It’s often worth looking at what’s happening in property investment overseas. Our neighbours across the ditch, for example, have come up with some interesting developments including setting a maximum LVR of 80% for at least 90% banks’ home lending. In another controversial move, the New Zealand Government is trialling a scheme to check and certify rental properties.
Inspectors will assess rentals using a standard checklist, and will award the property a rating.
Initially it is being trialled on selected government housing rentals. If successful, the scheme will be rolled out to all Housing New Zealand tenancies. According to the Department of Building and Housing, “the Government has not made any decision on regulating standards of rental properties in the private market. Any decisions will be made following implementation of a Warrant of Fitness in Housing New Zealand properties and will include consideration of cost-benefit analysis and implications for tenants and landlords.” However, there are strong indications that the plan is to introduce the scheme to private rentals.
The New Zealand Property Investors Federation opposes the scheme, saying:
There are four key problems with a rental property WOF.
1. It mostly duplicates existing legislation;
2. Regular inspections are a permanent extra expense;
3. It will lead to a reduction in rental property availability through some being unable to meet WOF requirements; and
4. Requirements for WOF increasing over time. (http://www.nzpif.org.nz/
We’re not suggesting the Australian Government (or any of the state governments) are considering such a scheme. It is worth watching, though, and monitoring what happens to property prices and rents.
If you’re wondering how your properties would do in an assessment, download the PDF of the draft checklist here: http://www.beehive.govt.nz/