What Does the New Government Mean For Property Investors?

December 2023

Read Time: 4 Minutes

The new coalition government has announced a raft of policy changes that will affect landlords and tenants. We take a look at what is proposed, and what the policies will mean for you.

Rules Around Ending Periodic Tenancies 

What the Rules are Currently

Since February 2021 Landlords have been unable to end a periodic tenancy without a reason. If a landlord wishes to end a periodic tenancy, their reasons for termination must fit strict criteria. These criteria include the owner moving in, the property being needed for employee accommodation, the sale of the property and changes to the property including change of use of the property, extensive renovations and demolition. Landlords must give 63 days’ notice in these circumstances. 

If a tenant wishes to end a periodic tenancy, they must give at least 28 days’ written notice, unless the landlord agrees to a shorter time. If there is a group of tenants named on the tenancy agreement, and one of the tenants gives the landlord written notice, this ends the tenancy for all the tenants. 

What They are Changing to

Landlords will be allowed to issue a 90-day notice to a tenant to end a periodic tenancy without providing a reason or applying to the Tenancy Tribunal. 

Tenants’ notice periods will be returned to 21 days and landlords’ notice periods to 42 days if the tenant wishes to move or the landlord wishes to sell a property.  

Potential Benefits for Landlords and Tenants: 

  • Landlords may be more likely to take a risk and rent their properties to younger tenants or those without comprehensive references. This may assist home occupiers in securing a property.  
  • Tenants will be able to move in a quicker time frame.

Mortgage Interest Deductibility 

Tax Laws Now

In March 2021, the government announced a set of fresh policies aimed at stabilising the housing market. Among these changes was the elimination of the option to deduct mortgage interest on rental properties from taxes.  

Under this policy, deductions for properties purchased after March 27, 2021, were no longer permitted. For existing properties purchased before this date, deductions are gradually being phased out over a four-year span. 

What They are Changing to

The new government plans to restore mortgage interest deductibility for rental properties.  

A 60 percent deduction will be allowed in 2023/2024, an 80 percent deduction in 2024/2025 and a 100 percent deduction in 2025/2026. 

Potential Benefits for Landlords and Tenants

Property investors may be attracted back into the property market  

Rental stock may increase, benefitting home occupiers who are currently finding it difficult to find housing.  


Bright-Line Property Rule  

The Rule Now

The sale of a residential property which has been owned for less than 10 years may incur income tax on any gain on the sale.  

The bright-line property rule does not apply to properties acquired before 1 October 2015. 

What the Rule is Changing to

The new government plans to bring the bright-line test for residential property back to two years, effective from July next year.   

Properties sold after 1 July 2024 will only be subject to the rule if owned for less than two years.

Potential Benefits for Landlords and Tenants

Property investors may be encouraged to enter the market following the relaxed rules, potentially increasing rental stock.  


Pet Bonds 

Bond Rules Now

Landlords are not currently allowed to charge extra bond for allowing a pet and the maximum bond a landlord can charge is the equivalent of four weeks' rent.  

How Bond Rules are Changing

Pet bonds will be introduced to make it easier for tenants to have pets in rental properties. The pet bond would allow landlords to charge a higher bond than the usual four weeks' worth of rent to cover for damage caused by pets.

Potential Benefits for Landlords and Tenants

Landlords may have greater peace of mind around allowing pets in rental properties knowing they are covered for damage. 

Tenants with pets may find it easier to find a property that will allow their pets. Home occupiers may be more likely to feel that a rental property is their home if they are allowed to have a pet, and may stay longer. 

When Will the Changes Happen? 

While a timeframe for the above changes (other than the reintroduction of tax deductibility) has yet to be announced, Crockers will keep you up to date with the progression of these policies. 

Get Expert Advice 

Keeping up to date with the law and how it affects you as a landlord can be difficult. If you’d like some further advice on managing your rental property or have a general enquiry, contact our Property Management team on pm@crockers.co.nz or call for a chat on 09 623 5952. We look forward to hearing from you! 

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