The benefits of investing in a new build

As Kiwis’ preferred way to build wealth, property investment remains as popular as ever – but we are beginning to see an interesting shift in investor behaviour.

Historically, most investors have opted to buy existing properties as a faster and more affordable option, but recent regulation changes have incentivised many to build new or buy off the plan.

Here are some of the benefits of investing in a new build.

Lower deposits accepted

To help boost construction and combat the housing supply shortage, the government has lowered the minimum deposit for new investor builds.

Currently, the minimum deposit for a new build is 20% of the property’s value, while the deposit required to buy an existing investment property is 40 percent.

So, if you have a smaller deposit saved, this change allows you to begin your investment journey sooner.

There may be fewer repairs

With the new Healthy Homes Standards for rental properties coming into effect, ensuring an older property is compliant can be expensive, with some experts estimating that it could cost up to $30,000.

However, under the Building Code, new builds must factor these standards into construction, meaning there will be no further modifications required.

And, as part of the Building Act, new properties are also covered under a 10-year warranty.

Increased tax benefits

Another important factor is the tax benefits available to investors who choose to build rather than buy.

With the right to deduct interest payments from taxable income set to be phased out by 2025, those who invest in new builds are eligible for a 20-year exemption to this rule.

To find out more about financing a new build, contact your like Mike Pero Mortgage Adviser.