There were a number of promises made by National and Act during the election campaign which directly affected property investors, and it looks like they have already pushed on with the first one – to restore the interest deductibility for landlords!
The Government has announced that the 2023/24 year sees a 60% deduction, with an 80% deduction in 2024/25, and back to 100% in 2025/26.
While obviously costs to landlords are still higher than ever with an increase in interest rates and overall costs such as rates and insurance, I am confident that this will provide some much needed relief for many landlords who have been struggling to hold onto their rental properties due to them becoming financially unviable as an investment, and in some cases unaffordable to be able to hold onto.
However it is not all about the landlords, and the tenants themselves will find this has a positive impact on their affordability as this should help to stabilise rental prices somewhat. It is often thrown around in the media that landlords are greedy, however we manage over 500 properties and categorically it is not greed that sees weekly rents increase, but rather increased costs to landlords.
Undoubtedly this will mean that those landlords teetering on being forced to sell due to the financial drain holding onto their properties.
Another real benefit is that with the reintroduction of interest deductibility on all investment properties, this will mean that more investors will purchase pre-existing homes as opposed to just new ones (which were still able to claim interest back).
While having lovely new homes is fantastic, due to the building cost of these the rents are higher, but now I believe we will see more good quality ‘second hand’ homes back in the market for renters.
This will assist with rental stock, and also help to keep rents lower for tenants – it really is a win-win situation in my opinion.