This morning the government announced its new housing plan to tackle the current housing crisis. We have summarised below the main points so far.
The bright-line test will be increasing from 5 years to 10 years. There is an exception for new builds which will remain at 5 years. This comes into effect for property acquired on or after 27 March 2021.
This means any gains made on residential properties bought and sold within a 10 year period will be taxed. The exception to this is the family home or inherited property.
From 27 March 2021 new residential investments will no longer be able to claim interest on loans against the income from those properties. This will come into law on 1 October 2021 but apply retrospectively from 27 March 2021.
This will also be phased in for existing residential investments over a 4 year period.
Housing Acceleration Fund
The Government have launched a $3.8 billion fund to speed up the pace and scale of new builds hoping to add saturation to the market. The aim is to jumpstart housing developments by funding the infrastructure needed for these developments.
Further funding for Kāinga Ora
The Government are also allowing Kāinga Ora, the Crown housing agency, to borrow a further $2b for it to buy land for housing.
Apprenticeship Boost initiative
In a bid to get more houses built, the Government is bolstering its apprenticeship scheme by extending it by four months to further support trades and trades training.
This means employers who have apprentices starting over those extra four months can get the Apprenticeship Boost support as well.
First home buyers deposit
Buyers who are applying for their first home loan will only need a 5% deposit, rather than the 20% deposit required by most lenders.
First Home Grant
From 1 April 2021, the First Home Grant income caps will be lifted from $85,000 to $95,000 for single buyers, and from $130,000 to $150,000 for two or more buyers.
The Government has also announced it is upping the cap on how much a home has to cost, for someone to be eligible for the grant.
• Auckland goes from $625,000 to $700,000
• Queenstown-Lakes District goes from $600,000 to $650,000
• Wellington City, Hutt City, Upper Hutt City, Porirua City, Kāpiti Coast District goes from $550,000 to $650,000
• Nelson City, Tasman District, Tauranga City, Western Bay of Plenty District, Hamilton City, Waipā District, Hastings District, Napier City goes from $525,000 to $600,000
• Christchurch City, Selwyn District, Waimakariri District goes from $500,000 to $550,000
• Waikato District, Dunedin City goes from $425,000 to $550,000
• Rest of New Zealand goes from $400,000 to $500,000
As always, if you would like to discuss how these changes may effect you, please get in touch with your Greenlion Advisor.