Delay causes concern
Many landlords are stuck in limbo after the Reserve Bank announced it would delay the implementation of higher capital requirements for mortgages when investors have more than five properties.
Tuesday, July 29th 2014, 12:00AM
by The Landlord
It’s something the Reserve Bank has been mulling over for a while and the bank has released its final decisions on capital adequacy requirements for housing loans.
But it said the proposal that customers with more than five properties be included in banks’ SME retail or corporate asset class was likely to be delayed until December.
NZ Property Investors Federation executive officer Andrew King said it was a big concern for a lot of property investors.
“It will certainly make it more expensive for banks, whether they pass it on or not is not known. No one is too sure how investors will be affected and that’s the worrying bit.”
He said there were many landlords who, if they bought one more property, would be caught under the new rules. “They’re thinking ‘what will happen?’ It’s causing people not to do things because they’re just not sure what the effect is going to be. No one is able to say.”
He said efforts to ask the Reserve Bank and the banks had not been successful. The Reserve Bank had said it was up to the banks how they interpreted the policy and the banks had said they couldn’t make a decision until they saw the Reserve Bank’s policy, he said.
“Investors are left in the dark. I think the way it’s been handled is particularly poor. It’s something that’s so important to a lot of people and the Reserve Bank has shown quite a cavalier attitude. It seems like a recipe for disaster but it might not be, you just don’t know.”
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