Build-to-rent

Build-to-rent properties are medium-to-large scale, multi-unit residential housing developments that are built to provide long-term rental accommodation.

How they work

Build-to-rent properties provide long-term rental accommodation and are generally developed and professionally managed by institutional investors, developers or community housing providers.  

Increasing long-term rental supply 

Build-to-rent properties are typically rented as long-term rentals, with leases of several years, giving tenants more security and stability.  

Developing more build-to-rent properties will help improve rental supply and are an opportunity to boost the supply of secure, affordable and quality rentals in Aotearoa New Zealand.  

Build-to-rent exempt from interest limitation rules

As part of the Government Housing Package announced in March 2021, the Government introduced the current interest limitation rules. To ensure continued investment in new housing supply, property development and new build properties were exempt from these rules for a period of 20-years.

From 1 October 2021, new and existing build-to-rent developments will be exempt from the interest limitation rules in perpetuity.

Build-to-rent could help fill a key gap in the housing market. Exempting build-to-rent developments from the interest limitation rules will enable the full potential of the sector and ensure continued delivery of new housing supply.

Legislation implementing the proposal will be included in the next omnibus tax bill. The public will have an opportunity to provide feedback on the proposal, including the proposed build-to-rent asset class definition when the bill is referred to the Finance and Expenditure Committee.

Proposed build-to-rent asset class definition:

  • at least 20 dwellings in one or more buildings that comprise a single development, on either a single parcel of land or multiple contiguous parcels
  • the dwellings and any common land or facilities for those dwellings have a single owner
  • dwellings can be held in one or more titles
  • the building that a build-to-rent dwelling is in can include other dwellings or commercial premises that do not form part of the build-to-rent development (for example, an apartment block that has shops on the ground floor)
  • the dwellings are used or available for rent under the Residential Tenancies Act 1986
  • explicit personalisation policies must be offered, over and above the Residential Tenancies Act 1986
  • tenants must be offered a fixed-term tenancy of at least 10 years with the ability to give 56 days’ notice of termination, but they may agree to or request other tenancy offers.

Information release - Taxation (Annual Rates for 2022-23, Platform Economy, and Remedial Matters) Bill (No 2) (ird.govt.nz)(external link)

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