This article was originally created for Hayes Knight (now Nexia Auckland).
Home > Updates > Government drops a bomb on residential rental owners
This morning there was certainly no kindness shown by the Labour Government to residential rental owners. As if landlords were not already dealing with enough given the Healthy Homes Standard, the rental loss ring-fencing, the current 5-year brightline test, and the tough new tenancy rules, they will now have to deal with a 10-year brightline period and the removal of interest deductions. New builds will be exempt from this interest restriction. This clearly demonstrates that the Government wants to channel rental owners towards new builds who will provide the funding to help the country out of its housing shortage.
While the announcements might only have been made public today, they start coming into force in four days, on 27 March 2021, giving people next to no time to take any action, let alone get across the new rules and what impact that will have on their situation.
It is difficult to see who the winners will be other than the Government coffers in terms of increased tax take. Rental prices will surely be increased by those owners able to hold onto their rental properties; first home buyers will be no better off as they are still grappling with LVR restrictions and humungous deposits; and middle New Zealand will feel like their retirement savings are being taken away from them after being told repeatedly over the years that they needed to provide for their own retirement.
Tighten your belt, this is going to be a bumpy road.
Click here to read the change to the brightline period and click here to read about the removal of interest deductions.