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What are the benefits of investing in a New Build vs an Existing property in New Zealand

Thinking about getting into property investment? One of the first questions investors ask is: should I buy an existing home, or invest in a new build? 

While both can deliver good returns, new build properties in New Zealand offer unique advantages that make them especially attractive for investors. From lower deposits to better cashflow, here’s why more Kiwis are choosing new builds over existing homes. 

Why choose a new build for your investment property? 

1. Higher borrowing capacity 
When you invest in a new build, you’ll have a higher borrowing capacity, thanks to these two government policies that give you an advantage:  

• Lower Deposit Requirement: For most investment properties in NZ, the Reserve Bank requires a 30% minimum deposit when buying an existing home. But new builds are exempt from this rule. That means you may only need a 10-20% deposit to secure a new build property - making it far more accessible for investors who want to leverage finance.
• Exempt from Debt-to-Income (DTI) Restrictions: New builds are generally exempt from the Reserve Bank’s DTI rules, giving you more borrowing power compared to buying an existing home. 

This is the NZ Governments way of encouraging new homes to be built, adding supply to the housing market and addressing housing affordability.  

2. Low Maintenance (Keep your weekends free) 
New properties come with modern materials, appliances, and construction methods. That means lower maintenance costs and fewer surprises - no leaking roofs or outdated wiring or plumbing to worry about. Less time fixing, more time living (or investing again!). 

3. Building Guarantee 
Most new builds come with a 10-year Master Build or similar guarantee, giving you peace of mind and reducing the risk of unexpected repair bills. 

4. Tenant Appeal = Less Vacancy 
A modern, warm, energy-efficient home is far more appealing to tenants. New homes also usually have more street appeal thanks to modern landscaping, fencing, and a fresh look — something existing homes often lack unless they've been freshly renovated. That means: 

• Easier to find tenants
• Tenants are more likely to stay longer
• Higher rents compared to older homes in the same area 

5. Better Cashflow Potential 
You often end up with better net cashflow on a new build investment compared to an existing property.  When you combine lower maintenance costs and potentially higher rent (thanks to that tenant appeal!)  your net yield will likely be higher for a new build. The lower deposit requirement can also improve the long-term returns. 

6. Higher Return on Equity
The rental income is (usually) similar whether you put in 20% or 40% deposit. But with a lower deposit (thanks to the deposit rules mentioned above) the return you make on your equity (the money you personally invested) is higher. This return is called Return on Equity (ROE). Yes, you’ll have slightly higher mortgage costs, but double the leverage, so the ROE can be much stronger, and you have half the capital tied up. 

7. Healthy Homes 
It’s easier to pass a healthy homes assessment with a new build. Surprisingly new builds don’t automatically meet Healthy Homes Standards because they’re built to the Building Code – a separate standard. They will however meet the Healthy Homes insulation standard, meaning no costly retrofits. It’s important to get a Healthy Homes assessment done to ensure it meets the ventilation and heating requirements.  

How Generation Homes makes property investment simple 

At Generation Homes, we make the process of investing in a new build property easy, predictable, and stress-free: 

• Fixed Price Contract – Unlike many builders where you need to allow a 10% contingency, our contracts are fixed price. That means you’ll know your costs upfront and can have confidence in your expected yield.
• Fixed Move-In Date – Better for budgeting and starting rental income on time.
• Tenant-Friendly Design – Choose from our popular interior colour palettes, carefully selected to appeal to a wide range of tenants.
• Healthy Homes - Heat pumps and basic ventilation are included in our standard house and land packages, so they’re more likely to be compliant with Healthy Homes standards – we still recommend getting an independent assessment done (usually a minimal cost around $200).
• Ready for tenants to move in – at handover the home will have basic landscaping, lawns, driveways and fences completed, so you won’t have to wait to start getting a return! 

New builds aren’t just shiny and new - they’re often the smarter choice for NZ property investors. From lower deposits and stronger tenant appeal, the numbers often stack up better than with older properties. 

If you’re considering investing in New Zealand property, a new build could give you the best balance of cashflow, compliance, and capital growth potential. 

Helpful Tools & Links: 

Property Investor Calculator 
See if you can afford a rental property with this handy property investor calculator from Kiwi Bank. 

FAQs 
Q) What are the LVR rules? 
A: Loan-to-Value Ratio (LVR) rules are set by the Reserve Bank of New Zealand (RBNZ) to limit how much you can borrow against a property compared to its value. They’re designed to keep the financial system stable by ensuring homeowners have sufficient equity in their home. 

• Owner-occupiers: Generally, need at least a 20% deposit (so maximum 80% lending).
• Property investors: Usually need a 35% deposit (so maximum 65% lending).
• New builds: Exempt from LVR restrictions, meaning you can often buy with a much lower deposit (as little as 10–20%). 

In simple terms, the LVR rules set the minimum deposit banks must require, but banks can still apply their own criteria on top. 

LVR Restrictions Explained 
Q: What are DTI rules? 
A: Debt-to-Income (DTI) rules are lending restrictions introduced by the Reserve Bank of New Zealand (RBNZ) to promote financial stability and reduce risky borrowing. They work by limiting how much you can borrow for a mortgage based on your income. 

• Owner-occupiers: Generally capped at 6 times your annual income
• Property investors: Generally capped at 7 times your annual income 

These limits don’t mean you can’t borrow above them, but banks can only allocate a portion of their lending to higher-DTI loans. Currently, banks are allowed to have up to 20% of new lending exceed these thresholds (for both owner-occupiers and investors). Whether you fall into that 20% is at the bank’s discretion, and they’ll still apply their own affordability and servicing tests. 

Debt to Income rules explained 
Q: Why are new builds exempt from the Reserve Bank LVR (loan to value) and DTI (Debt-to-income) rules?  
A: It’s the NZ Governments way of supporting new housing construction to increase supply and improve affordability. NZ has had a long-term housing shortage, so these policies are essentially channelling demand into brand-new housing rather than existing stock. 

FEELING INSPIRED? 

Read next: Experienced property investors Christine and Leo always use new builds to build their portfolio.

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