Requirement for a 40% deposit will mean higher rents


From September 1st this year the Reserve Bank is going to put limits on how much investors can borrow. Their goal is to slow down the property market. They think that by preventing investors as well as owner occupiers from buying as many houses as they were able to before, they will achieve their goal. Loans to construct new buildings will be exempt.

* No more than 5 per cent of bank lending to residential property investors across New Zealand would be permitted with an LVR (loan-to-value ratio) of greater than 60 per cent (ie a deposit of less than 40 per cent).

* No more than 10 per cent of lending to owner-occupiers across New Zealand would be permitted with an LVR of greater than 80 per cent (ie a deposit of less than 20 per cent).


Act Leader David Seymour has said that…

“The new rules are a desperate response to the government’s failure to unwind restrictions on land supply and provide council incentives for development.”

“ACT would remove the anti-development bias in the RMA, and counter infrastructure costs by providing fiscal incentives for councils to allow residential development.”

When I read about the 40% deposit requirement my first thought was how the rental market will be affected by this decision. When property investors buy multiple properties it expands the pool of rental properties available for tenants. By making it harder for investors to buy properties the government is making being a landlord less desirable.

When the private rental pool shrinks it is the government who will be under pressure to provide the housing. If private rental housing no longer keeps up with demand, rental returns will increase because of that demand. More and more we will see multiple tenants vying with each other for the privilege of renting a property. This will lead to bidding wars like Auckland experienced in 2012 where the tenants will offer a premium on top of the advertised weekly rent in the hope of securing the property.

Exempting loans for new properties will not help the situation if restrictions on land supply have not been removed. The solution is to sort out restrictive councils and land supply, not to ankle tap investors.

Our recent Whaleoil Housing survey shows that most of our readers agree.

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Should the government interfere in council land supply constraints? ( Written responses to the survey question below )

They should interfere for the greater good, as they need to in Auckland. They should also interfere where councils have been captured and rendered inert by polarising and self interested individuals with personal agendas. For an example of when interference is needed look no further than what the government did to ECAN. It was timely and very necessary.

They should look to act if the council is not performing its statutory duties with regards planning/zoning or the policies run counter to the local government act

They should not have to interfere but if council is not doing their job, government should step in

I would have said no and it is disappointing but they have to in Auckland’s situation now because Pants Down Brown has instructed his minions to stop people being able to develop in order to force people into apartments and his wet-dream of an Singapore/HK-like stacked city. Auckland has sufficient greenspace on it is perimeter that ought to be freed up for new development.

When Councils cause land supply constraints

Only when it is obvious the Council is holding back new areas for “no good reason”.

Councils shouldn’t be able to constrain land supply.

However central government affects local government by passing stupid legislation such as the RMA.

Which made land supply worse.

This debate is all about Auckland. I have never accepted that Auckland’s problem is an “all of New Zealand” problem. Government wouldn’t even think about becoming involved in housing land demands for Kaitaia, or Whitianga or Ekatahuna or Ashburton. Why the fuck is my Prime Minister being taken away from me, to be looking after Auckland issues? My Prime Minister has a country to run.

But the councils should not have so much control devolved to them………

Generally central Govt should stay out unless the Local Govt are incompetent.

If the council are distorting the market through constraining supply the government should intervene for the good of the country and its people.

Govt should only be involved in setting the regulatory and legal framework – which is shite at the moment…

They should not have to but where there is market failure they have no choice.

they should interfere if the council are being wankers

Government interference should be a last resort, not a fiirst

Interfere if the council stick to ideological reasons which go against the national common good in constraining city boundaries.

There should be NO constraints on land supply either local or state councils are usually stocked with idiots who don’t understand what they are preventing so govt should step in

They should interfere when councils are unable to do their job effectively.

Local Councils often encroach too much on what landowners can do with their land. Government interference should primarily be around limiting Local Council encroachment.

It is ridiculous that every council has their own district plan with different rules to achieve the same end.

There should be one standard set of rules nationwide with allowance for regional variations.

When you have a dysfunctional city council, as Auckland currently does, the Govt. needs to step in and go over their heads.

The legislation Councils operate under is the Govt’s responsibility. Scrap the RMA & get rid of planners!

They should intervene when the actions of a local authority are causing hardship

Yes, override the council the councils non mandated planning process and reform the RMA. Hold councils accountable for past failures eg leaky buildings that were consented and approved

When Councils act AGAINST the best interests of the community, withholding land etc, or development, they should act.

Govt and council same thing

Where the policies of the council may be in contrast with wider public good at a national level, Governments could consider overriding council policies eg: additional council land being made available for housing and small business development.

If the council can be shown to have been negligent in their duties to ratepayers and general taxpayers hten they should be put into administration and a ministry for Auckland established to override coucnil and fix the problems

This should not be necessary but when crazy policy such as Auckland Councils boundary rules are in force a government has a responsibility in the national interest to intervene. The pathetic posturing of this Government is not enough.

There needs to be separation between local and federal government. If councils do not open supply, people are free to move to another city.

Interference should be restricted to cases such as Auckland where the council is not functioning properly

They should interfere when a Council fails to operate in the best interest of its ratepayers and the economy

Repeal the RMA

Government should act to ensure that land is not made artifically scarce by local governments.

If councils refuse to open up land for development and thereby artificially constrain the market, central government must step in to override them.

councils should have zero power to restrict building section supply.

In situations like Auckland, some intervention is obviously required.

As a rule no, however when councils are publically supporting the release of more land , yet doing everything possible to stonewall it then the government needs to step in for the greater good. I think its clear now that the Auckland City Council is playing politics with the housing issue….does anyone actually believe that land release wouldn’t be fast-tracked if Labour was the government

They should interfere when a council is irresponsible as is the case with AC

The should remove RMA that central govt imposed so councils cant use it as an excuse to restrict land.

There should not be council land supply constraints

Where Councils are acting with disregard to those who voted for them but instead follow UN dictates under the Agenda 21 regime, then it is the responsibility of Central Govn to step in.

umm… urban limit? + the houses being built are 1 or 2 levels… o.k? Apparently high rise buildings will only turn in to slums, not question about it = Labour + National opinion. This seems like a situation where the basic questions have not even been asked, but Labour/National/Auckand city council all have their own correct/supperior answer… meanwhile in Aucklnad there is a huge over demand for housing, and still nothing done.

When we have an incompetent council as we do in Auckland then all decisions should be taken away from them!

Tricky question. RMA and leave legislation is government. Interpretation and implementation is council

When you have a council that is verging on incompetent, of course the Govt has a responsibility to interfere.

There should be no land constraints.

Councils are just an arm of Government. Sure they should have a community of interest focus, but when they are getting it so badly wrong it is right and proper for central government to step in.

Especially when the council is abusing its own rate payers.

Government has a responsibility to interfere every now and again. Len Brown should have been sacked for his amoral behavior and misspending, however it takes a long time to set up a sub division and its permits, constraints and to make sure the impact of building a new area isn’t detrimental to existing areas.

Repeal the RMA this failed and is the no1 reason for high land prices

There should be no constraints. It’s private property and you should be able to with it as you please.

They should interfere when the council deliberately isn’t doing its job to support its ideology like Auckland Council is. They need to remove all controls from the council as they can’t be trusted instead of ineffective meddling like they are doing now

When councils like Auckland dig their heels in and actively restrict supply the govt needs to step in.

In principle the government should never interfere in land supply, and if our government reformed the RMA and the LGA properly the land supply problem would sort itself out and no interference would be needed. Currently, however, the Auckland council in particular is out of control and must be called to account. The situation has got to the point where some level of government interference is probably necessary.

Only when councils fail demonstrably to do what they are elected for. EG AKL

Adequate land supply should be a matter of national importance in the RMA.

The government should remove such constraints.

There should be no constraints on land supply either by the government or council
lack of supply from councils compact utopian dream and refusal to free up land while claiming poverty that they cant afford to connect roads and water as they have spent any available funds five times over

They now need to interfere – but they shouldn’t

They should take land supply decisions completely away from local councils, who have proven unable to manage it properly. Likewise building inspections, which Councils do slowly, expensively, and do everything possible to avoid responsibility for failures.


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