The National-Led Coalition Government's Policy Updates & The Property Market
New Zealand's first-ever three-party coalition government is beginning to chart its course for the future.
Having spent the past few weeks deciding what they collectively want to achieve over the next term, we are now getting a glimpse of some of the policies as the National-led coalition starts to roll out its 100-day plan.
In this article, we focus on some of the most recently released policies and their potential implications for the housing market.
Interest deductibility to return for rental properties
It was recently announced that the coalition party has adopted Act’s policy to speed up the rate at which interest deductibility for rental properties will be returned to investors.
The National-ACT coalition agreement states that the government will restore mortgage interest deductibility for rental properties. Investors can claim an increased amount of home loan interest over time with the below plan:
- 2023/24 Financial year: 60% of their home loan interest costs.
- 2024/25 Financial year: 80% of their home loan interest costs.
- 2025/26 Financial year: 100% of their home loan interest costs.
While this policy may entice investors back into the housing market, it is important to consider the broader economic landscape. Local economist Tony Alexander’s recent survey of mortgage brokers in early November indicated a resurgence in investor interest (31% were seeing more investors) – the strongest since October 2020, yet with continued high interest rates and escalating costs, a rush of investors may not be imminent.
Foreign Buyers and Tax
As part of the coalition agreement with New Zealand First, foreign buyers are now restricted from purchasing residential properties. Consequently, National’s proposed foreign buyer tax policy is no longer on the table. They had originally proposed allowing foreign buyers to purchase properties over $2m or above, adding a 15% tax.
National’s initial projections estimated $740 million in revenue, which was earmarked for promised tax cuts. With this scheme now abandoned, Prime Minister Christopher Luxon asserts that the tax package will be sustained through a combination of spending reprioritisation and additional revenue measures. When recently asked how he plans to pay for tax cuts without the foreign buyers tax, Luxon said: “I want to be really clear, we are going to deliver tax relief as we promised and in the amounts we promised to working and lower to middle-income earners in New Zealand.”
90-Day Notice Period
Landlords regain the flexibility to end a tenancy with just a 90-day notice period without needing to give a reason. This could potentially influence landlords to be more inclined to take chances on tenants, creating a shift in the rental landscape.
Looking Ahead, How Rapson Loans and Finance can assist
These new policy updates offer us a glimpse into the evolving landscape of the property market under our new government. However, navigating the dynamic landscape of New Zealand’s housing market demands careful consideration and analysis.
Our experienced mortgage advisers are ready to provide expert consultation on how these policy changes may impact your specific circumstances. For professional advice and insights tailored to your unique situation, turn to Rapson Loans & Finance.
Contact us today for advice on your mortgage and loans, Tauranga’s Rapson team is here to guide you through the intricacies of policy changes in the real estate market.