Reserve Bank Macro-Prudential Tools

[donna]

Matthew Gilligan of GRA has written a post on the new RBNZ rules for lending to property investors with 5 or more properties - on the top menu bar - click the link to 'property blogs' to access it.

…if you're a glass half full type of person you'll see the opportunity in this proposed change.

cheers,

Donna

[Bluekiwi]

I was going to get around to starting a thread on this.
Its just another stake into the hearts of property investors.
Instigated by the National government who have given the Reserve Bank open slather to target the purported villan and bogey man of the new zealand economy, the hated property investor.
Responsible for all the ill's in new zealand, the world and maybe perhaps even the universe.
Soon to be blamed for global warming I am predicting.

I hate to say it.
But I am almost wishing back the labour government, almost.

Stakes through the heart of property investors:
1. Depreciation.
2. LVR Restrictions.
3. Exorbitant rates.
4. Exorbitant insurance premiums.
5. LAQC's.
6. Association rules.
7. GST changes

I just cant help but feel the knife is well and truly out for property investors.
And that it really is a complete facade to say they are looking after the stability of the financial market.

I just cant see how increasing the costs to property investors accross ALL area's of business.
Is going to improve stability, when the only real outcome is going to be some investors going to the wall creating bad debts for banks and destabilising the financial markets.

[PC]

JK is on retainer from the "productive" financial sector.
Can't have people doing investment themselves and not paying those exorbitant management fees.

Very strange that tenants never figure out that they are the suckers who cop it in the end.

[speights boy]

Is going to improve stability, when the only real outcome is going to be some investors going to the wall creating bad debts for banks and destabilising the financial markets.

Investors going to the wall creating bad debts for banks ONLY happens if their debt level is too high.

[Bluekiwi]

Maybe a good place for people to update what they hear about these rules.
This is what I have heard.

1. Date the rules come into action: June 30.

2. Interest rate premium: I have heard .5 and I have heard between .5 and 1.5

3. How many properties: I have heard 5 under one entity, I have heard up to 4 with one bank is fine.

4. Rules decided: I have heard RBNZ are still fiddling with rules and will advise (no consulation with proprety associations prior)

[Bluekiwi]

Investors going to the wall creating bad debts for banks ONLY happens if their debt level is too high.

I have 5 years or more to get my affairs in order, as I am fixed out to 2018 / 2019.

But what about investors who wanted to stay floating, maybe they have had insurance problems / loss of rent down christchurch, leaky building issue that has hit them, maybe they had a left field event hit them up here with council.
They are floating and didnt fix to pay minimum interest bills now.

They are prepared and have planned to pay lower rates now around 5% and go up to say 8.5% when floating rates hit that high.
That equation could now be 6.5% and 10%.

[speights boy]

But what about investors who wanted to stay floating, maybe they have had insurance problems / loss of rent down christchurch, leaky building issue that has hit them, maybe they had a left field event hit them up here with council.
They are floating and didnt fix to pay minimum interest bills now.

They are prepared and have planned to pay lower rates now around 5% and go up to say 8.5% when floating rates hit that high.
That equation could now be 6.5% and 10%.

They sell.
Their paper wealth is transferred to someone else.
Happens every day in every market.

It's a business, if they chose not to hedge they run the risk.
Their decision.

[PC]

Supply of rental properties fall - rents go up.
Nice!

[speights boy]

Or...
A renter buys it as their PPOR, or another investor buys it as at distressed sale discount.
The house doesn't disappear when it's sold ya know !

[PC]

Minimum wage is rising = inflation = more rent for me :-) = more tax for me :-( = ...
Oh I'm getting dizzy.

[elguapo]

Very strange that tenants never figure out that they are the suckers who cop it in the end.

Are they? It seems to be that prices are increase far faster than rents and if you factor in the additional costs as listed by BK, it looks a lot like it's the new property investors who are the suckers!

[klauster]

Hold on Bluekiwi, there are more curiosities NZ is known for:
- Taxed on intention (invest but don’t make profit)
- Home improvements for tenants not rent deductible
- Tenancy law subject to interpretation

Who is taking care of NZ’s assets renters or owner?
NZ’s wealth is not the paper Dollar, there are land, businesses and properties.
Mostly not understood - it does not matter if you pay 1k or 1,000k it’s still the same replacement value.

---------------------------------------------
Stakes through the heart of property investors:
1. Depreciation.
2. LVR Restrictions.
3. Exorbitant rates.
4. Exorbitant insurance premiums.
5. LAQC's.
6. Association rules.
7. GST changes

[Bluekiwi]

Are they? It seems to be that prices are increase far faster than rents and if you factor in the additional costs as listed by BK, it looks a lot like it's the new property investors who are the suckers!

Geeze you guys are hard case tough nuters arent you.
No feeling for your fellow property investors.

But in reply here I can say its chinese buyers who are the new investors.
Both NZ and new, and even I am getting shocked at what I am seeing at auctions now.
There are also a lot more indians buying as well.

I would say the percentage of bidders goe's like this.
80% Chinese (or look like they might be)
10% Indian
10% white (cant tell where they are from)

Its not funny now the chinese bidders at auctions who get there numbers wrong.
And the way they bid you can also tell the nationality.
As they drag a 10 minute auction out into a 30 minute one and frustrate the beegeebers out of the auctioneer

[speights boy]

All sorts of figures in here.
Will be interesting to see if a trend continues / develops this year.

IE: Will the growth in business lending overtake growth in household lending?
Could be good for the overall economy if that does indeed become the case.

Household borrowing grows only steadily; business borrowing surges

www.interest.co.nz/property/68755/household-borrowing-grows-only-steadily-business-borrowing-surges#comments

[mortgage broker]

Time for a commercial property boom I reckon.