New laws around property investment deposits
West Auckland Property Management (WAPM) has curiously watched ANZ, ASB, BNZ, Westpac and Kiwkbank hit the fast forward button.
According to Scoop.co.nz, all five of the country's leading retail banks have acted early to introduce restrictions on lending to property investors as part of the Reserve Bank's bid to slow the heated housing market.
Last month, the central bank said it intended to have the new lending restrictions that required property investors to have at least a 40% deposit for loans in force by Sept. 1, asking lenders to comply with the spirit of the new regulations immediately.
What are the new regulations to be enforced on September 1?
• Restrictions for investor lending extended from nationwide from Auckland only
• Banks will be forced to require a 40 per cent deposit - up from 30% - for at least 95% of the loans they make in this area.
• Restrictions for owner-occupier lending extended from Auckland to nationwide.
• Required deposit level remains at 20% for at least 90% of bank lending.
ASB said existing approvals and pre-approvals above the new 60% loan to value ratio would be honoured until their documented expiry date, while BNZ said "all investor home lending applications from today will require a 40% deposit."
ANZ, the country’s biggest lender, said it would extend the maximum loan to value ratio of 60% for property investors across New Zealand. The bank had previously only required a 30% deposit in Auckland.
The bank said it intends to honour all existing pre-approvals, but any renewals will be subject to the new policy.
How does this affect your tenancy?
It appears the need for specialised property management will only rise as tenants will have less options in terms of rentals. In turn, this means the selection and management of tenants needs to be stricter.
New Zealand Property Investors' Federation chief executive Andrew King believes the regulation moves will have an impact on the number of dwellings available for renters.
"It's going to have larger impact on tenants, particularly tenants in Auckland because there's a real shortage of rental properties in Auckland and this will do nothing to help the people living in their cars and overcrowded conditions to be able to get a rental property.
A lot of people think investors are competing with first-home buyers and we would prefer first-home buyers to get homes. But the investors aren't buying the homes for themselves … they're not buying them to have empty - they're buying them for tenants and there's huge tenant demand at the moment.”
Tenants are your lifeline. And with the increase of renters flooding the market during these tough times it pays to make sure they are the right ones for your rental property.
This article was brought to you by the team at West Auckland Property Management.
Do you need help finding the right tenants for your rental property? Visit the West Auckland Property Management website at www.wapm.co.nz, or give the team a ring on (09) 832 0832.