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NZ Housing Tax Announcements Benefit New Builds For Investment.

Posted 4 months ago | By Latitude Homes

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If you are thinking of property as an investment, it's important that you understand the new housing policy changes for the New Zealand housing market announced in March. 

These changes included:

  • For any residential investment property purchased from 27th of March 2021 will have to be held for a 10 year period (a ‘bright-line test’) to escape the tax. This is a stat that has since doubled from the current five year period.

  • If acquiring a residential rental property on or before 27th March 2021, no interest deductions will be made.

  • For those who already own a residential rental property, a phase out of interest deductions will occur over a four year period

So what does this mean for the everyday kiwi?

It is due to the serious shortage in properties but skyrocket in demand for them that is creating the current housing crisis in NZ. This means, buying a house for your everyday kiwi is pretty hard and expensive.

The new law changes have been put in place with an aim to make investing in multiple properties more difficult, in turn freeing up more opportunity for your average New Zealander wanting to buy a home.

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 Will this drop the price of housing? This is a hot talking point that only time will tell. 

 

Do the law changes affect new builds?

Along with Wednesday’s announcements, it was also confirmed the bright-line period extension on residential property will not be applied across ‘new builds’. These will remain at the current five-year bright-line period, presenting an opportunity for investment builds.

 

The benefits to new build investment.

Aside from the obvious tax benefits outlined above, we have highlighted a number of other benefits associated with purchasing a new build.

  1. A smaller deposit is required.

For investors buying an existing property the deposit will sit at a higher 40%, unless they meet the exemption criteria. 

For a new build, it will vary case by case but a smaller deposit is required, typically 20% of the purchase price. New builds are exempt from the new LVR rules set by the reserve bank in order to encourage housing supply.

You can read more about the latest LVR restrictions and criteria on the Reserve Bank of New Zealand’s website 

      2. Customise your home or investment

Add your own flavour and customise your new build to perfectly suit your requirements. 

Latitude Homes offers a range of different build options, from kitset homes through to full builds. Whether you’re picking a house plan or you’re designing your dream home or investment, Latitude Homes makes new builds a fun and easy process.

To learn more on our different build options, click here.

 

      3. Less maintenance required

New builds require much less maintenance work when compared to existing properties.

Whilst buying an old home with character is great - it can often come with a lot of hidden maintenance, repairs or renovation costs. To minimise the risk for home builders, today there are plenty of warranties and/or guarantees that are put in place for the buyer to fall back on, in case of emergency.


     4.  Better quality properties, better quality tenants 

A better quality, new property is likely to attract better quality tenants, resulting in the potential for higher rent requests. 

It is mandatory that all new home builds are designed to comply with the Healthy Home legislation. Therefore, this removes any need to fix or upgrade your property to meet these specific legal requirements.

Whilst a new build may not quite compare in terms of personality and character, they are able to make up for it in terms of practicality. A lot has changed over the years including materials and features, allowing kiwis to find comfort in much smarter homes.

Overall it can be said that new builds tend to be better insulated therefore warmer, drier and more energy efficient.

 

With the new housing law changes taking effect, the shortage of available homes and the overcapitalisation in existing houses due to excessive demand, the benefits to investing in new builds for your property portfolio far outweigh the alternatives.

If you would like to discuss a new build on your existing property, a piece of land you have or even look at a house and land package, contact your local Latitude Homes builder. We are more than happy to help you build an investment in your future.

 

Take a look at our range of building options on our website and get in touch to speak to your local Latitude Homes builder.

 

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Thanks again to yourself & Graham! You have both made this such a stress free build, and it has been an absolute pleasure building with you both & I will continue sending people to you as they pop up! - Biggs Family
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