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Let's Kick 2021 Into Touch

Change has been the only constant in a year few will forget in the property market, writes Sharon Cullwick.

By: Sharon Cullwick

1 January 2022

One thing’s for sure, there certainly is a lot of change in our industry, and 2021 was no exception. Early in the year we saw the introduction of the most of the Residential Tenancies Act changes, followed by the announcement that private rental property providers could no longer deduct mortgage interest as an expense. The Healthy Homes Standards were implemented for any new or renewed tenancy agreement from the July 1; Resource Management changes were announced in November along with new Privacy Commission guidelines; and in early December there were additional changes to the Healthy Homes regulations.

In February phase two of the Residential Tenancies Act was implemented. This included most of the changes to the policy.

In March, the government’s surprise announcement that rental property providers could no longer claim mortgage interest payments as an expense, singled out rental property providers from any other business. The phasing in of these changes began on October 1, and will apply to all residential investment property by 2025. This is one of the biggest financial hits to rental property providers. It is expected that once fully implemented, the costs per property will be about $6,000 per year. However, as interest rates increase, these costs will increase for investors.

As part of the March announcements, the bright-line test was extended from five to 10 years for existing properties purchased on, or after March 27, 2021, with the exclusion of new builds. A new build was defined sometime later as a property with a code of compliance after March 2020.

Removing The Red Tape

July saw the implementation of the Healthy Homes Standards (HHS). However, many had started getting their houses up to standard well before this date. These regulations set the minimum requirements for heating, ventilation, insulation, moisture ingress and drainage, and draught stopping for all rental properties. All private rental houses must comply within 90 days of any new or renewed tenancy.

In November, the government announced a bipartisan agreement that would amend the Resource Management Act by removing red tape and allowing intensification of housing. Some see this as a great move. Others are worried about the NIMBY effect. This intensification would allow up to three homes of up to three storeys to be built on most sites. These changes would bypass some of the outdated local zoning rules. Although only recently announced, there are already changes being made to the proposed legislation. We will have to wait to see the changes when the final legislation is written.

November also saw new guidelines released from the Privacy Commission. These guidelines, although good in theory, will slow the process of finding a suitable tenant, leaving properties empty for longer and making the rental crisis worse. A property manager or landlord can only ask for information required at each stage of the process.

In December additional changes were announced to the Healthy Homes Standards. These changes are for dwellings built from 2007 to 2008 onwards and are to the current building code requirements for insulation and glazing. Changes will include renovated properties and apartments of at least three storey and six units or more.

Phase three of the RTA, which was to be implemented in August, has been delayed until at least mid-2022. These changes relate to family violence and assault against a landlord.

Sharon Cullwick, Executive Officer, NZ Property Investors’ Federation


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