One of the surprises in the coalition agreement signed on Friday between the parties forming the incoming National-led government in New Zealand was the acceleration of the restoration of mortgage interest deductibility for landlords.
National’s coalition partner, the ACT Party, pushed for the faster return of deductibility than National campaigned on. Interest deductibility was removed in a staggered way (other than for new builds) by the former Labour government.
Kiwi landlords will be able to claim back 60 per cent of their mortgage interest costs on investment properties from 1 April next year. This will rise to 80 per cent from 1 April 2025 and to 100 per cent from 1 April 2026.
Landlords will also be able to once again end a tenancy, for any reason, with 90-days’ notice.
These changes around investment properties are expected to fuel the already more active New Zealand property market, with an increase in listings and a small lift in prices already evident following October’s election.
However, the National Party’s plan to fund its promised tax cuts by allowing the return of foreign residential property buyers has been stymied by its other coalition partner, the New Zealand First Party. It opposed the plan to partially lift the ban on foreign buyers which would have seen them allowed to buy homes for over NZ$2 million but pay a 15 per cent tax.
National campaigned on a policy of cutting red tape and regulation, and the coalition agreement commits to a rewrite of the CCCFA (Credit Contracts and Consumer Finance Act) as a priority, saying the new government will aim “to protect vulnerable consumers without unnecessarily limiting access to credit”, apparently with a focus on the affordability regime.
The coalition has also agreed to remove the Reserve Bank of NZ’s dual mandate, which saw the central bank charged with keeping inflation in check but also supporting maximum sustainable employment.
The Australian-owned banks operating in New Zealand will also have noted the coalition agreement included conceding to New Zealand First’s demand for an inquiry into banking practices and profits.
There will be a select committee inquiry into banking competition focusing on competitiveness, customer services, and profitability.
The new government will be sworn in today (Monday).