MP Kiri Allan
Yesterday, the Labour Government announced the next steps in our plan to tackle the housing crisis and make it easier for Kiwis to buy their first home.
New Zealand’s housing crisis has been decades in the making. Gisborne especially has felt the impact of this crisis, with a lack of stock and increased demand seeing it become one of the hottest markets in the country. Just last month rents in the district also hit a new record high of $535.
There is no easy fix. It’s an issue that will take time to turn around, and will require everyone working together.
As part of this, our Government has announced a new package of changes that will increase housing supply, relieve pressure on the market, and tilt the balance back towards first-home buyers.
The first part is about helping more people buy their first home. We’re lifting the income caps on the First Home Loan and First Home Grant programmes, and lifting the price cap on houses people can purchase through these schemes in targeted regions.
With a First Home Loan, buyers only need a 5 percent deposit, rather than the 20 percent deposit required by most lenders. First Home Grants provide up to $10,000 to help people pull together their deposit. We’re helping more people access this support, and get into their first home.
Another way we’re shifting the balance towards first home buyers is by extending the bright-line test from five to 10 years. The bright-line test, introduced by National, is designed to make flipping properties less attractive.
Under current bright-line settings, if you buy a house and sell it within five years, you’ll need to pay income tax on any profits you make from the sale. We’re changing these settings so speculators will pay this tax if they flick off houses within 10 years. And remember, the bright-line test does not apply to the main family home or inherited property.
Alongside the bright-line extension, we’re also closing a tax loophole that allows speculators to write off interest costs against income they make from their properties. Together, these steps should ease pressure on the market, and give first-home buyers more options.
Another important part of our plan is increasing housing supply. Our new Housing Acceleration Fund will speed up the pace and scale of house building.
This fund is something local government and developers have been calling for, and will jumpstart large-scale developments by funding the vital infrastructure like pipes and transport needed for new housing, helping green light tens of thousands of house builds in the short to medium term.
We’re also helping to boost supply by incentivising investment in new developments, rather than existing houses. People who choose to invest in a newly-built property will be exempt from changes to the bright-line test and interest deductibility. This will encourage more people to invest in new builds, and over time, will help to drive development.
Finally, we’re making sure we have the skilled workforce we need to build more houses, extending our Apprenticeship Boost payment, which has already helped businesses to take on 21,000 apprentices, to grow our construction sector.
This is just a quick overview of our next steps to ensure more Kiwis can afford to buy their own home. There’s no one, simple answer for fixing the housing crisis, but together, the measures we’ve announced will make a real difference to all Kiwis, and especially our people in Te Tairawhiti.