GRA Blogs

Articles by The Professional Trustee Team

Proposed new LVR rules for investors

AUTHOR: The Professional Trustee Team

POSTED: 19 July 2016

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 LVR restrictions, investors across New Zealand will be required to have loan-tovalue-ratios 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.

Request a Meeting

The Professional Trustee Team

09 522-7955

info@gra.co.nz

© 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.

Comments

Testimonials

Hi Salesh, I just wanted to send you an email on behalf of GRA to say how fantastic we have found your company to date. As you know, Ben and I joined GRA a couple of months ago and have just found you so amazingly helpful in getting our new property set up correctly and sorted out. We have what I would consider a rather complicated structure as a result and it’s a fantastic feeling to know that we are getting everything done in the best way possible. We have just had approval to put a minor dwelling on the property which will make a massive difference in terms of cash flow and obviously value, something we would never have even thought of without GRA and which we are very excited about. During the buying process we attended a seminar with Matthew and from the outset thought he was fab. We therein signed up for property school and found this nothing short of fantastic. The content was relevant, up to date and comprehensive, but more importantly it was taught in a way that we could actually understand and really get value out of. I wanted to mention also, that everybody GRA have recommended to us has been just so efficient and absolute masters at what they do. A wonderful network of people that we feel very lucky to now be able to call on. From Kris Pederson and Bryan Rist who put our mortgage together to the insurance guys they then referred us to, I’m super impressed. Within GRA, Ellery has probably turned things around for us faster than I’ve ever known before, something which we appreciated so very much when it came to crunch time. She’s always a pleasure to deal with and again, we’re stoked. We’ve just settled on the property today and are about to go and get the keys. I’m pretty pumped and hence this email is probably rather excitable. So, a massive thank you to you Salesh, the partners for such a fabulous 6 weeks at property school and everyone at GRA for their help. May this be the start of our property empire. Thanks again, - A & B - July 2015

We can help

Here's how

Investing in residential property?

Put this at the top of your reading list.

If you're investing in residential property, seeking to maximise your ability to succeed and minimise risk, then this is a 'must read'.

Matthew Gilligan provides a fresh look at residential property investment from an experienced investor’s viewpoint. Written in easy to understand language and including many case studies, Matthew explains the ins and outs of successful property investment.