1. Tax deductibility. This has been a game-changer for the new build sector. In a bid to stimulate the supply and purchasing of new homes the New Zealand Government has announced that properties built after 27th March 2021 will be classified as new and therefore the investor can offset the interest component of their loan against the personal income. This is being phased in over the next 5 years. Read more in-depth about it here. Investors buying new homes will NOT be able to deduct the interest component of their loan. This has seen a shift of investors looking towards the new build sector for their next property purchase. 

2. The 5 Year Brighline Test versus 10 Years for existing. We always see property investment as a long term play. However, for those who like to turn their capital around, only having to wait 5 years to be exempt from capital gains taxation with a new build, rather than 10 years with an exiting house is a huge driving force. This is another example of the Government attempting to divert the investor market towards purchasing new builds. This increases the supply of new homes in a desperate housing shortage and it helps ensure Kiwi renters are living in modern, healthy homes.  

3. Lower LVR’s. Banks will lend you more money at historically low interest rates. For investors and owner-occupiers, banks will accept smaller deposits for new builds, in some cases as low as 10% check with your bank on their     appetite for high LVR (loan to value ration) loans to buying new homes. For existing home purchasers for investors, the LVR is 40% deposit. So if you were looking at an existing home purchase as an investment and the price was $650,000 the deposit would be $260,000 (40% of purchase price). If you were looking to buy a new build home for the same price, the deposit could be as low as $65,000 that’s a difference of $195,000. It’s clear to see the benefits of leveraging your capital to achieve a more robust portfolio. Would you rather own one $650,000 home with $260,000 tied up in it or four $650,000 homes with the same capital ties up but at a portfolio value of $2.6m? Easy answer. Say the market moves 10% in the next few years, thats $260,000 growth in the new builds versus $65,000 in the existing home. Simple investment maths that could propel your property investing journey. With the way Christchurch prices are heading, it’s about time to get aboard for the up-leg.

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4. Kiwisaver compliant and eligible for Government grants. Another Government stimulation scheme for new build purchasers. The Kiwisaver scheme helps contribute Kiwis use their savings towards the purchase of their first home. There is an accompanying scheme called the First Home Grant which could be up to $20k if the applicants are a couple and meet certain criteria. Do your research and find our your eligibility.    

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5. Buying off-plan and benefitting from market movement. This is an age-old speculator trick but it’s one that can seriously benefit a purchaser financially. Purchasing a home off the plan generally means(but of course not always) that by the time your property is finished and you are required to settle, the asset has benefitted from market uplift and is now worth more than the price you had on the contract. This has been happening frequenty in The Garden City as prices keep tracking upwards consistently at a rate of knots.

6. Might seem obvious but, one major benefit is that it’s new! No one has lived in the home before you or your tenant. You aren’t inheriting someone’s questionable interior design choices or haphazardous DIY attempts or more     dangerously, underlying issues with the existing home that could be costly to remedy. Leaks, electrical issues, plumbing failures, cracked drainage or unrepaired earthquake damage (those last two are prevalent in Christchurch’s property market). You won’t be staring down at an expensive and timely renovation and the new home is likely to have been designed in a neutral manner by an interior designer, ready for you to add your character to the neutral canvas.  

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