Is there a case to target property investors?

Is there a case to target property investors?

Finance Minister Bill English has said that Government would support new lending rules that target property investors if the Reserve Bank thought these loans were a higher risk than other residential loans.

“Rental property loans are actually less risky than many of the loans taken out against homes to fund businesses” said Andrew King, Executive Officer of the NZ Property Investors’ Federation (NZPIF). “There are really two issues here - more clearly classifying residential loans and whether these different loans are more risky. We think more clearly classifying residential loans has merit, but rental property isn't any more risky than owner occupied property and is certainly a lot less risky than business loans”.

Property investors are significant providers of private rental accommodation for tenants. Unnecessary risk weighting rules around rental properties will likely increase the cost of borrowing and push rental prices higher.

The NZPIF 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 Reserve Bank and Government should be supporting the efforts of our members to improve the accommodation shortfall and not making it difficult to provide homes for tenants,” said King

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