Investors who buy a house and sell it before two years, will have to pay a tax on the profit. A new law starts from today to try to stop speculators – people who buy houses for the purpose of making a quick profit.
People who invest in houses to rent usually keep the house for many years. We need landlords because many people need to rent. This new tax will not apply to landlords who buy houses for long term investment. However, from next month, Auckland landlords will need a 30% deposit.
The government hopes that this new law will stop the huge increases in the price of houses. At the moment, about 40% of all house sales in Auckland are bought by overseas buyers, especially now that the Kiwi dollar has dropped so much recently. Some New Zealand real estate agents are advertising in China, UK, Singapore and Malaysia. One agent said that houses in Auckland are too expensive so investors are now looking at houses in Christchurch and in other North Island cities like Hamilton and Tauranga. House prices in Auckland were up 20% from this time last year. The average price is now $827,359.
Another reason for an increase in house prices is the number of migrants arriving in New Zealand. This past year, more than 60,000 migrants are wanting to settle in New Zealand. Listen to September 22nd 2015 to hear more about this.
For more on this new law, listen to May 18th 2015.
Vocabulary
• investors – people who buy a house or a business, hoping to increase their money
• deposit – pay this money in cash