In a press release from the weekend, Labour’sFinance spokeswoman Barbara Edmonds said the policy, which allows landlords to reduce their tax bill by deducting interest costs would “give approximately 346 landlords who own at least 200 properties each around $464 million between them”.
Housing Minister Chris Bishop looked into the claim and the Ministry of Housing and Urban Development published data from an Official Information Act (OIA) request which shows that that number cannot be substantiated with current data and is very likely incorrect. The OIA request is from last year and was not publicly available, meaning Labour could not have used it to find correct figures, although the Government argues it should have known not to use a number that could not be substantiated.
The number comes from a story published by the Stuff website in 2021, which was included in a piece of CTU economic analysis written during the election campaign that analysed how much landlords would get from the Government’s interest deductibility policy.
The calculation uses bond lodgement data to work out how many individual properties the person lodging the bond is responsible for. Data for bond lodgement registers the number of bonds each individual entity has lodged, broken down into tiers of 1, 2-3, 4-10, 11-20, 21-50, 51-200, and more than 200.
Data from Chris Bishop says Labour's claim about millionaire landlords cannot be substantiated. Photo / Marty Melville
The Ministry notes this data is not a reflection of the number of properties someone owns. Rather, it is a reflection of the number of properties someone is responsible for lodging bonds for. And the big dog when it comes to lodging the most bonds are not landlords who own hundreds of properties, but property management companies, who manage hundreds of properties on behalf of other people.
A breakdown of the data shows just 368 entities have lodged more than 200 active bonds - in other words, those entities are each responsible for more than 200 rentals. The number is slightly higher than the Labour figure because it uses a different time period.
That number is broken down into one individual and six companies. The other 368 entities managing more than 200 active bonds are 361 property management companies, which generally do not own the properties themselves, but manage them on behalf of other people.
It is possible some of these companies manage properties for individuals who each own more than 200 rentals - but it is impossible to prove one way or the other. Many of the companies will manage a portfolio made up of people who own small numbers of properties.
Labour Finance spokeswoman Barbara Edmonds said the Government should release a regulatory impact statement. Photo / Mark Mitchell.
A note from the Ministry of Housing and Urban Development notes that the data as a whole “still doesn’t provide a good indication of landlord’s ownership, as there is no way to further analyse the bonds lodged by Property Managers”.
The spat has quickly become political with Bishop saying it was “disappointing and concerning that Labour has repeatedly used information they must know is incorrect”.
Labour shot back, arguing it would have been inappropriate to set officials on the task during the campaign period, and saying the Government needed to publish better information. As yet, there has been no Regulatory Impact Analysis published for the interest deductibility changes, which are being added to an existing tax bill. Adding a change like that to an existing tax bill is a normal way of making tax changes, although Labour did publish a RIS when it created a new top tax bracket following the 2020 election.
“We used the data that was publicly available during the election campaign,” Edmonds said.
“If the Government wants us to use their data they should release it before tabling the bill,” she said.
Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.
