New rules to target property investors, which the Reserve Bank may choose to implement if there is a threat to financial stability, would be supported by the Beehive the Finance Minister Bill English said yesterday. However the perception that there is such a threat is based on making a case that rental property investment is risky.
“This investment is actually less risky than many of the loans banks give to businesses” said Andrew King, Executive Officer of the NZ Property Investors’ Federation (NZPIF). “We think the classification of residential investment loans is a good step but this category of borrower should not be required to have a higher capital ratio than those applying for business loans”.
Property investors are significant providers of private rental accommodation for those who chose not to or cannot own their own homes. Unnecessarily stringent rules around borrowing capital to support the development of the private rental sector will impact negatively on the total of available accommodation. Current and potential property investors are likely to change their intentions and reduce their portfolios.
The NZPIF is keen for potential property investors to take up this type of investment and add to the available accommodation pool. It also provides support and education to members so that the accommodation they provide is of a good quality and well managed. There have been many stories recently of potential tenants struggling to find suitable accommodation.
“Surely the Government and banks should be supporting the efforts of our members to improve the accommodation shortfall and not making it difficult to become a property investor,” said King