Market Comment - November 2025

As we head into the end of the year, there’s plenty happening in the property world. Labour’s proposed Capital Gains Tax has reignited debate, new pet regulations are about to reshape how we manage tenancies, and the local market in Christchurch remains steady but subdued. Here’s what matters — and what we think — from an investor’s point of view.

Labour’s New Capital Gains Tax – What It Means for Property Investors

Labour has released its proposed Capital Gains Tax (CGT). At first glance it looks tidy, but the detail matters. We agree with the NZ Property Investors Federation (NZPIF): the policy, as drafted, unfairly targets providers of rental accommodation.

The key points

• It only applies to residential and commercial investment property. Other asset classes are exempt.

• Holiday homes and second houses that aren’t rented are included.

• It applies only to gains made after 1 July 2027.

• If you own a business that includes property, CGT applies to the property portion of that business.

• It applies to net gains — you can deduct purchase costs and improvements (a sensible inclusion).

• No treatment for inflation is mentioned — taxing inflationary “gains” would be unfair.

• Interest deductibility and a potential wealth tax have not been ruled out.

Why we think it misses the mark

Labour frames this as a tax on speculation. We’re all for curbing genuine speculation — but the policy doesn’t clearly distinguish between short-term trading and long-term investment that provides warm, dry homes. We welcome the ability to deduct the cost of improvements. That’s logical. But repairs, maintenance, and inflation should also be accounted for. If a CGT proceeds, it should support investors who upgrade their properties and lift housing quality.

The big omission: interest deductibility

There’s no clarity on interest deductibility. If the goal is a fair, balanced system, this should be addressed alongside CGT. Removing deductibility was a costly mistake for the rental market. Our view: confirm that interest deductibility is permanently restored and move forward with policy that encourages supply.

Heads-Up: New Pet Regulations from 1 December 2025

From 1 December 2025, new pet rules under the Residential Tenancies Amendment Act 2024 take effect.

What changes:

• A pet bond of up to two weeks’ rent can be requested (in addition to the standard bond).

• Written consent is required unless the agreement already allows pets; refusals must be on reasonable grounds.

• Tenants remain liable for pet-related damage beyond fair wear and tear.

• Existing lawful pets prior to 1 December are generally not caught retrospectively.

• Service/assistance animals are excluded from these requirements.

What this means for landlords and managers:

• Pet-friendly properties can attract a wider tenant pool and reduce vacancy time.

• Update tenancy agreements, inspection templates, and insurance to reflect the new regime.

• Communicate your pet policy and consent process clearly with new and existing tenants.

Christchurch Market Update

The Christchurch rental market remains steady but subdued. We’ve continued to rent a good number of properties over the past month, though it is taking a little longer to secure tenancies. The fundamentals haven’t changed: well-presented and well-priced properties always rent well. Focus on realistic rent levels, presentation, and value for money to stand out.

Our Take

A well-designed tax system should encourage investment in quality housing, not penalise it. If a CGT is to proceed, design it to reward improvements, treat inflation fairly, and confirm interest deductibility. That would be a constructive step that supports both investors and tenants.

Property legislation continues to evolve, and we’ll keep you updated with what matters most. If you’d like guidance specific to your property, get in touch anytime.