A bill is to be introduced to Parliament this month which will allow owners of certain types of new and existing Build to Rent properties to claim interest as an expense on their tax returns provided they meet certain conditions. The exemption will apply retroactively from October 1, 2021
To qualify, developments need to offer tenants leases of at least 10 years. The announcement by Housing Minister Megan Woods could mark a key turning point towards unlocking the potential of Build to Rent, Property Council New Zealand chief executive Leonie Freeman says.
The Property Council, whose members are some of New Zealand’s largest property developers, owners and investors, has come out in support of the government’s Build to Rent tax exemption boost.
Its members share the government’s view that enabling Build to Rent will provide warm, dry rental homes that offer Kiwis long-term security of tenure.
“It is encouraging to see that the government has listened to our sector and acknowledged Build to Rent as a unique property asset class,” Freeman says.
“The government’s announcement is a major step towards boosting New Zealand’s emerging Build to Rent sector.
“Build to Rent will transform the experience of renting in New Zealand. Property Council research shows that our members stand poised to deliver over 25,000 Build to Rent homes in the next decade, with the right policy settings.
“Build to Rent refers to multi-unit residential developments, typically located in city centres within walking distance of key transport links.
“These developments are professionally managed, with brilliant amenities available onsite, offering residents bespoke lifestyle options for as long as they want to stay.
“By enabling Build to Rent, the property sector will be able to deliver thousands of new high-quality, high-density rental houses, supporting New Zealand’s urban intensification and climate ambitions.
“Kiwis will hopefully soon have many choices to access to a warm, dry and climate-friendly Build to Rent home.
“Over the past 18 months, the Property Council has been working closely with the Government to highlight the untapped potential of Build to Rent, and to explain the legislative actions required to enable it,” Freeman says.
“As part of this, we have collaboratively resolved the unintended consequences of last year’s interest deductibility changes.
“While today’s announcement has been a fantastic step in the right direction, there are a few remaining speed bumps to truly unlock the concept.
“For Build to Rent to flourish, access to large institutional investment via the overseas investment act and commercial depreciation is also required.
“The Property Council looks forward to continuing our engagement with the Government to support the roll-out of the world’s fastest growing residential sector in Aotearoa.”
