The government is seeking feedback on the exemption of new builds from the proposed tax rules that are part of the new housing package.
It has released a consultation paper after confirming that new builds are exempted from planned changes to residential investment properties’ tax treatment. It confirmed that it will consider a residential property as a new build if it is a self-contained dwelling (with a kitchen and bathroom and has received a code compliance certificate).
“The government’s goal is to encourage more sustainable house prices by dampening investor demand for existing housing stock to improve affordability for first-home buyers. The proposals … will help to achieve that goal,” said Finance Minister Grant Robertson.
“This is part of the government’s move to cool the property market. A more sustainable housing market supports more first-home buyers to get into their own home but also protects our recovering economy. So we all benefit.”
The government is also considering exempting subsequent owners from the interest changes and how long any exemption might last.
Revenue Minister David Parker explained that the proposal to exempt new builds should “help boost supply by channelling investment towards increasing housing stock and away from direct competition with first-home buyers and owner-occupiers for existing housing stock.”
“This consultation is focused on finalising the detailed design of the rules. The proposals will not affect the main home,” Parker said.
National’s Shadow Treasurer Andrew Bayly and Housing spokesperson Nicola Willis commented that the consultation paper on interest deductibility and bright-line rules brought with it confirmation of what an “unprincipled mess the proposed legislation is.”
“National opposes the government’s ill-advised approach to dealing with the housing crisis and, in fact, argue that these measures will contribute to further housing challenges,” Bayly said.
“We know investors and landlords have a role in New Zealand, and the demonization of this small group of people is bizarre and divisive behaviour from the government.”
National urges property owners to share their views on the changes “despite the short timeline Housing Minister Megan Woods has allowed consultation.”
The consultation closes on July 12, 2021. The government will introduce the measures into Parliament later this year but will apply from October 01, 2021.