke van Velden is the deputy leader of ACT.