isobizz

Hi,

I am a Kiwi who has lived 30 years in the UK, so am out of touch with how things work in NZ nowadays. I am planning on retiring home to NZ in a couple of years or so, but am thinking of buying a property soon and renting it out in the meantime.
Here in the UK we have Buy-to-Let mortgages for people who want to let a property. Does the same thing exist in NZ? If so, can anyone tell me what percentage of the property value is reuired as a deposit, and what might the ballpark interest rate be? I've read that foreign residents have to put down 30% but would this be the same for a buy-to-let deal?
Any advice would be much appreciated!

Thanks,
Chris

southerner

Hi Chris

Its not called buy to let in NZ, probably more often than not they're called investment properties. Banks will obviously have their own credit criteria and as I'm sure you know there is a fairly active investment market for rental properties. You might have seen a bit of news recently that banks are starting to lend again above 80% for owner/occupiers, but in truth they always were lending when the loan servicability was pretty good. The fact you will be absent might work against you. REINZ has some good stats on house prices, but beware their commentary tends to be a bit rosier than others. There still is no capital gains tax. You should at the moment be able to get a cashflow positive property with current interest rates if its a proper rental. If you're after a nice home, earning a bit of cashflow to pay some of the mortgage then that might be a bit more difficult, but then who buys a nice home to rent out to strangers.

Some are picking new building to pick up again in 2010, as there is a long term demographic/population trend that will require a large number of new homes nationally in the next 20 years. There is a surplus of coastal sections at the moment so potentially some bargains there, but they are generally not in the cities - more for holidays and retirement.

Try ASB, National Bank, Westpac, TSB, KiwiBank, BNZ, SBS for a range of bank rates. Most competitive rates seem to be fixed term rates, and KiwiBank generally seems to be the price leader but is keeping its powder dry at the moment. Interest.co.nz and Rodney Dickens ramblings (google him) are a cvouple of websites with pretty good commentary for residential investment.

isobizz

Thanks very much, Southerner - that's helpful!
The plan is to aquire a home in my home town, Nelson, if we see the right position with the views we want. The house itself may not be so important, as we could remodel or even rebuild eventually. But some rental income until we come home permanently would certainly be a help! I don't know how problematic that might be with the lender... Boy, the rates are much steeper in NZ, as here we are paying about 2-3% on a variable rate mortgage! Of course, the UK base rate is currently only 0.5% - it won't last forever, of course.
Chris

southerner

Chris,

I'm sort of from Nelson myself. My parents live at Mapua, which as you're probably aware is now a very popular spot, with a good sprinkling of brits and other European/US expats. I'm still kicking myself I didn't buy a section at Split Apple Rock 15 years ago. Pretty good views there.

isobizz

Yes, I love Mapua too, and would live there from choice, but we've decided (looking a little to the future) it would suit us better to live closer in to Nelson, say Atawhai, or Port Hills (cheaper taxis home from restaurants!!)
Chris