2934 (2024). Chlöe Swarbrick to the Associate Minister of Finance

2934 (2024). Chlöe Swarbrick to the Associate Minister of Finance: What evidence, advice, briefings, documents, statistics or otherwise, if any, has the Minister received that restoring tax deductibility for landlords will lower rents for tenants?

Hon Chris Bishop: I received advice from Treasury and Inland Revenue officials in December last year on restoring interest deductibility for residential property investment. In that advice, officials said that the policy change could put downward pressure on rents in the long run. Research by the Housing Technical Working Group, a cross-agency group of housing experts, suggests that rents are primarily driven by household incomes and the relative supply and demand for rental housing. Officials advised me that changes in taxation would not significantly impact rents in the short run, as the stock of housing supply is fixed. But in the long run, tax changes could impact the supply of housing by incentivising new construction, and this could therefore have more significant impacts on rents. This advice was reflected in the paper I took to Cabinet this year with the Associate Minister of Finance and the Minister of Revenue entitled “Restoring interest deductibility for residential property”.