Property law change not expected to hit Rotorua

FILE

Changes to tax laws regarding residential property ownership will not have much effect in Rotorua but will catch out those trying to flout the law, local experts say.

Prime Minister John Key announced a number of measures on Sunday, aimed to help curb spiralling house prices and track the number of foreign buyers purchasing Kiwi homes.

From October, people selling a residential property which is not their main home, within two years of purchasing, will face tax on the capital gain, with some exemptions. Mr Key said the new measures would help weed out speculators and foreign investors who traded Kiwi homes just to turn a quick buck, and would make it easier for IRD to catch residents and foreigners trying to cheat the system.

Rotorua Property Investors Association president Debbie Van Den Broek said laws preventing the quick buying and selling of properties for short-term profit had been in place "since the beginning of time and some people would try to be a bit sneaky".

"This will catch people who may have been a bit dishonest with IRD in the past and that's a good thing."

Mrs Van Den Broek said property speculation was not prevalent in Rotorua but could happen in the future.

"In the last few months we've had a lot more Aucklanders coming here buying up property, so it could happen."

She said the new laws would also help tenants looking for certainty, "so they know they won't be turfed out in six months after the place they are living is sold".

Ian McDowell, managing director of McDowell Professionals and Rotorua district forum leader for the Real Estate Institute of New Zealand, said the new laws were Auckland-oriented. "This doesn't happen much in Rotorua, our market has been flat for five or six years and is only just starting to pick up again.

"We are seeing more out-of-town buyers coming to Rotorua for good-value houses in the $350,000-$400,000 range, where there is strong demand.

"Sooner or later there will be a scarcity and prices will climb, but nothing like what's happening in Auckland."

- Additional reporting NZME.