Where To From Here
The goalposts have shifted, again. The Government extension of the bright-line test to 10 years, coupled with the removal of investors’ ability to offset their mortgage interest payments against rent received, marks the latest instalment in a seemingly endless succession of changes to property investment law.
It’s been met with shock and outrage from many. There are fears that “mum and dad” investors will no longer be able to afford to keep their retirement dreams alive, as thousands of dollars are added to their annual expenditure. Aimed at addressing the vertiginous rise of property prices since the removal of LVRs last year (due to fears around a bottom out after Covid-19), these measures come in the wake of increases in LVRs, which moved to 30% on March 1, increasing to 40% on May 1.
New Zealand Property Investor undertook a survey shortly after the changes were announced. The results were enlightening: 54% believed that the changes would slow down house price growth, and (interestingly) 54% said they supported the extension of the bright-line test to 10 years.