Consider levelling playing field, panel told

The FMA hosted the discussion about New Zealanders’ understanding of investment risk.

Panellists adviser Martin Hawes, ANZ Wealth’s John Body, FMA chief executive Rob Everett and columnist Mary Holm said many New Zealanders thought property investing was a safer investment than it really was.

They said it should be considered that if markets were down when investors needed to sell, they could be caught out. Holm said she knew of an investor who had been left with a debt because he had been forced to sell a rental property for less than its mortgage. She said any investment that had to be funded through borrowing became much riskier.

The panel was asked about the tax treatment of rental properties.

Body said there should be some incentives for KiwiSaver, to create a level playing field between property and long-term savings-style investments. He cited the FSC’s campaign earlier this year, which called for tax to be levied only on accounts’ returns after inflation.

But Hawes said property should not be considered an investment.  “I think of investments as something that’s passive, where you put the money in and wait for the return. Property is a business, it requires a lot of active management, a lot of time. If you compare property as a business to other businesses, it’s not unfairly advantaged. The rules that apply to property investment are exactly the same as for any other kind of investment.”