Eighty homes in a $110 million south Auckland terraced house project were pre-sold on Saturday and a real estate agent says the Government’s landlord tax law change was possibly one of the driving factors.

James Law of James Law Realty said the places sold on Saturday are to be built at The One at Flat Bush and demand took everyone by surprise. “The Government has given tax advantages to people for new builds. That’s possibly one of the reasons,” he said of the sales.

But the sale announcement also comes on the same day the Reserve Bank Te Putea Matua announced it would begin consulting on tightening mortgage lending standards. Law said 133 homes were planned at The One, with construction starting in October and 10 per cent deposits have been taken on the 80 pre­ sales.

Tung Wei Ling, chief executive and founder of the One Property Group said: “I am absolutely shocked by this. Another agency told me it will take nine months to sell down this project. We have now hit our sales target months ahead of our schedule. Our funders are ready. There’s no way we will be canceling this project.”

Law said the houses are all to be built at 241 Flat Bush Rd – many hectares and a green fields site.

The One Property Group is the developer and KCC Construction founded by Uikun Zhang has been contracted to start construction in two months.

Demand for new build properties is rising with the Government’s confirmation that it will be exempt from its new tax rules for property investors.

In March, the Government said it would phase out investors’ ability to offset interest costs of their mortgages against rental income. But investors are exempt if they are building new and Law says that’s a big factor in demand right now.

In June, Finance Minister Grant Robertson and Revenue Minister David Parker jointly announced a consultation on the exemption of new builds from the proposed tax law.

“The Government’s goal is to encourage more sustainable house prices, by dampening investor demand for existing housing stock to improve affordability for first-home buyers. The proposals we are releasing today will help to achieve that goal,” Robertson said.

“This is part of the Government’s move to cool the property market. A more sustainable housing market supports more first-home buyers to get into their own homes but also protects our recovering economy. So we all benefit.”

Parker said: “The proposal to exempt property development and new builds should help boost supply by channelling investment towards increasing housing stock and away from direct competition with first home buyers and owner-occupiers for existing housing stock.”

“This consultation is focused on finalizing the detailed design of the rules. The proposals will not affect the main home.”

Generally, it is proposed that residential property would be considered a new build if it is a self-contained dwelling with its own kitchen and bathroom, and that has received a code compliance certificate. The Government is also considering whether subsequent owners should also be exempt from the interest changes, and for how long any exemption might last.

SOURCE: NZ HERALD