REINZ supports the Government’s announcement of a new exemption from the interest limitation rules for qualifying Build-to-Rent assets. However, further clarity is required — particularly around qualification— to ensure Build-to-Rent assets can be successfully established and sustained in New Zealand.
The Government announced that new and existing Build-to-Rent assets will be exempt from the interest limitation rules, a welcome change to the interest limitation rules first announced in March 2021 as part of the Government’s initiative to support housing supply and affordability.
In our view, owners of Build-to-Rent developments should be able to deduct interest for the length of time they own the property, provided they operate the property as a Build-to-Rent tenancy. We have proposed a small change to achieve this.
REINZ strongly supports measures to increase housing supply across Aotearoa; measures that enable developers to build at scale and legislative measures that will sustain an affordable rental market. REINZ welcomes the introduction of the Build-to-Rent exemption from interest limitation as a means for all New Zealanders to achieve an affordable, healthy home.
Why a call for further guidance is necessary
However, due to the significant length of tenure and the importance of maintaining a workable relationship between all parties involved, it is fundamental the relationships between the tenant, landlord and property manager are transparent and fair. As a result, REINZ calls for further guidance around the parameters of the Build-to-Rent asset class definition.
Joanne Rae, Head of Property Management at REINZ, says: “One in three New Zealanders currently identify as a renter and this number is expected to increase. It is vital that more long-term rental options are introduced to ensure Kiwis have access to quality, stable rental housing, that is secure, warm and dry”.
“Developing new models through Build-to-Rent will allow for longer, more secure tenancies, and with clear guidance on ‘personalisation’, increased freedom to customise the property,” Rae concludes.
REINZ made submissions earlier this month seeking further clarification on the Build-to-Rent asset class definition to ensure the new provision enables a sustainable and ongoing housing initiative for Aotearoa’s ever-growing rental market.