The new LVR restrictions and what they mean for you!

 The recent action from the Reserve Bank is drastic, in fact probably the most in many years. We expect the new rules to have a wide reaching influence on the market. So how does it affect you?

The Reserve Bank has today released new lending restrictions on residential property. These are aimed at slowing the rampant New Zealand house price growth, which the government fears could cause instability in the wider economy.

In short, the legislation requires investors to now hold a 40% equity position across their investment portfolio.

 What this means for you as OPES clients: 

 Some simple numbers:  it’s two for the price of one. 

Two new build OPES Partners investment properties for the price of one existing rental property. These new rules have made it twice as hard to buy, with the given rule of 20% being extended to 40% across the board.

BUT and this is a major but, the OPES method of investing is exempt from these new rules - one of the many reasons why OPES focus solely on new build investment properties. Investing in new build properties is exempt from these new rules meaning its business as usual.

The driving force behind these radical changes is the government wanting to relieve pressure on the increasing house prices and market whilst still enabling and encouraging the construction of new dwellings for people to live in. They are encouraging both owner-occupiers and investors which is very positive.

Rental properties in the market place will have to decrease, thus pushing up rents across the rental market. Investors now make up around 40% of house sales so locking many of these people out will have cooling consequences.

In summary, the changes are major and will have far reaching impacts. They will be good for some and not so for others. But with many locked out of future investment opportunities this is great for OPES clients. Fewer in the market with potentially increased rental levels.

If you'd like to find out more, come along to one of our property investment seminars

 

This may well be your lucky day; be sure to keep it our secret!