The property sector appears happy with proposed law changes to crack down on property traders and speculators, particularly those who have been avoiding paying tax on their proceeds.
Although Prime Minister John Key says the new law is a ''bright line test'', not a a capital gains tax, the New Zealand Property Investors Federation says it is ''comfortable'' with the announcement of a capital gains tax on property sold within two years.
Executive officer Andrew King said the announcement should finally put to rest all the unfounded comments about property having a tax advantage.
''Some people may be unfairly affected and the changes could have a negative impact on some rental property owners.''
It was unclear if the move would have any effect on house prices. There was no data to back up the commonly held belief that speculation was rife in the property market, he said.
If property trading was the cause of house price growth, the announcement should reduce property prices, he said.
Property Institute chief executive Ashley Church said Mr Key's announcement was more in the nature of welcome ''tweaks'' than a major policy announcement and warned they would not affect house price inflation in Auckland.
''It's been Government policy to levy tax on anyone buying an investment property with the intention of selling it at a profit, within 10 years of purchase, for as long as I can remember.
''So the real change here is that the Government is giving the IRD more resource to police that policy within the first two years of that purchase,'' he said.
Finance Minister Bill English announced the Budget on Thursday would provide $29 million of extra funding specifically for IRD to increase its property tax compliance activities, taking its total budget for the area over the next five years to $62 million.
