Dramatic Rise In Rents On The Cards

If this report is correct then the guaranteed outcome must be rising rents. If home buyers must find bigger deposits then it is inevitable that many will have to stay renting for longer.  This in turn puts pressure on rents.

The only people that will be disadvantaged by any of the moves suggested will be the first home buyers, and low income families with limited deposits.

The rental market will have a massive shake up if the policy is enacted and there is only one way for rents to go as a consequence- and that’s up.

Investors should take careful note. Scratch together every cent and  buy as many  properties as possible which are suitable for rentals- especially properties that can house couples and families. That’s where the greatest pressure will be felt . Single folk can always bunk down with family or friends. Not so easy if it’s a couple and even harder if there are children.

The proposed moves may take the heat out of the housing market (very doubtful at best) and will, instead, transfer it straight across to the rental market.

Either way the investor wins while those who need to buy, lose

House buyers may need bigger deposit


Rules aimed at taking some of the heat out of the housing market and providing greater financial stability could be agreed as early as the middle of the year, Finance Minister Bill English says.

Those rules are likely to include requiring home buyers to have bigger deposits.

In a speech to a business audience in Auckland today, English said the Reserve Bank would consult over the next few weeks on proposals giving it a greater ability to influence the amount of lending done by banks and other financial institutions.

These might include requiring lenders to:

* Restrict high-loan-to-value ration lending in the housing sector.

* Hold additional capital on their balance sheet as a buffer during an economy wide credit boom.

* Hold additional capital against loans in specific sectors if risks emerge in those sectors

There were some expectations that these would be used immediately to dampen the Auckland housing market but those decisions would be in the hands of the Reserve Bank, English said.



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