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Levelling the playing field for first home buyers


Labour will:

Create a level playing field for families to buy their first home by removing a tax loophole that speculators use to avoid paying tax.


The Issue

Housing is Labour’s top priority. We are committed to working to restore the dream of homeownership and ensuring decent housing for everyone.

National has had nine years to fix the housing crisis but it continues to grow worse. Home buyers are being locked out of the market by speculators. Taxpayers effectively subsidise the activities of property speculators who exploit a loophole in the tax system.

It is time for a fresh approach to make home buyers the priority and crack down on speculators.


Losses from rental property investments will be ring-fenced. Speculators will no longer be able to use tax losses on their rental properties to offset their tax on other income, a practice called negative gearing. This move has been recommended by the IMF and the Reserve Bank.

The biggest users of this loophole are large-scale speculators who own multiple rentals and use losses on new acquisitions to continually reduce their tax. The speculators’ tax loophole helps them outbid home buyers for properties because the taxpayer effectively subsidises part of their cost of servicing mortgages.

Ending this loophole will not affect most people who have bought a single rental as a long-term investment, because most of them are not using it. Those that do use this loophole generally only do so for a few years after purchase.

It is time to end the subsidisation of speculators by taxpayers. Removing the speculators’ tax loophole will put home buyers on a level playing field and give them a fair shot at buying a home.

For a smooth transition, this change will be phased in over five years, with loss deductibility reducing by 20 per cent a year.

Removing the speculators’ tax loophole will save taxpayers around $150 million a year once fully implemented. Total savings in the first ten years will be $1.2 billion. Labour will use this money to help 600,000 families heat and insulate their homes to modern standards.


This is just one of Labour’s fresh ideas to tackle the housing crisis. Labour’s comprehensive housing package includes:

  • building homes people can afford to buy, and restoring the Kiwi dream of owning your own place through our KiwiBuild programme and the Affordable House Authority.
  • a three point plan to crack down on speculators by banning offshore speculators from buying houses, taxing speculators who flip a house within five years, and ending the speculators’ tax loophole.
  • ensuring homes are healthy to live in and building state houses for families in need.

See the full housing policy here.

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