GRA Blogs

Articles by The Professional Trustee Team

The Professional Trustee Team

Proposed new LVR rules for investors


From 1 September 2016 we are likely to see higher LVR rules being applied to investors who are borrowing to purchase residential investment property as per the Reserve Bank announcement today

Under the proposed new restrictions, investors across New Zealand will be required to have LVRs of 60% (i.e. they will need deposits of 40%). Only 5% of residential investment loans will be allowed to have LVRs greater than 60%. Debt-to-income (DTI) ratios could also be applied from 2017.

Reviewing data overseas it seems LVR restrictions do slow down credit consumption and house price growth at the time of being introduced. However, long-term they do not appear to decrease prices.  

Higher LVRs could now pave the way for a decrease in the OCR, which may possibly lead to a decrease in short term interest rates, assuming the banks pass same on to borrowers.   Our dollar may also continue to fall as it did this morning after the announcement.  One hopes inflation will consequently lift.

Understandably this new policy level will affect existing investors and people currently in the process of purchasing property.  If assistance is needed, please contact us at GRA.   


The Professional Trustee Team
© Gilligan Rowe & Associates LP

Did you like this article? Subscribe to our newsletter to receive tips, updates and useful information to help you protect your assets and grow your net worth. We're expert accountants providing expert advice to clients in NZ and around the world.

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.
Testimonials
All the speakers are very professional for their topic. They are all very knowledgeable. - Anon - December 2017
We can help
Here's how

Gilligan Rowe and Associates is a chartered accounting firm specialising in property, asset planning, legal structures, taxation and compliance.

We help new, small and medium property investors become long-term successful investors through our education programmes and property portfolio planning advice. With our deep knowledge and experience, we have assisted hundreds of clients build wealth through property investment.

Learn More
TOP