Linwood Law offers a skilled yet cost-effective service for clients who are buying, selling or refinancing properties.
We also have considerable experience in subdivisions and larger, more complicated developments.
We can also advise on buying and selling in a retirement village, easements, build contracts, finance documents, property sharing agreements and residential tenancies.
COVID-19 and Loan-to-Value Ratios (LVRs)
On 30 April 2020, the Reserve Bank of New Zealand removed loan-to-value ratio (LVR) restrictions for 12 months. Before the change, the following limits applied:
- In the case of owner-occupiers: banks were permitted to make no more than 20 percent of their residential mortgage lending to borrowers with high-LVR (less than 20 percent deposit)
- In the case of investors: banks were permitted to make no more than 5 percent of their residential mortgage lending to borrowers with high-LVR (less than 30 percent deposit)
As a result of the changes, banks are no longer legally obliged to apply these limits to their lending.
In their own words, the Reserve Bank’s rationale for removing the LVR restrictions was to “ensure [they] didn’t have an undue impact on borrowers or lenders as part of the mortgage deferral scheme implemented in response to the COVID-19 pandemic.”
The removal of the LVR restrictions are, generally speaking, good news for those with a mortgage and those who are looking at buying a first home. However, we believe it is important to take your time before making any firm decisions regarding borrowing or investment. The ramifications of the COVID-19 pandemic are still uncertain, and the Reserve Bank may choose to modify or reapply the LVR restrictions in 12 months’ time.
If you have any questions about the effect of the Reserve Bank’s decision on your mortgage, or are interested in purchasing / selling residential property, feel free to call us on 03 3892121 or contact one of our Property team below.
COVID-19 and Commercial Leases
Recently, the Government has introduced some changes regarding commercial leases. Though these interventions are less drastic than many were expecting, they will still have a significant impact on many businesses.
The crucial changes are summarised below:
Previously, landlords could cancel leases after these conditions had been satisfied:
- The tenant had failed to pay rent for 10 working days. This period has been extended to 30 working days; and
- The tenant had been served noticed of this breach by the landlord for 10 working days. This period has also been extended to 30 working days; and
- The tenant had failed to remedy the situation.
Apart from the altered deadlines, then, the conditions for the cancellation of leases remain the same.
It is important to note that landlords are permitted by law to serve a tenant a default notice before the tenant has been in default for 30 working days. As a result, it is possible for the default and notice periods to be concurrent rather than consecutive.
These changes apply retrospectively to all lease cancellation notices served on or after 8 April 2020.
It is the New Zealand Government’s intentions that these extensions will enable productive negotiation between landlords and tenants with respect to any difficulties that arise, or have arisen, as a result of COVID-19. However, we understand that uncertainties remain for many commercial landlords and tenants
If you have any questions about how these changes might affect you and want legal advice from one of our team, feel free to call us on 03 3892121 or contact a member of our Property team below.
NB: Please note that the above is a general overview of the topic and is not advice. Every situation is different and would require advice tailored to the individual.