Landlords

PHOTO: Housing crisis

Landlords‘ threats to sell up or massively hike rents are probably unfounded, experts say, with their new costs dwarfed by the capital gains they’re making.

The Government last month said it would phase out a “loophole” which allowed landlords’ to use interest costs to reduce their tax liabilities, something owner-occupiers can’t do.

In response, landlords said they’d have to increase rents or sell their properties, in either case potentially forcing tenants to find somewhere else to live. A Property Investors Federation (PIF) survey of its members this week found 77 percent were planning to hike rents and 22 percent sell. President Andrew King said the average extra cost for landlords would be $3140 per property.

But economists at housing market analysts CoreLogic are sceptical.

“We’re thinking that actually the effects over the next year or two years might actually be pretty limited,” senior property economist Kelvin Davidson told Newshub.

“The increase in tax, it gears up, it ratches up over a number of years – so the extra tax cost over the next one or two years is actually relatively small, and certainly small in relation to the possible bright-line liability.”

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