Those that have investments in properties in New Zealand that have yet to be developed could be in trouble. Those that have associations with Blue Chip and have placed funds down on the development of property there – which has not begun to happen – are at risk.
Many investors have invested money into the development of properties. These properties have yet to undergo any construction. Investors warn that those who have done this may be in the worst risk situation. Those that have purchased properties that were already built will be in a better position. This is because the asset has been completed and therefore can be used to produce rental income.
It is estimated that 4000 investors have purchased 2000 properties that are worth millions in the hopes of building a retirement nest egg.
Additionally, those that have been using tax laws to allow the write down of property value losses as part of their business expenses may not be able to do this any longer. The government treats landlords as a business and as such they have been able to write down the costs of interest payments, depreciation and maintenance as business expenses.
This may be a cause of concern to many rental owners who are now faced with paying for these losses out of pocket.
