New Zealand’s Government Housing SchemeWritten by: superadmin
In light of the Government’s housing announcement in March 2021, we thought we would share our thoughts on the package and how it will affect property investors in New Zealand.
The Government appears to have two clear key intentions through the measures announced to date: incentivising the new build housing supply available to the market and providing increased access for first home buyers.
While there will still be a lot of detail to come, at Wolfbrook we view both of these intentions as favourable and particularly good news for those looking to invest in a new build property.
• Exclusion of New-Build Homes from the Removal of Interest Deductions
The revised interest deductibility policy means that investors will no longer be able to write-off interest costs against the income they make from their investment properties. As new builds will be exempt from this revised policy, we believe that this will increase investor demand for new properties such as Wolfbrook’s developments. We take a more in-depth look at this new tax policy here.
• Exclusion of New-Builds from the ‘Bright Line Test’
As it currently stands, property investors are required to pay income tax on profits made from selling a property within five years of purchasing. With the proposed new legislation, this will be increased to 10 years; however, similar to the above, if people choose to invest in a new-build, they will be exempt from this bright-line test.
• $3.8 Billion Housing Acceleration Fund
The Government has allocated $3.8 billion to infrastructure measures to increase housing supply. We believe this will be in the form of horizontal infrastructure and further support of local authorities resulting in fast-track land supply and development consenting.
• Kiwisaver First Home Grant
The Kiwisaver First Home Grant income eligibility caps have been lifted. This will allow approximately 9,300 additional couples and 3,700 singles to qualify for the Grant. When buying a new build, the Grant provides up to $10,000 to first home buyers instead of only $5,000 for an existing property.
• Increased Regional House Price Cap
In some New Zealand regions, the current house price cap will be increased for buyers to be eligible for the First Home Grant.
• First Home Loan Deposit Scheme
The deposit required for a First Home Loan from the Government will be reduced from 10% to 5%.
Now more than ever, choosing to invest in a new build is the smartest option for Kiwis, so if you are looking to get on the New Zealand property ladder, feel free to drop us a line. We have a team of knowledgeable property experts on hand to answer any questions you may have about buying property and why investing in a new build property is the best option for you.