Labour’s 100-Day Plan For Housing – What Affect Will This Have On Rental Properties?

There are three key points of Labour’s 100-Day housing plan which will directly affect investors in the New Zealand residential rental market, and while there is still a lot of uncertainty around what the actual changes will be, particularly the Healthy Homes Guarantee Bill, I have outlined the ‘bones’ of the bill, which is what we do know already.

Healthy Homes Bill

As part of Labour’s 100-Day plan , the Healthy Homes Guarantee Bill has now been passed in Parliament.

The Healthy Homes Guarantee Bill has been designed to ensure that New Zealand residential rentals meet minimum healthy home criteria including heating, ventilation, insulation and drainage.

Although we are already aware of the upcoming insulation minimum requirements, and current smoke alarm legislation, what they are still working through is what the actual standards in relation to a ‘warm and dry’ home will be.

There is a lot of speculation out there surrounding heating sources, minimum internal house temperatures and lots more, however until they complete research we do not have any new set standards to date.

It is positive that the Government will run a consultation process over the next 18 months to ensure that tenants, landlords, public health and building science experts and industry representatives have an opportunity to get involved in creating robust minimum standards.

While obviously this is overall a very positive move to ensure tenants have healthier homes and will stop people living in cold and damp homes, the implications are that it could cause landlords some financial difficulty which may cause a lot of investors to sell, or at the very least rents will in all probability increase to cover these extra costs.

The Brightline Test

There are also changes that will target property investment and speculation. This sees the current brightline test increasing from 2 to 5 years. They are yet to advise when this will be changing, however it is expected to be in 2018 sometime.

The impact of this should not be too major on rental property owners, however it is important that there can still be allowances made in cases where the property does genuinely need to be sold quickly due to serious illness or other such circumstances.

RBNZ Changes To The LVR Restricitions

This is due to take affect from 1st January 2018, with investors being able to borrow with a 35% deposit, down from 40%.