How many investment properties is too many?

[Oh_hunnihunni]

We forget I think, that ownership, like money, is a human invention. We could invent an alternative, if we wanted to. One that was fairer for everyone.

[Lilith7]

We forget I think, that ownership, like money, is a human invention. We could invent an alternative, if we wanted to. One that was fairer for everyone.

Yes - but we're human. We're idiots, as well as geniuses.

The world is a weird place. And humans are crazy.

[kiwimade64]

There was a referendum held in Berlin recently regarding the nationalisation of megaproperty holdings, which gave support to the idea that private individuals or companies should have limited numbers of residential investment properties. The local political leadership are now formulating legislation to go ahead with that proposal which will compensate landlords, nationalise their holdings, and limit future purchases.

With our current challenges around housing, should there be a limit to the number of residential properties that can be held in private hands? Or should we perhaps use taxation to persuade investors to look at more productive use of their savings?

https://www.newshub.co.nz/home/politics/...aland.html

I think limiting people to 1 rental property tax free when selling and then add capital gains tax to sale on all subsequent rentals would be enough to make an impact.
Its the property investors who hold 20 or 30 properties that are really the problem

I like this idea.  First rental, tax free.  From then on, the rate of tax increases as you purchase more properties.  The more properties, the higher the tax.

[Oh_hunnihunni]

How though, do we get such a regime through a Parliament where property investors with multiple holdings are in the majority?

No one votes against their own interests. Ever. Especially politicians.

[Lilith7]

How though, do we get such a regime through a Parliament where property investors with multiple holdings are in the majority?

No one votes against their own interests. Ever. Especially politicians.

Well. I have some ideas. Any politician who owns, either in trust or as an individual more than say 2-3 properties should not get a vote on any law limiting property owning on the grounds that they cannot possibly be impartial.
And on the grounds that our housing situation - thanks largely to their (& that of other property owners) outright greed, is in dire straits & must be made fair as a priority. An urgent priority; as in within weeks.

Just damn well fix it.

Works for me. 

[Kacee]

That must be absolutely awful - especially now.

It shouldn't affect the landlord if she/he has had the property for 26 years as that is plenty of time to pay off the mortgage.

After 26 years she must have been happier to rent rather than buy and nobody knows if ill health etc. is the reason why the LL is selling.

I know people who have sold their 3 rentals rather than take the risk of bad tenants where with the new rules they can't get rid of them, the reason why one property was sold. The 'lovely tenant' at first wouldn't pay rent after a couple of months. Now she has had to find somewhere without, possibly, fantastic LLs who gave her every chance. It was a beautiful home which had been completely refurbished before she moved in.

[Oh_hunnihunni]

No, if she had been able to buy I think she would have. Those of us blessed enough to have partners, and good jobs, and to raise families within those well resourced circumstances sometimes assume everyone is so lucky.

Fact is a lot of people aren't. And most of them are women. Usually raising children on their own. The cost of doing that is a lifetime of debt. It is a pity we don't teach our children about that risk, along with other life lessons.

[Kacee]

No, it is perfectly legal. And being done exactly by the rules. 26 years though is a long time.

On a related note I see Mr Luxon owns seven properties and is set to make 4.3m in extra paper value in today's property market.

How much longer must we wait until some balance is restored?

He might own 7 properties but only 3 are rentals. He has a family home and a bach as do many 'ordinary' people, his Electoral Office and the apartment he bought in Wng. which saved paying rent. Nothing wrong with that, he has taken advantage of earning good money throughout his working life which many of us could have done and is reaping the benefit of this crazy housing market.

[Oh_hunnihunni]

Did you miss the bit where he pays rent on the Wgtn apartment he owns so that he can claim the Parliamentary accommodation allowance? That is one loophole that needs to close. Other employees who rent accommodation in cities away from home in order to get jobs don't get subsidised accommodation as a rule, and if they do, their employer pays Perks tax on that subsidy.

Why are MPs not treated as the employees that they are?

---

Why do we have a crazy housing market? Could it be because people are 'reaping the benefits' of it and therefore accelerating what is in effect a pyramid scheme?

[Lilith7]

No, if she had been able to buy I think she would have. Those of us blessed enough to have partners, and good jobs, and to raise families within those well resourced circumstances sometimes assume everyone is so lucky.

Fact is a lot of people aren't. And most of them are women. Usually raising children on their own. The cost of doing that is a lifetime of debt. It is a pity we don't teach our children about that risk, along with other life lessons.

Its more often the woman who takes on any children if there's a relationship breakdown, so those doing the bringing up of children will in most instances have less opportunity to earn higher incomes, they may only be able to work part time, & if female  they'll have lower wages & more expense than will single people or a childless couple, & usually that's long term.
So realistically unless they're extremely fortunate they'll have less chance of buying a house & have no option but to be long term renters.

[SueDonim]

PROPERTY 101:

"How many investment properties is too many?"
How could there ever be a specific number? It all depends on a person's ability to manage and maintain them. And so long as they are managed and maintained, why is it the least bit important how many someone owns? It's no-one's business except theirs. Do you question how many dealerships a car dealer owns? Or how many orchards an orchardist owns? Or....

The reference to Germany...
It's irrelevant. They have a culture of renting for life. So expect to pay rent for life and spend their money on other things, when they have it. Our culture is to expect home ownership, but too many young people also spend all their money frivolously. They want to have their cake and eat it too, and then complain when those who worked hard, saved hard and lived frugally have money to invest. Those who really want to buy property can and do, and are rewarded in later years by reduced outgoings and more discretionary income. Some of whom spend that on investment property so they can have more than the GRI when they retire.

And after seeing the mess that our current government has made of absolutely EVERYTHING to do with housing, why would you want them to control more of the actual houses?

Picking on Luxon
He is supposedly a successful businessman but there isn't much evidence of this. We're told he has a few properties. If he is successful and didn't invest some of the money in property you would question his ability. As it is, I wonder where someone so "successful" has hidden the rest of his money as he doesn't appear on the companies register as owning anything in NZ.

It's ironic that the skyrocketing value of the properties he has has been because of the policies of the government that he is there to try and oust in the next election.

As far as conflict of interest goes, there was a list of MPs and property ownership the other day and it was surprising how few have investment property. Maybe THAT is a lot of the reason behind some of the idiotic law changes we have had that just keep making everything harder for tenants. The conflict of interest has been that there has been no one forcing the government to listen to the submissions made by the people who actually know.

Investment v. trading
Some of the comments above are making the so-often made mistake of confusing these. Traders buy and sell and have been making millions in the last couple of years. The idiotic "bright-line" rules have just clarified policies about tax on this income. The tax was always payable, as income tax, and the fact that IR didn't require payment is a huge problem. Now it seems that the tax obligations have been formalised and clarified into something less than they used to be which is unfair on all the other taxpayers.

Investors are there for the rental income and don't sell without a reason. So capitals gains tax is pretty irrelevant and bright-line rules will rarely apply because of the length of time the properties are held. Rental investors do, however, pay income tax on the rental income. And pay more of it than ever before after rule changes in the last few years. Other business can claim capital depreciation and interest on loans. Property investors can no longer do this, so have to either put the rents up, run at a loss, or bail out. Which many are doing. Maybe the 26-year example above - instead of blaming the landlord, blame the government for making provision of housing so much harder than it used to be.

20 years ago, anyone with equity in their home could easily use that equity to get started in rental investment. Today there are so many rules for borrowing that it is much harder. Those with 30 or 90 or more houses probably got their foothold when it was easy, and maybe now have enough cashflow to continue. 20 years ago you didn't ever pay more than interest only on mortgages. Now, because of government meddling, banks are requiring repayment so some investors now need to sell something to pay off their borrowings. And of course prices are now so high that that is much easier. But that is not the landlords' fault.

Oh, but we need to free up rental houses for young people to buy...
The problem is, young people don't want the houses that are rentals. They want something flash. It seems that cheaper houses are rarely of interest to young people. And when you go to auctions at the low end of the market, if there are young people there they usually get the house. Investors are totally numbers driven and drop out of the bidding when the price exceeds the expected return. Young house hunters can go higher as they are looking at the start of home ownership with a lifetime of investment opportunity for themselves.

And, as far as the housing shortage is concerned, it needs to be remembered that every young person buying their first home is not only taking a house out of the rental market, but usually not leaving behind an empty rental for someone else. For those who think investors are the problem of numbers of houses available for rent, think again. I'm not for one minute suggesting young people shouldn't buy their own home, but do get sick of hearing that property investors somehow cause the problem of lack of availability of houses for young people.

Instead of hating the landlords who are simply investing wisely and providing an essential service to people who need a house to live in, how about putting the blame for all the woes at the feet of the government where it belongs. The mess we have was created by the government. Landlords either live with it by putting the rents up, or sell their properties, usually increasing the holdings of those landlords who have chosen to stay in the business.

Instead of hating the landlords, look at all the skulduggery in the other essential services. Power, food, fuel, building supplies companies, etc all contribute to the cost of living, often by scalping everyone they can. Landlords are the scapegoats because their tenants know who they are. Everyone else is faceless. The landlords are all your neighbours, friends and family. Ordinary people just trying to make a living so why just pick on them?

And please stop telling the government to "fix" things. It's the over-control of the socialist government that has CAUSED all of the problems.

[Praktica]

What government is socialist? What is your definition of socialist?

There is a view that property price inflation was made far worse by the flood of money pumped into the world economy by central banks after the GFC, and more recently during the pandemic. In New Zealand the situation was made worse by the demand induced by over a decade of population increase due to immigration.

[Lilith7]

If a politician owns several properties, & is clearly wealthy but opposes a wage increase for those on the lowest wages then I believe that makes it everyone's business. Most of us want to know a bit about what kind of person we may or may not vote for which is fair enough.

Germany isn't the only country to have tradition of renting for life - France also does, & the Swiss have Europe's lowest percentage of home owners, with around 59% preferring to rent.

https://www.swissinfo.ch/eng/land-of-les...s/43861460

https://www.independent.co.uk/property/h...91077.html


It isn't only that people here 'spend money frivolously; it is also that effectively they're barred from the property market because these days it takes considerably more to be able to buy a house than in the past. An entire decade of saving & an above average income is required to buy a house in Auckland for example.
The increase in house prices can't fairly be blamed solely on this govt, despite their muckups; the housing situation has grown steadily worse over the past few decades, rather than beginning at the precise moment this govt took office.


https://thespinoff.co.nz/money/06-07-202...a-nz-house

https://www.stuff.co.nz/business/money/1...n-auckland

No one 'hates landlords' fgs. Very fanciful comment.

I've no intention of stopping telling this or any future govt to FIX things; that IS their job. They're not in office to run the country like a business; they're there to fix the damage done by that very attitude.

And if you genuinely think this is a 'socialist govt' then I'd suggest some reading might be in order.

[Oh_hunnihunni]

PROPERTY 101:

"How many investment properties is too many?"
How could there ever be a specific number? It all depends on a person's ability to manage and maintain them. And so long as they are managed and maintained, why is it the least bit important how many someone owns? It's no-one's business except theirs. Do you question how many dealerships a car dealer owns? Or how many orchards an orchardist owns? Or....

The reference to Germany...
It's irrelevant. They have a culture of renting for life. So expect to pay rent for life and spend their money on other things, when they have it. Our culture is to expect home ownership, but too many young people also spend all their money frivolously. They want to have their cake and eat it too, and then complain when those who worked hard, saved hard and lived frugally have money to invest. Those who really want to buy property can and do, and are rewarded in later years by reduced outgoings and more discretionary income. Some of whom spend that on investment property so they can have more than the GRI when they retire.

And after seeing the mess that our current government has made of absolutely EVERYTHING to do with housing, why would you want them to control more of the actual houses?

Picking on Luxon
He is supposedly a successful businessman but there isn't much evidence of this. We're told he has a few properties. If he is successful and didn't invest some of the money in property you would question his ability. As it is, I wonder where someone so "successful" has hidden the rest of his money as he doesn't appear on the companies register as owning anything in NZ.

It's ironic that the skyrocketing value of the properties he has has been because of the policies of the government that he is there to try and oust in the next election.

As far as conflict of interest goes, there was a list of MPs and property ownership the other day and it was surprising how few have investment property. Maybe THAT is a lot of the reason behind some of the idiotic law changes we have had that just keep making everything harder for tenants. The conflict of interest has been that there has been no one forcing the government to listen to the submissions made by the people who actually know.

Investment v. trading
Some of the comments above are making the so-often made mistake of confusing these. Traders buy and sell and have been making millions in the last couple of years. The idiotic "bright-line" rules have just clarified policies about tax on this income. The tax was always payable, as income tax, and the fact that IR didn't require payment is a huge problem. Now it seems that the tax obligations have been formalised and clarified into something less than they used to be which is unfair on all the other taxpayers.

Investors are there for the rental income and don't sell without a reason. So capitals gains tax is pretty irrelevant and bright-line rules will rarely apply because of the length of time the properties are held. Rental investors do, however, pay income tax on the rental income. And pay more of it than ever before after rule changes in the last few years. Other business can claim capital depreciation and interest on loans. Property investors can no longer do this, so have to either put the rents up, run at a loss, or bail out. Which many are doing. Maybe the 26-year example above - instead of blaming the landlord, blame the government for making provision of housing so much harder than it used to be.

20 years ago, anyone with equity in their home could easily use that equity to get started in rental investment. Today there are so many rules for borrowing that it is much harder. Those with 30 or 90 or more houses probably got their foothold when it was easy, and maybe now have enough cashflow to continue. 20 years ago you didn't ever pay more than interest only on mortgages. Now, because of government meddling, banks are requiring repayment so some investors now need to sell something to pay off their borrowings. And of course prices are now so high that that is much easier. But that is not the landlords' fault.

Oh, but we need to free up rental houses for young people to buy...
The problem is, young people don't want the houses that are rentals. They want something flash. It seems that cheaper houses are rarely of interest to young people. And when you go to auctions at the low end of the market, if there are young people there they usually get the house. Investors are totally numbers driven and drop out of the bidding when the price exceeds the expected return. Young house hunters can go higher as they are looking at the start of home ownership with a lifetime of investment opportunity for themselves.

And, as far as the housing shortage is concerned, it needs to be remembered that every young person buying their first home is not only taking a house out of the rental market, but usually not leaving behind an empty rental for someone else. For those who think investors are the problem of numbers of houses available for rent, think again. I'm not for one minute suggesting young people shouldn't buy their own home, but do get sick of hearing that property investors somehow cause the problem of lack of availability of houses for young people.

Instead of hating the landlords who are simply investing wisely and providing an essential service to people who need a house to live in, how about putting the blame for all the woes at the feet of the government where it belongs. The mess we have was created by the government. Landlords either live with it by putting the rents up, or sell their properties, usually increasing the holdings of those landlords who have chosen to stay in the business.

Instead of hating the landlords, look at all the skulduggery in the other essential services. Power, food, fuel, building supplies companies, etc all contribute to the cost of living, often by scalping everyone they can. Landlords are the scapegoats because their tenants know who they are. Everyone else is faceless. The landlords are all your neighbours, friends and family. Ordinary people just trying to make a living so why just pick on them?

And please stop telling the government to "fix" things. It's the over-control of the socialist government that has CAUSED all of the problems.

Well, hi there. Always nice to meet a new poster. Especially one with such a magnificent talent for creative writing!
Socialism is about people. We are a socialist country because we are a welfare state. We are a capitalist country because the economy rules most government decision making. The government is elected and paid to lead - all of us, not just the wealthy. So, it should lead the way, but unfortunately we keep electing ambitious wealthy people.

We are a democratic, capitalist, socialist country of slow learners.

But hey, I wouldn't want to live anywhere else.

[crafters_corner]

Well, hello Sue.

You've only been here 5 minutes, and you sure have created a sensation. And, I love it.

I too, welcome you, and it's great to see you here, and not afraid to express your feelings. Keep it up.

[TygerTung]

It isn't that young people spend money frivolously that is stopping young people from buying homes, it is the fact the house prices are on an exponential curve, so what what could easily be bought by a young couple on minimal wages with some money lent/gifted (say $16k) for a deposit by their parents is now far far out of reach.

To say that young people now days want a luxury mansion for their first house these days is a red herring. Young people these days would be very pleased to get a rough and ready small house for their first home. Noone is expecting to buy a giant mansion with all the trimmings.

When we bought our first house in 2008, it was real easy, if we were in the same position now (young, apprentice and office junior wages with a little money lent by parents) we would be stuffed. The house prices are out of control. What this country really needs is for a housing market crash, with the house values to drop by at least 50%. It would be better for society as a whole.

[Lilith7]

It isn't that young people spend money frivolously that is stopping young people from buying homes, it is the fact the house prices are on an exponential curve, so what what could easily be bought by a young couple on minimal wages with some money lent/gifted (say $16k) for a deposit by their parents is now far far out of reach.

To say that young people now days want a luxury mansion for their first house these days is a red herring. Young people these days would be very pleased to get a rough and ready small house for their first home. Noone is expecting to buy a giant mansion with all the trimmings.

When we bought our first house in 2008, it was real easy, if we were in the same position now (young, apprentice and office junior wages with a little money lent by parents) we would be stuffed. The house prices are out of control. What this country really needs is for a housing market crash, with the house values to drop by at least 50%. It would be better for society as a whole.

Not sure about the housing crash but definitely agree that its far from easy for those just starting out to manage to buy their own house, & that something does need to change to make it fairer for everyone who wants to, to buy their own home.
And I don't think anyone these days would balk at a house which needs some repair & renovation work, either.

[Oh_hunnihunni]

Perhaps the best way to bring house values down is to build a lot of dedicated rentals and institute the same rent controls across all rental properties, so that renting is a better option than buying.

And, alongside that make investment alternatives safer and more attractive.

[Lilith7]

Perhaps the best way to bring house values down is to build a lot of dedicated rentals and institute the same rent controls across all rental properties, so that renting is a better option than buying.

And, alongside that make investment alternatives safer and more attractive.

That would make sense, though.....

[Kay2021]

From the Stuff article this morning, there could be an assumption that some private property investors are no more than hoarders on a grand scale.

https://www.stuff.co.nz/life-style/homed...properties

And I know of two in our neighbourhood on the Shore who own more than 90 properties, each.

There is property investment and then there is greed and then there is addiction, for me the 90 properties each falls into the addiction category.   We rent, have awesome landords and we are awesome tenants, they got us when they bought the house.  Last time we saw them, plumbing issue, major, when leaving they said, see you in 5 years.  We are mindful though there intention is never to sell, things can change.