The last few years have seen myriad changes to tenancy laws in New Zealand, and so far 2024 does not look to be any different! The new National-led government has hit 'Ctrl + Z' on a number of changes made over recent years, moving the needle on the regulatory environment slightly towards landlords instead of tenants.

Effective now - greater mortgage deductibility
The ability to deduct mortgage interest costs was slowly being phased out, and now is being quickly phased back in! Rental property owners will be able to claim 60% this tax year (was previously 50%), 80% in 2024/25 and 100% in 2025/26. For some investors, this restores the attractiveness of residential property investment, and will hopefully help to remedy the growing shortage of available rental properties. 

Effective 1 July - Bright Line Test reduced to two years
The current Bright Line Test is 10 years, so this is a significant reduction. Although many investors already plan to hold for longer periods, this will provide for greater flexibility for those who prefer to sell sooner, but also want to avoid capital gains tax. 

Tenancy termination rules - no date set
Also coming this year is a reversal of the prior law banning 'no cause' terminations. Tenancies will be able to be ended by landlords providing they give the required notice period – no reason is needed. This area of the law is a fine balance, as few landlords terminate tenancies in an ongoing rental investment unless there are genuine problems. But equally, frequent changes are very disruptive for tenants, especially for families with children who may need to change schools when the family relocates. 

Healthy Homes deadlines – no change
The deadlines for a rental to meet Healthy Home criteria are unchanged. New or renewed tenancies must comply within 120 days of the tenancy start date, while existing and varied tenancies do not need to comply until 1 July 2025. If you are unsure whether a change such as extending a tenancy or increasing the weekly rent counts as a renewal or a variation, feel free to contact me for advice. 

Louise Benson, Head of Property Management
Barfoot & Thompson Milford
027 431 9536
milford.rental@barfoot.co.nz