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Matthew Gilligan

New Reserve Bank Lending Rules for Five or More Rentals


Did everyone catch the NZ  Reserve Bank announcement today that investors with five or more rental properties will be required to be treated commercially by banks?  

Apparently we must be treated as small business owners in risk profile, and higher costs for credit paid.  Higher interest rates and potentially lower LVR ratios are possible. This will reduce liquidity in the market more, on top of  the 20% deposit rules already applied late last year. There is some speculation that it will be applied on a 5-property rule per bank, which would soften the impact for some.

This is rough stuff for property investors and will arguably tighten housing supply discouraging bigger investors to participate in construction of larger scale portfolios. It must further spook the market in the short run.  But it will likely create some good buying opportunities on the flip side.

Matthew Gilligan
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Matthew Gilligan
Director
© Gilligan Rowe & Associates LP

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Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.
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