On Nov 2, Property Council submitted to Parliament’s Finance and Expenditure Committee on the Taxation (Annual Rates for 2022-23, Platform Economy, and Remedial Matters) Bill (No 2). This bill, amongst other things, gives effect to changes intended to support growth in the Build to Rent sector.
Why this matters to our members
Property Council advocates for opportunities to unlock growth and urban development that meets New Zealand’s social, economic and environmental needs. Build to Rent has the potential to transform the experience of renting in New Zealand. Property Council research shows that our members stand poised to deliver over 25,000 Build to Rent homes in the next decade, with the right policy settings. This bill takes the first steps towards enabling growth in the Build to Rent sector.
Our submission strongly supported the action taken by Government of introducing a Build to Rent asset class definition and welcome the restoration of interest deductibility in perpetuity for eligible Build to Rent developments. There are, however, certain elements of the Bill that are of concern to Property Council due to their potential to result in unintended consequences. To that end, we have prepared a list of key recommendations to influence better, fairer outcomes for all.
We recommend that the Select Committee:
- Clarify the intent of “without penalty” in relation to tenant personalisation and ensure that the requirements for tenant personalisation (i.e. paining of a wall) include, at minimum, ‘make good’ provisions (i.e. painting wall original colour) for tenancies of less than 24 months;
- Allow for limited partnerships or joint ventures by either removing the “same person” requirement from the definition of Build to Rent land or as an alternative, the definition should be expanded to read “same group of persons” as shown below:
Build to rent land
(a) means land to the extent to which, together with any other contiguous land owned by the same group of persons, has 20 or more dwellings used, available for use, or being prepared or restored for use, as dwellings occupied under a residential tenancy to which the Residential Tenancies Act 1986 applies or would apply, if—
- Clarifies the application of the “contiguous land” requirement to Build to Rent developments include unit titled dwellings that meet the asset class definition;
- Provide guidance on the application of the proposed asset class definition to mixed-use developments;
- Provide guidance on the future need to introduce a new category of ‘Build to Rent’ tenancy into the Residential Tenancies Act 1986, to align with the bespoke requirements of Build to Rent;
- Introduce a mechanism for Build to Rent operators to address inadvertent breaches of the asset class definition, within a reasonable time period;
- Amend responsibility for compliance checks of certified Build to Rent properties to align with retirement villages who take a self-management approach supported by an audit function; and
- Amend the Overseas Investment Act 2005 to explicitly enable international investment in the Build to Rent sector.