ACT adopts NZPIF ring-fencing proposal and goes further: a major advocacy win

ACT has announced it will campaign to remove rental loss ring-fencing for all residential rental properties, going further than the new-build exemption NZPIF has been advocating for.

A major NZPIF advocacy win

ACT has adopted NZPIF’s proposal and gone further.

NZPIF advocated for removing ring-fencing from new builds as a first step in discussions with political parties. ACT is now proposing to remove the restriction for existing rental homes as well. We welcome this broader commitment.

ACT Housing spokesperson Cameron Luxton first raised ring-fencing during the political panel at the 2026 NZPIF Property Investors Conference in Tauranga. ACT Leader David Seymour officially launched the party’s wider policy on 14 October 2026.

NZPIF has put its proposal to ACT, National, Labour, New Zealand First and Opportunity. During the conference panel, National’s Chris Bishop and New Zealand First’s Andy Foster said they would consider it. Other parties have indicated they are open to persuasion.

A changing property market

NZPIF believes the changing property market, and the greater focus on increasing housing supply to help keep house prices and rents under control, has created room to reconsider tax restrictions introduced during the previous property boom.

For example, the national median weekly rent was $595 in June 2026, compared with $600 in December 2023, according to Tenancy Services data. This is one indication of how conditions have changed, although rental trends vary across regions and over time.

The way to fix a housing crisis is with good housing policy, not bad tax policy.

NZPIF’s position on rental property taxation

NZPIF believes the focus should be on policies that support housing supply and encourage people to provide and maintain rental accommodation. Removing rental loss ring-fencing would be a welcome step in that direction.

What this could mean for rental property owners

For rental property owners, the change could make a meaningful difference to the numbers on a new build, a renovation or an upgrade. For some, it might even influence the decision to remain in the rental market rather than sell.

Current rules

How ring-fencing works now

Under the current ring-fencing rules, when allowable expenses on residential rental properties exceed rental income, the excess deductions generally cannot be used to reduce tax on other income, such as salary or wages.

Instead, the deductions are carried forward and may be used against eligible residential property income in future years, subject to the applicable tax rules.

ACT’s election proposal

Allow rental losses to offset other taxable income

ACT proposes allowing eligible residential rental losses incurred from the date the policy takes effect to be offset against an investor’s other taxable income, including employment income subject to PAYE.

Crucially, this would apply to both existing rental homes and new builds, rather than being limited to newly constructed properties.

What about existing ring-fenced losses?

Under ACT’s proposal, losses already ring-fenced before the policy takes effect would remain subject to the existing rules. The proposed change would apply to new eligible losses from its commencement date.

Why removing ring-fencing matters

New rental property owners can face substantial losses in the early years of ownership, particularly when borrowing costs are high. Under the current rules, those losses remain ring-fenced, which can put additional pressure on cash flow and make it harder for new landlords to enter the market.

NZPIF believes this matters because the rental sector needs new landlords to replace those who retire or otherwise leave the market.

Removing the restriction could improve the financial viability of rental investment, make it easier for property owners to fund improvements and provide an additional incentive for private investors to remain in or enter the rental housing market.

ACT’s estimated fiscal impact

$264 million

Estimated reduction in government revenue in year one, rising to $303 million in year four.

What happens next?

Nothing has changed in law yet

This is an ACT election policy, not current law. The existing residential rental loss ring-fencing rules continue to apply.

For the proposal to become law, it would need to be adopted as part of a future government’s programme and go through the usual policy and legislative process.

NZPIF will continue raising the proposal with all political parties and advocating for policies that support the supply of rental housing in New Zealand.

We’ll keep members updated as policies develop ahead of the election.

This article provides general information only and should not be considered tax or financial advice.