Investors hoping to acquire new properties in New Zealand are facing new requirements from the Reserve Bank – we explain what this could mean for you.
The New Requirements
From 1st October 2016, residential property investors will generally need a 40% deposit for when they buy a property, and owner-occupiers will generally need a 20% deposit.
With these requirements, the Reserve Bank aims to encourage purchasing of newly developed properties to encourage more properties to be built and increase the housing stock in the New Zealand housing market to slow the rapid house prices and property market.
Exemptions apply where:
Owner-occupiers or investors are constructing or purchasing a new dwelling (provided the loan commitment occurs prior to, or at an early stage of, construction of the dwelling).
Deposit Requirements For New Dwellings
When purchasing a new dwelling as an investment a deposit of only 20% is required as opposed to a 40% deposit when purchasing an existing dwelling. This allows investors to continue to expand their portfolio even if they can’t meet the 40% requirement but can get to 20%.
Rules Apply To Registered Banks Only
As the Reserve Bank rules apply to registered banks only, non-bank lenders are able to lend to levels greater than the banks, lowering the deposit requirements when dealing with this source of finance. Again this allows portfolio expansion when 40% deposit can't be achieved.
More Information
We suggest a Mortgage Broker should be able to help navigate the new rules, plus they should have access to non-bank finance. One who’s been particularly helpful and has banking and broking experience is Mark Cook of the Home Loan Shop
Mark Cook, Home Loan Shop
Tele: 022 044 2557
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Article written: November 2016
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