John Key’s land tax could push up rents

A land tax proposed by John Key as the answer to the housing crisis could push up rents and risks having no effect on skyrocketing prices, Labour’s Housing spokesperson Phil Twyford says.

“The Government needs to explain why the thousands of dollars overseas-based landlords will be forced to pay in land tax wouldn’t simply be passed on to tenants.

“National has refused to back Andrew Little’s Healthy Homes Guarantees Bill which requires heat pumps because they are worried a $2000 one-off cost would push rents up. But now John Key is proposing a much bigger annual tax on foreign landlords.

“It’s still highly questionable that a land tax of a few percent would deter foreign speculators who last year made capital gain in Auckland of 25 per cent.

“The Prime Minister has spent three years denying that foreign speculators are pushing up house prices. Now that he knows new data is about to prove him wrong, he’s softening the ground for a land tax.

“John Key’s land tax raises more questions than it answers. If the tax is too low, foreign speculators won’t be discouraged and they’ll just treat it as the cost of doing business. If it is ratcheted up as high as 10 per cent -- as the PM has suggested could be an option – then it will be a de facto ban, and in which case why not just adopt Labour’s ban?

“On the other hand, Labour’s plan to ban foreign buyers from buying existing homes would curb runaway house prices and channel billions of dollars of foreign investment into new builds. This is backed by 70 per cent of New Zealanders and the Property Institute.

“By ignoring the housing crisis for years, the National Government has created a generation of renters, locked out of the dream of homeownership. Now John Key’s proposed land tax is just yet more ineffective tinkering,” Phil Twyford says.