Tax Settings

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Interest deductibility has been fully restored. From the 2026 income year (1 April 2025 onwards), landlords can once again claim 100% of the interest on loans used for rental properties, reversing the phased restrictions that applied between 2021 and 2024. Rental losses can still only be offset against rental income under ring-fencing rules, not your salary or wages.

The bright-line test is now two years for most property. If you buy and sell within two years of settlement, any capital gain may be taxable; outside that window, it generally isn't. One important exception: if you bought an existing property between 27 March 2021 and 30 June 2024, you're still locked into the old 10-year bright-line period for that specific property — the shorter rule wasn't applied retroactively.

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Lending Conditions

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LVR restrictions for investors have eased slightly. From December 2025, banks can allocate up to 10% of new investor lending to buyers with less than a 35% deposit (previously 5%), giving a little more flexibility than in recent years, though a 30–35% deposit is still the practical norm for most investors. New-build properties remain exempt from these restrictions entirely.

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Tenancy Law Changes

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No-cause terminations are back. Since 30 January 2025, landlords can end a periodic tenancy with 90 days' notice without giving a reason, or 42 days' notice if the property is needed for the landlord's or a family member's own use, or is being sold with vacant possession. Tenants, in turn, now only need to give 21 days' notice to end a periodic tenancy.

Healthy Homes Standards are now fully and permanently in force. Since 1 July 2025, every private rental must meet all five standards (heating, insulation, ventilation, moisture and drainage, and draught stopping) at all times — there's no phase-in period left. Every new tenancy agreement must include a compliance statement, and a landlord who falls short can face Tenancy Tribunal penalties of up to $7,200. It's worth treating compliance as an ongoing maintenance item, not a box ticked once.

 

Yields and Where to Look

 

Gross rental yields across Wellington typically sit around 3–4%, with net yields (after rates, insurance, management, and maintenance) closer to 1.5–2.5%. As with most of the country, capital growth rather than yield is the main driver of investor returns here. If yield is your priority, outer suburbs tend to perform better — Upper Hutt, for example, is currently returning gross yields of around 4.7% on houses and up to 5.5%+ on units.

Wellington property values remain roughly 20–25% below their 2021 peak. For investors taking a longer-term view, that gap — combined with the restored tax settings — is worth factoring into your numbers.

 

Got a question about your own situation? I'm always happy to talk it through — no obligation, just straight answers.

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