School holidays were last week and the office was exceedingly quiet. It is funny I notice even those without kids seem to take school holidays as a time to wind down. It is almost a time when everyone has a holiday. I can’t quite figure it out but maybe the reason is that most of the clients are actually away so work slows. If that is the case then isn’t this a good time to snag a great buy in the property market. This must especially be the case if equity in a property purchase has just been increased to 40%? Maybe over the next week as people slowly get back from holiday the market will again get busy.
As mentioned above it is imperative with the complex lending environment at present that clients are educated on what they need to be doing to get their finances in order when purchasing. Our Mortgage Express brokers are very good and we should be encouraging every client to use them. Below is an update from Anthony Woolcott from Mortgage Express;
‘As requested by the Reserve Bank – in the spirit of the proposals, we’re seeing the banks start to implement the LVR changes already even though they don’t take effect till 1st September. So far we’ve seen a number of banks advise that their maximum LVR for investment properties is 60% effective immediately – and we expect the others to follow suit. Existing approvals are being honoured.. but won’t be rolled over (use it or lose it!).
Owner-occupied lending – the LVR threshold remains at 80% LVR. However, the banks can’t write as many of them now. So we expect they will ration them accordingly…..and getting an over 80% loan will get a little harder again.
The good news – non-bank lenders are not bound by these restrictions. I’ve just got an approval home today from Liberty Finance for an investor loan at 80% LVR that the banks wouldn’t touch. 30 year term and Floating rate 5.59% - that’s about as good as the advertised rates at the banks! We’ve now got a few long-term lenders in the non-bank space. Generally happy to lend to 80% for investors…. but also will look at other loans behind them (even maybe vendor finance). Fixed rates not as sharp as the banks….but they’re not too bad all the same. Also got one home last week for owner-occupiers at 85%. Lender was happy to use all the clients overtime in the application (which main banks won’t do for over 80% LVR’s) and were happy for the clients to borrow some money from another finance company towards their deposit (a big no-no for the banks!).
The non-bank lenders generally don’t have branches and shop-fronts. So a little plug for the mortgage advisers with access to non-bank lenders - and importantly experience in working with them! At the moment they’re a good option for investors wanting to borrow over 60% LVR.
Sounds complicated so anyone thinking of buying or selling for that matter should be talking to one of either Anthony Woolcott or Sarah Langley at Mortgage Express.
What do they actually mean? Most of us are aware of these terms and are unaffected by their introduction into the property market. Essentially the Government and the Reserve Bank are concerned with strong house prices driving internal economic activity in NZ, increasing debt and straining through too much debt. Add to this a feeling house prices are causing homelessness and you have a few reasons for these two parties to control the housing market activity.
Road blocks is pretty restricting borrowing through an increase in deposits required by a purchaser. At present that is restricted to 20% and the Reserve Bank are threatening 30%. Lending restrictions refer to the Government wanting to link lending to incomes so a person can only borrow a certain multiplier of their income.
The housing market issues being discussed are Auckland issues. Immigration is at record levels and the bulk of those entering the country are entering and staying in Auckland. House prices out of control is an Auckland problem and a housing shortage and homelessness is an Auckland problem. So why is the Government and the Reserve Bank putting national controls in place? It makes no sense.
Think about it, if there is a shortage of housing in Auckland and house prices are out of normal peoples league then place restrictions on Auckland buyers and sellers which may force these people further afield and into the regions. Regional New Zealand has a buoyant real estate market in most places but is certainly not out of control. There are houses to purchase at prices that are within most people’s range. With people moving into the regions there will be a need for more labour, more people equal more jobs.
I have said it before and will say it again, common sense needs to apply here and keep Auckland’s housing problem in Auckland not in the regions. Fingers crossed this happens but judging by past history I can’t see it happening sadly.
Either way we are confident in what we are doing at present. There is a shortage of houses for sale and plenty of buyers in the market. Prices are not out of control, now is a great time to be selling so if you are thinking about it call one of our award winning team.
This week has been one of learning for us, particularly in our Property Management business. There have been a number of new issues to be aware of that as a property owner you should understand.
Firstly, the Residential Tenancies Act, from the 1st of July requires owners of rental properties to have enough working smoke alarms as described in the current building act. The number is determined by the number of bedrooms, number of levels and size of a house. The basic rule of thumb is one smoke alarm within three metres of a bedroom. On behalf of the large number of owners we have negotiated a very good contract rate with Smoke Alarm Professionals who will install the correct number of alarms and service them for an annual fee. It is an excellent service and one that will bring all our managed properties into line with the new legislation.
Second, from the 1st of July owners will have to state the type and condition of insulation on a separate statement at signing of the management authority. Owners will then have three years to bring the insulation in their properties into line with existing building codes. With smoke alarms being the current priority and due to the slow nature of information coming from the Ministry of Building and Housing, we have little information but will be sharing it as soon as we know.
Third, there has been a lot made of the methamphetamine manufacture and use in rental properties over the past few months. It is a problem for some parts of the country and rather than take a reactive approach we are now adding to all tenancy agreements an addendum outlining the owner’s right to sampling properties mid tenancy.
Additionally we are recommending owners undertake sampling for methamphetamine between tenancies as we are seeing examples of tenants being compensated by owners who have accused tenants of meth contamination of a property without having a base test to work from, so not having proof it was the current tenants who contaminated the home.
Meth is very real, but what we are hearing is the guideline around safe and unsafe levels, the difference between producing and smoking and the quality of testing is completely unregulated so is open to rather broad interpretation. Regulation should arrive pre-Christmas according to government sources so again when we know anything we will pass it on to our clients as soon as possible.
The quality of homes in NZ has needed a shake up for some time and with new legislation pushing for better quality of housing and healthier warmer homes for tenants. As experts in the field of Property Management please do give us a call if you have a property you want managed as the current rental environment is very complex and you need only the best working on your behalf.
Licensed Business Owner of Harcourts Four Seasons Realty 2017 Ltd
Licensed Business Owner of Harcourts Four Seasons Realty 2017 Ltd