The change of government has brought optimism for many Homeowners and property investors.
There are promises for interest deductibility to be fully restored by 2026 and the Brightline test to be brought back to two years (from five years for new builds and ten years for existing properties). This may mean good news for many property investors if these promises go ahead.
While that may be the case, we still think investing in a new build is a much superior option. Here’s why.
New builds only require a 20% deposit to purchase as an investment property, whereas 40% is required for existing properties. So, for those who mustered up a smaller deposit, entering the housing market sooner is much easier.
New builds often come with a 10-year building guarantee, which helps to reduce the risk of ongoing maintenance costs (which can pop up at the worst time possible from a financial standpoint). And while you can acquire a builder’s report on existing properties, things can still be missed. You wouldn’t want to be caught by surprise a year later for a leaky roof or something of similar scale.
You’re less likely to incur additional costs of getting the property to code on the healthy home standards because a new build will already be compliant. Many new builds will be up to standard with insulation, heating, ventilation, draft stopping, moisture ingress, and drainage. So, there will be less to pay upfront in the future.
When you purchase off the plans, you often don’t need to settle until the home is complete, giving you more time to improve your financial situation and increasing your ability to hold for the long term.
A new build that is built to rent out will have a plan in place to ensure the home is good to go for a new tenant to move in upon settlement. That includes fixtures like fencing, landscaping, letter boxes, and curtains. All the little things many new investors forget to think about.
While there is promise for existing rental properties to have tax deductibility reinstated, that could still take time to come into effect. New builds have tax deductibility benefits, meaning they are still a favourable investment for the near future and long term.
Many new builds are built to a healthy home standard, include the latest architectural trends and construction techniques, and are energy efficient. This makes it a preferrable choice for tenants in comparison to existing properties.
With the recent change of government and all other things considered, investing in a new build might be your best bet. If you want guidance around selecting, financing, and general information around building property investments into your financial plan, chat with one of our enable.me advisers. Once you’ve locked down your investment property criteria, talk to us, and we’ll help you find a suitable property.
While property investment may seem simple from the outside, there’s a lot that goes into buying the right property and making sure you can hold it through the fluctuations of a property cycle. In this guide, you’ll find everything that you need to know about what makes property such a powerful investment option, and how to make sure you buy the right investment property to meet your financial goals.
Click here to download the New Zealand Property Investor Handbook by Momentum Realty.