Government changes to be aware of

Government changes impact property investors. They can be from the Government itself like the Brightline Test and the changes to overseas buyers, but also the changes impacting overseas buyers. Otherwise they can be from the Reserve Bank.

There were a few government changes made last year to impact property investors, and to restrict the very strong migration driven growth in Auckland:

  1. LVRs in Auckland – 70% maximum loan to value ratio for investment property
  2. Outside of Auckland – 80% maximum LVR in other regions with an allowance of 15% of loans to exceed this.
  3. Brightline test – you must hold property for 2 years (apart from your own home) or have the profit taxed
  4. Overseas buyers – must have an NZ bank account, NZ IRD number and face NZ Land Withholding Tax.

In addition there were further government changes, with building improvement regulation to take affect from 1 July this year:

  • Smoke alarms on each floor with 3 metres of each bedroom with a 10 year ultra long life photo-electric battery; and
  • Insulation in ceiling and under-floor.

The impact of these changes has been to reduce the volume of sales significantly for Auckland houses priced under $750,000. It has had a minor impact on Auckland houses priced over $1.25m.