Applications for existing build-to-rent developments to register for exclusion from the interest limitation rules close 1 July

Build-to-rent providers wishing to register existing developments for the exclusion must apply to Te Tūāpapa Kura Kāinga – Ministry of Housing and Urban Development by 1 July 2023. Registered developments will be able to claim interest costs relating to the associated developments.

From 1 July 2023, only new build-to-rent developments (built on or after 1 July 2023) will be eligible for the build-to-rent exclusion from the interest limitation rules.

Once approved, Te Tūāpapa Kura Kāinga – Ministry of Housing and Urban Development will record land on an internal register of build-to-rent assets and will share relevant information with Inland Revenue.

Applying for the exclusion

For a land to be registered as build-to-rent, a property must meet all of the requirements included in the definition of “build-to-rent land”, as outlined in section YA 1 of the Income Tax Act 2007.

Definition of ‘build-to-rent land’

Land registered as build-to-rent must continuously meet the following requirements:

• at least 20 dwellings in one or more buildings that comprise a single development, on a single project-based parcel of land (as described in section CB 12(1)(a) to (e) or CB 13(1)(a) and (b) of the Income Tax Act)
• owned by the same person (a person includes a legal entity like a company)
• the dwellings are used or being made available for rent under the Residential Tenancies Act 1986
• tenants must be offered a fixed-term tenancy of at least 10 years (which will enable them to terminate the tenancy with 56 days’ notice under section 58A of the Residential Tenancies Act 1986), but they may agree to or request other tenancy offers. That is, a tenant does not have to accept a 10-year tenancy offer
• explicit personalisation policies must be provided, with reference to sections 42, 42A and 42B of the Residential Tenancies Act 1986, and including examples of possible personalisations and the landlord’s position on the keeping of pets

To ensure alignment with the interest limitation rules, the exclusion for existing developments applies retrospectively from 1 October 2021. The exclusion will apply to new build-to-rent developments (built on or after 1 July 2023) from the date of application for registration.

For more information, please visit the Build-to-rent page on this website.