Housing rent likely to rise with capital gains tax

"If rents do rise and people cannot afford the increase, what sort of pressure is this going to put on Housing New Zealand to supply affordable housing? There already appears to be a shortage of affordable housing in the Auckland area, this will only make it worse," he says.

"The pure return on a rental property is not great. Generally, a rental property investor will factor both timing tax advantages (depreciation) and capital gains into their investment decisions."

"If an investor buys a flat for $300,000 and rents it for $300 a week, they are looking for that property to appreciate to say $400,000 over the next five years. If a tax is now introduced on that capital gain, then the $300 rental will not stack up, it will have to increase."

With much debate already in Parliament about a CGT, Herriott believes it is only a matter of time before some form of tax on property is introduced.