Five Property Rules 29/09/2014
The Reserve Bank (RBNZ) plans to introduce a new rule that will affect property investors with five or more properties. Under the w new rule, which is now expected to come into effect early in 2015, a property investor with five or more properties will be treated as a business rather than fall under the residential investment rules.
What does this mean for property investors? This is still less clear for most people or even banks. Does it mean higher interest rates? More than likely but by how much higher? Lower LVR? But how can you say that five properties at 60% gearing are a greater risk than four properties at 80%? Who knows? Does it apply if you own five properties overall or only if you have debt on five properties? There are also the questions of whether the five properties are defined as tiles or dwellings? At this stage we don’t know. We’d need to see the final draft of this rules to know what that is.
Prosperity Advisors will keep you updated on this topic when more information is available.