Landlords ignorant of upcoming LVR rules

[muppet]

Landlords ignorant of upcoming LVR rules

Landlords remain largely ignorant of new Reserve Bank rules which kick in next Sunday,
demanding Auckland investors have 30 per cent deposits.

A Westpac NZ online survey of 2000 property owners found only 5 per cent knew
when the changes came into force, nearly 30 per cent had not heard anything about
the changes and 53 per cent had heard something but did not know the details.

Westpac concluded that property investors, particularly in Auckland, were worryingly
unaware of the detail and implications around the new LVR regulations.

An "alarming" 61 per cent of new investors had heard something but knew no details, the bank said.
Of current property investors who are looking to buy again in the next 12 months,
17 per cent had not heard anything about the pending changes and half had heard
about them but knew no details.

The Reserve Bank is tightening LVR rules to reign in Auckland investors,
ensuring banks demand 30 per cent deposits for a mortgage secured against
an investment property.


The change comes into effect on November 1.

Read more at

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11534291

[flyernzl]

Logical, as they are surveyng Landlords not Property Traders.

Contrary to common misconception, most Landlords hardly ever buy anything more. They are too busy running their existing accomodation business.

[PC]

Far too low.
Think of the poor children - make it 50% deposit for us evil Auckland investors.

Nothing like stifling the supply of rentals to keep rents high - Bwa Ha Ha!!

[Wayne]

Far too low.
Think of the poor children - make it 50% deposit for us evil Auckland investors.

Nothing like stifling the supply of rentals to keep rents high - Bwa Ha Ha!!

Sounds fair.
Of course if the prices were lower people could afford to buy a PPOR then they wouldn't need as many rentals

[mortgage broker]

These blanket LVR rules have an impact on a lot more than investment properties. I often see some of my clients leveraging their rental properties for other things - like purchasing a business, expanding their business, cheaper funding for vehicles, renovations etc.

I wonder if this slows other things down so that we will need lower interest rates later on.

[brokerman]

These restrictions only apply to Bank lending. There is still plenty of activity in the 80 to 85% space and some funds to 90% for really strong deals.
80% interest only 5.29% fixed two years. 85% interest only 5.79% fixed two years, 90% interest only 6.29% fixed two years. No low equity premiums to be paid in addition either.

[Rosco]

These restrictions only apply to Bank lending. There is still plenty of activity in the 80 to 85% space and some funds to 90% for really strong deals.
80% interest only 5.29% fixed two years. 85% interest only 5.79% fixed two years, 90% interest only 6.29% fixed two years. No low equity premiums to be paid in addition either.

Very interesting, thank you!

[brokerman]

Very interesting, thank you!

Very welcome, getting a lot of referrals from Auckland Accountants and Lawyers for people who have been 'caught out' with the new deposit requirements. 80% seems to be the right balance looking at the applications coming in.

[FASATRIX]

Very welcome, getting a lot of referrals from Auckland Accountants and Lawyers for people who have been 'caught out' with the new deposit requirements. 80% seems to be the right balance looking at the applications coming in.

Does it apply to Auckland only or Wellington too?

[brokerman]

Does it apply to Auckland only or Wellington too?

The RB restrictions relate to Auckland region only. For Wellington Banks will go 80% standalone and non Banks to 90%

[FASATRIX]

The RB restrictions relate to Auckland region only. For Wellington Banks will go 80% standalone and non Banks to 90%

Thanks for your reply. I know that investment restrictions apply to Auckland only but I was wondering whether lenders will go over the standard LVR restriction (80%) outside the AUCK market. You answered my question though

[FASATRIX]

reason why i asked is to understand what 50K cash deposit can buy. With restriction I could only purchase a single 250K dwelling otherwise I could buy a couple of them

[brokerman]

reason why i asked is to understand what 50K cash deposit can buy. With restriction I could only purchase a single 250K dwelling otherwise I could buy a couple of them

As long as they houses and not Apartments as different rules apply. 90% houses and 80% apartments as a rule