Some Tauranga property sector leaders fear higher rent and housing shortages in Tauranga if the property tax system is restructured.
The government is exploring changes to New Zealand's tax system after a Tax Working Group outlined a raft of changes on Wednesday, including reforming property tax.

Tauranga property manager Steve Warburton.

Proposed changes include introducing a method taxing capital gains on residential rental properties, a low-rate land tax and axing a property owner's right to claim depreciation.
Tauranga property manager Steve Warburton, managing director of Prime Rentals, says the proposed changes could scare off new investors in the rental market and prompt current investors to sell their rental properties.
He says the demand for rental accommodation in Tauranga is booming and if there are not enough rental properties available, Tauranga could face an accommodation crisis.
'During 10 days this January, we have rented more houses than any January in the 17 year history of my business.”
Mick Lloyd is another Tauranga property investor and says the proposed changes unfairly target property investors.
'The report appears to have targeted the only sector in New Zealand that was actually making an effort to save and provide for themselves by attempting to save for their retirement.
'In earlier reviews Inland Revenue stated the property market did not have any special benefits or tax breaks over any other business but it just shows if you keep repeating something often enough, after a while people start to believe it.”
He agrees with Steve that if the changes are adopted, a number of investors will withdraw from the market.
'More established investors will purchase rental properties, and the more established investor will be more likely to increase the rents. It wouldn't surprise me to see 20 per cent increases.”