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Legislation has passed confirming that new and existing build-to-rent developments on registered build-to-rent land are excluded from the interest limitation rules.

Build-to-rent developments are medium-to-large scale housing developments built to provide long-term rental accommodation. The development must be approved as build-to-rent land by Te Tūāpapa Kura Kāinga ‒ Ministry of Housing and Urban Development (HUD).

To qualify for the exclusion, the development must meet the following requirements.

  • 20 or more dwellings in a single development on a single block or adjacent blocks, held in one or more titles.
  • Owned by the same person (a person includes a legal entity like a company).
  • Each dwelling is being prepared for use, available, or occupied under a residential tenancy.
  • Every residential tenancy has the option of a 10-year term, with the ability for the tenant to give 56 days’ notice of termination.
  • Every tenancy agreement includes a personalisation policy.

Existing developments

Existing developments have until 1 July 2023 to meet the requirements and to apply for the exclusion.

If the deadline is not met, the development will never qualify for the exclusion.

If the deadline is met, the exclusion can apply retrospectively, meaning interest can be claimed if it was incurred on or after 1 October 2021.

New developments

New developments completed on or after 1 July 2023 must meet the requirements for the exclusion as soon as the development is completed. If approved, the exclusion will apply from the date HUD receives the application.

Where to apply

HUD's website has more information about the requirements and the application process.

Build-to-rent - Te Tūāpapa Kura Kāinga - Ministry of Housing and Urban Development (

Once approved, HUD will record the land on a register of build-to-rent assets and will share this information with us. HUD needs to be notified of any changes, for example units or dwellings that no longer meet the requirements.

Apportioning interest for other residential dwellings

Interest can only be claimed if it relates to the portion of the development that meets the build-to-rent land definition.

The interest expense should be apportioned for any dwellings that do not meet the build-to-rent land definition.

When the exclusion comes to an end

Individual units or dwellings that become ineligible can never qualify for the exclusion again in the future. HUD will work with the owner to ensure any inadvertent breaches are remedied.

If it is not an inadvertent breach and the development no longer meets the requirements for build-to-rent land, the development will no longer qualify for an exclusion from the interest limitation rules.

Even if the development meets the requirements in the future, it can never qualify for the exclusion again.

Once the exclusion comes to an end, the owner must stop claiming interest as an expense in their income tax return unless another exclusion or exemption applies.

Build-to-rent exclusion or new build exemption

Build-to-rent land is not prevented from accessing the new build exemption instead of the build-to-rent exclusion. The new build exemption currently applies to exempt new builds from the interest limitation rules for a period of 20 years.

However, to access the build-to-rent exclusion at any time in the future (for example, once the 20-year new build exemption ceases), the development must meet the requirements from one of the following:

  • 1 July 2023 for an existing development
  • as soon as the development is completed for a new development.

For more information about the interest limitation rules.

Property interest limitation rules

Last updated: 03 Apr 2023
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