The new government has rolled out their 100-day action plan, but property owners and those in the property industry will be looking beyond the initial 100 days to see what proposed legislation changes will affect the industry. Let’s review some changes that may be on the horizon.

1.Interest Deductibility

Interest was not deductible for residential property acquired on or after 27 March 2021. The government now plans to phase interest deductibility back in with full interest deductibility by April 2026. The 2023/2024 income year will have 60% of costs deductible, 2024/2025 will have 80%, and in 2025/2026 interest will be 100% deductible.

2. What is the new government policy for ending tenancies?

Back in 2020 a law change meant landlords were unable to end a tenancy without giving a reason. The new government plans to re-introduce no-cause tenancy terminations providing landlords give 90 days’ notice.

3. Any change to the foreign buyers ban?

As a result of the Coalition Government Agreement between National and NZ First, the proposed National Government’s 15% foreign buyer tax on property purchased above $2 million in New Zealand will not be introduced. Therefore, there may not be any possible or potential change in demand for property from this change that was proposed at election time.

4.When does the Bright-line test change?

The Bright-line property rule means if you sell a property within a certain timeframe you may have to pay tax on any capital gain. The Coalition Government plans from 1 April 2024 to shorten the Bright-line test for property investors to two years from 10 years, returning the law to its 2015 setting. New builds will not be exempt from the two-year rule.

Other industry related government plans:

• Commission an independent review into Kāinga Ora’s financial situation, procurement, and asset management. This work is already under way with Bill English having been appointed to oversee the review.
• Establish a priority one category on the social housing waitlist to move families out of emergency housing into permanent housing more quickly.
• Make policy decisions to amend the Overseas Investment Act 2005 to make it easier for “build-to-rent” housing to be developed in New Zealand.
• Begin work to enable more houses to be built, by implementing the National Party’s ‘Going for Housing Growth policy’ and making the proposed ‘Medium Density Residential Standards’ optional for councils. The ‘Going for Housing Growth’ policy includes expanding housing supply and building infrastructure.
• Introduce legislation to remove the Reserve Bank’s dual mandate to get the Bank focused on putting the lid back on inflation. This move will return the Reserve Bank to a single focus on inflation. A Bill to achieve this was introduced on 13 December 2023.
• Introduce legislation mandating approval of building materials and product systems. International standards will then apply in New Zealand.
• Yet to be announced are plans to review Healthy Home Standards for Local Body and Central Government housing stock. Ensuring that all Local Authorities, Government, and private Landlords that own and rent out residential stock must comply with the Healthy Homes Legislation will be complex and will be an expensive exercise for the new Government but none the less it needs to be completed so that there is a level ‘playing field’ for all property ‘investors. A positive of this programme will mean the upgrading of the housing stock of Housing New Zealand that will bring back on stream several thousand residential properties.

The above is an interesting list of government plans that will help transform new home building and initiate other legislation effecting investment property. There’s a great deal of work yet to be done but I think the direction is positive.

As we progress into the three years of the Coalition Government term there will be plenty of other policy changes that will impact property investors. apm will be closely watching these and will be reporting on them for you as they occur.