The National-ACT-NZ First coalition government is rolling out significant changes to New Zealand’s property tax and tenancy laws. These updates will affect landlords, tenants, and property investors alike. Here’s an overview of the most notable changes and how they could impact you.

Tenancy and Rental Market Adjustments

Mortgage Interest Deductibility

From 1 April 2024, landlords can claim back 80% of the interest paid on mortgages for rental properties as a business expense. This rate will increase to 100% from 1 April 2025, providing greater tax relief for property investors.

Notice Periods

Changes to notice periods for tenants and landlords are on the horizon:

• Tenants: Will only need to provide 21 days’ notice to vacate a property, down from the current 28 days.
• Landlords: Notice periods for various scenarios will decrease to 42 days (currently 63–90 days), including:
  • Moving a family member into the property.
  • Major renovations or development.
  • Selling the property.

Pet Bonds

Landlords will soon have the ability to request additional bond money specifically for pet-related damages. This will exceed the usual four weeks’ bond. Details on how this will be implemented are still pending.

Reinstating 90-Day No-Cause Evictions

The government plans to reintroduce 90-day no-cause eviction notices, overturning Labour’s 2020 law requiring landlords to provide reasons for eviction. Landlords will no longer need to justify the termination of a tenancy if they give 90 days’ notice.

Bright-Line Test Changes

The bright-line test, which determines tax liability on property sales within a specific period, is undergoing major revisions:

• The current periods are five years for new builds and ten years for other properties.
• From 1 July 2024, the bright-line period will reduce to two years for properties sold after that date.

Some clarifications are still awaited, including:

• Whether trust transfers trigger the test.
• When the bright-line period begins.
• Exemptions for the primary residence.

What Do These Changes Mean for You?

These updates will significantly affect property ownership, investment strategies, and tenancy agreements in New Zealand. Whether you’re a landlord, tenant, or property investor, it’s crucial to stay informed and prepared for these legislative changes.

For expert advice on navigating these developments, contact Core Legal Wellington. We offer tailored guidance on tenancy laws, property tax, and investment strategies to help you adapt to the evolving property landscape.