With the National government's recent election win, they've pledged to bring back the 90-day no-fault termination, restore interest deductibility, and wind back the bright-line to 2 years. It's a clear pivot from past Labour policies, signalling a more favourable environment in the coming years.
Bringing back 90-day tenancy termination
The 90-day no-fault tenancy termination is a contentious policy in housing legislation. The Labour government banned it as they believed it caused too much instability for tenants. However, reinstatement of this policy can be one of the biggest wins for landlords, who can use it as a safety net for managing problematic tenancies. The option to terminate the tenancy with a 90-day notice also makes it easier for investors to sell the property, renovate it, or use it for a different purpose.
Removing the rollover of fixed-term tenancies into periodic tenancies.
Another change introduced in 2020 under the Residential Tenancies Amendment Act was proposed to be scraped by National. For landlords, removing the near-automatic rollover of fixed-term tenancies into periodic could mean more control over their properties.
Reinstating interest deductibility
National pledged to reinstate mortgage interest deductions previously axed by the Labour Government.
Reinstating interest deductibility will make property investment more financially attractive again. Interest payments are a significant expense for many property investors. Allowing them to deduct this interest from their taxable income can reduce their overall tax liability, improving the profitability of their investment.
Bringing interest deductibility back for landlords won't be immediate and likely to happen over 3 years. In the first year (April 2024), National wants to leave deductibility at 50%, then allow 75% in the second year. Then, by 2026, they want interest deductibility to be reinstated in full.
This is one of the biggest changes expected, which can lead to more investments in the housing market, potentially increasing the supply of rental properties available.
Bringing back the bright-line test
The bright-line test was increased to 10 years in 2021. It means if a residential property is sold within a certain period of time, there may be income tax on any capital gains. National wants to dial this back to only two years. This will allow property investors to move their money around without being penalised.
No changes to ring-fencing
Ring-fencing refers to a tax policy where rental losses cannot be offset against other types of income, like salary or business income. No party wanted to change the existing rules, so everything will likely remain the same.
All these changes collectively point towards a revitalised housing market. It's the perfect moment for landlords to take charge and optimise their property management strategies. No matter how many properties you're juggling, myRent gives you all the tools to manage your rental properties, but keeps you in control. Trusted by tens of thousands of New Zealand landlords to simplify their lives, stay compliant, and feel confident looking after their own properties. Check out myRent today and see for yourself!
The information contained in this article is exclusively for promotional purposes. It does not in any way constitute legal advice and should not be relied upon as the basis for any legal action or contractual dealings. The information is not, and does not attempt to be, a comprehensive account of the relevant law in New Zealand. If you require legal advice you should seek independent legal counsel. myRent.co.nz does not accept any liability that may arise from the use of this information.
