Photo: RNZ / Dom Thomas
The only way to ease renters' financial pain is to overhaul the country's housing system, a budgeting advisor says.
Landlords will soon be able to write off their mortgage interest.
The government has suggested they could pass those savings on to tenants but it could not promise this would actually happen.
Family Finances Service Trust budget advisor Heather Lange, based in Upper Hutt, says there is no way renters will benefit from the new rules.
Lange has been watching the number of clients in need of the government's accommodation supplement climb, and said it was once only beneficiaries who claimed it.
"Any double income, but minimum wage family, with children, will be accessing the accommodation supplement now.
"It's not what it's intended for, and it's not the band-aid that's needed to make up for the fact that housing's unaffordable."
Lange suggested a better solution would be landlords entering into an agreement with the government to provide housing for low-income renters.
A property expert was also unconvinced the cost of renting would come down as investors make savings.
CoreLogic chief property economist Kelvin Davidson said there were too many other pressures on both landlords' finances and the market.
"We've got a lot of demand for rental property, migration is very, very high.
"So, yes some landlords might pass cost savings on, but there's just wider forces at work here. High migration is putting pressure on the rental stock, and that's a big upwards driver of rents."
The change would not result in a torrent of investors buying up rentals, because high interest rates were still putting most off, he said.
"I think until mortgage rates start to fall more significantly, we'll still see investors largely sitting on the sidelines."
That would leave a "decent market" for first home buyers, who often compete for the same sort of properties, he said.
But while some investors had been sitting on their hands waiting for the government to make good on its election promise, others were already dipping their toes in the water, Real Estate Institute chief executive Jen Baird said.
"We have been hearing from real estate professionals from across the country that they have seen an increase in investor interest, and some activity, over the last few months in anticipation for these changes.
"Now we'll see if those people actually come to market."
New policy will save tenants money, govt says
Associate Finance Minister David Seymour told Checkpoint he expected rents to fall - but could not say by how much.
"Unfortunately nobody can tell because it's not the only variable that affects rents - there's the number of rental properties being built, there is the amount of people immigrating, there's general ... inflation to do with monetary policy [and] the performance of the economy - all of those things will have an influence."
Property owners would save about $800 million each year on tax, he said.
"That is money that will be divided between landlords and renters alike."
Checkpoint asked an expert how much property owners would save each week. The owner of a $750,000 property with a $500,000 mortgage could expect to see about an extra $160 a week, they said.
Associate Finance Minister David Seymour says the $800m per year saving will be "divided between landlords and renters alike". Photo: RNZ / Angus Dreaver
When presented with those figures, Seymour said he expected to see a "pretty even split" in how the saving was divided between landlord and tenant.
However, when asked if that meant he anticipated the rent on that property to be lowered by $80 a week, he would not say.
"[Rent] will be lower than it would otherwise be," he said.
Whether that decrease would be "overwhelmed" by other factors, like rising building costs, remained to be seen, Seymour said.
"We would all like to know [how much rents will drop] but if it was possible to know such things we'd all play the sharemarket and get rich."
Seymour said the change would simplify the tax code, bringing residential property in line with other sectors, including commercial property.
