by The Landlord
DTI “disaster” warnings
Commentators are warning of disaster - should the Reserve Bank’s recent debt-to-income ratio consultation paper lead to their adoption and implementation in New Zealand.
Property Institute chief executive Ashley Church said DTIs could do significant damage to the Auckland housing market, and the wider New Zealand economy, if imposed.
Not only would the number of new houses being built plunge, killing off the best response to Auckland’s supply woes, but they would also lead to a dramatic increase in rents as landlords looked to increase their income.
Property Investors' Federation executive officer Andrew King agreed on the rent increase front. He said decisions about risky lending should be left to borrowers and their banks and that, if the DTIs do go ahead, property investors should be exempt, as they are in Britain and Ireland.
Read more: DTIs would cut thousands out of market
Tenancy investigation team too small?
The Ministry of Business Innovation and Employment’s (MBIE) Tenancy Compliance and Investigation team was launched with fanfare last year, but it seems that it numbers just 15 officers.
Building Minister Nick Smith told a Select Committee that this was enough to keep tabs on the private rental market of around 450,000 properties as most tenants take issues to the Tenancy Tribunal themselves.
"The compliance and investigation unit focuses on the properties of the more vulnerable tenants, where they are unlikely to be able to take a case to the Tribunal.”
However, Labour Party housing spokesperson Phil Twyford said the number of officers was ridiculously low. Under Labour, a clear minimum standard would be set by MBIE and enforced by local councils.
Read more: Tenancy Services takes on enforcer role
The costs of switching banks
Competition between banks for home loan customers has been intense in recent years but the Banking Ombudsman has warned switching banks can incur big costs.
There have been a number of recent cases where customers accepted financial incentives to stick with one bank for a certain term but ended up moving to another – and having to pay back the incentives.
Banking Ombudsman Nicola Sladden said that anyone considering switching banks should research their obligations and all the potential costs before moving their loan. “If you have accepted a cash incentive, the bank will often ask you to pay that back if you decide to move banks.”
That’s because a bank might lose money when a fixed rate loan is repaid early and is usually entitled to recover that loss. The responsibility for early repayment charges will be set out in the standard terms and conditions.
Read more: Local flavour makes for bank winners
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