Allow banks to assess borrowers' risk: Newland
Property commentator Olly Newland has rubbished suggestions the Reserve Bank should clamp down on property investors.
Wednesday, November 19th 2014, 12:00AM
by The Landlord
The Reserve Bank has been discussing new restrictions on lending to property investors, related to the number of properties they own or their income.
But Newland told television programme Q&A that the idea of restricting property investors was total nonsense. “If you restrict property investors buying properties, it effects the rental market and rents go up.”
He said only investors buying property allowed tenants to access cheap rentals.
Newland said even the Reserve Bank’s loan-to-value restrictions should be lifted, and people should be able to borrow 99% of a property’s purchase price, if they wanted to. But he said they should be encouraged to have a 10% deposit.
“First-home buyers should be encouraged to buy. Something should be done. We should remove the restrictions and let the banks decide who can afford and who can not afford to buy. They should be able to borrow up to 99%, if they go broke it's their risk."
Another measure that could help was taking the GST off new home purchase prices, he said. Newland said that would instantly make new homes 15% cheaper.
He suggested that if New Zealand was to become more of a renting nation, people should be allowed to secure tenancies for much longer terms. “Overseas, it’s common to rent for 20, 30, 40 or 50 years.”
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