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Relaxing LVR rules for property investors

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  • Relaxing LVR rules for property investors

    Hi All,

    What do we think about the relaxing of the LVR requirements - 30% deposits down from 35%. Is this a game changer? Personally I can see house sale prices going up now occupiers and investors can borrow more - not sure that's the intention but will probably be the result aye.

    Mid Dec RBNZ will say what work Banks need to do around their capital requirements - i.e. they need to hold more and it needs to be of a higher quality. I'm not exactly sure what that means and how that would impact on us.

    What about Debt to Income Ratio? May this is where the focus will shift to.

    cheers,

    Donna
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  • #2
    From what we’re seeing banks are using serviceability to put the brake on excessive borrowing. The focus is less on LVR for investors.

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    • #3
      With current government policy being so anti-landlord, the primary reason I have removed myself from the buyers pool is concern about profitability.

      I have a shared concern with the banks, in that expenses as a result of pressure on landlords applied by government and lack of support around bad tenants means being a landlord is not currently as sounder investment as it should be. My concern is that these costs, and lack of protection reduce profitability, which translates concern over serviceability should market conditions dampen.

      Money which was put aside for future property purchases has now been allocated to other non-Nz property markets, which are more investor-friendly. Some of this is allocated out of NZ - so not only have I stopped buying property in NZ, I have taken funds offshore.

      This surely is not a positive for the tax man, renters, property managers, sales agents, or sellers.

      My personal impact on the market is miniscule, but an indicator of what others may also be doing.

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      • #4
        Absoluteproperty - Well said, and the government (mis)uses landlords to charge tenants for local levies instead of collecting them from households, takes land ownership and inflation to finance household deficits, makes investors responsible for damage to properties… , banks & insurances passing on any risks, and that based on a poorly managed and dated housing stock – where should profitability for new investments come from?

        Sure, it’s in the finance provider’s interest increasing capital requirements like high deposits and capitalized spending on property improvements.

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