Build to rent asset class proposed

In some places overseas, rental properties are purpose-built for tenants who have the right to stay for the rest of their lives. New Zealand has taken its first step in this direction. A tax Bill in August 2022 is aimed at creating a “build-to-rent” asset class. 

It proposes:

• the landlord must offer a lease for at least 10 years
• the tenant can request a shorter time
• the tenant can terminate the tenancy by giving 56 days notice
• the landlord must have at least 20 dwellings in a single development
• the whole enterprise must have a single owner with all properties sharing a single boundry.
• explicit personalisation policies must be offered over and above the Residential Tenancies Act 1986
• developers can put shops in with the dwellings.

If this type of investment is created, interest will be tax deductible – even though it applies to residential rental property – on the condition the property continues to be operated as a “build-to-rent”.

Existing investors in property will be given a transitional period to come within the build-to-rent rules, if they want to.