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New housing rules 'may be hindered by tight finance restrictions'

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Fuseworks Media
Fuseworks Media

Government moves to intensify building development and stimulate housing has given a green light to build more houses, but developers already have the brakes on because of tight lending restrictions by banks, say mortgage brokers.

The General Manager of Hamilton based Omega Capital, a non-bank specialising in sourcing property finance, Noni Martin, says sweeping changes introduced by Government in the last couple of weeks, designed to stimulate housing development, may not have the desired result because of tight lending restrictions imposed on property developers.

The changes allow people to build up to three homes of three storeys on most sites, without any need for resource consent, from August 2022. Currently, district plans typically only allow for one home of up to two storeys.

"They are moving one lever to open up the development opportunity and activity in the housing market, but they have already put the brakes on with the Reserve Bank tightening credit so there is a real shortage of funding for these developments to happen," says Martin.

Waikato based Omega Capital is one of the largest companies in the commercial mortgage broking industry. The business has grown by 25 percent in the last 12 months, as access to finance for property developers has tightened following changes to lending rules at the retail banks.

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