Articles

Articles

Latest News

As part of our service at Harris Tate, we produce a range of legal articles that are published in various media, designed to alert our clients to legal developments that may affect them.

Our legal articles are written by lawyers and legal executives and discuss legal aspects relating to industries, businesses and individuals as well as focusing on everyday legal topics of interest.  These articles provide information to help educate our clients on different topics and current events in the law.  They may raise additional questions.  Please do not hesitate to contact us with your questions or to discuss your individual situation in more detail.

Squeeze goes on property investors under tough new restrictions

19 August 2016

Booming house prices are leading to further restrictions on borrowings for property purchasers (both investors and owner-occupiers), a measure which is intended to cool the market.

The Reserve Bank of New Zealand is currently consulting on new loan-to-value ratio restrictions (LVRs) intended to start from October 1, under which property investors will need a 40 per cent deposit.

New investors and property speculators are expected to be impacted the most under the new LVRs. However, long-term investors with access to high equity in their property portfolio may find opportunities arising from the changes.

At the same time new nationwide restrictions are also proposed for owner-occupier purchasers requiring a 20 per cent deposit which will no doubt have a negative effect on first time buyers.

That said, with the recently announced amendments to the Government's HomeStart scheme, first-home buyers can now earn more and buy more expensive houses, and still qualify for the subsidy, which itself remains unchanged.

The scheme offers a grant of up to $10,000 for an existing house, and $20,000 for a new house to add to a deposit for first-home buyers.

Income caps for the HomeStart grants are now $85,000, up from $80,000, for a single person and $130,000, up from $120,000, for a couple.

In addition to the above proposed LVR restrictions, higher income and house price caps were needed because of a rise in wages and residential property prices since the scheme was first announced.

We recommend you seek specialist and legal advice when purchasing property.

(Published in The Weekend Sun - August 19, 2016)