Overseas property models
Question from Mark updated on 1st January 1970:
Why hasn't the New Zealand property industry adopted similar creative real estate and vendor financing models as seen in the Southern US states in the 1980, 1990s and in Australia and UK right now that lowers the hurdle for people to buy houses?
Our expert Kris Pedersen responded:
Great question. For years in NZ investors have utilised "rent to buy" strategies such as wraps and more recently lease options. In my opinion the actual strategy can be a real win/win as long as it's practiced correctly. However, unfortunately there have been some sharks who have used these as a way to prey on unsuspecting tenant/buyers. The normal media as per usual has tended to focus on the bad stories rather than the good situations where families have got into home where otherwise they wouldn't have. Part of the problem here has been that tenant buyers really do need to get independent advice however most solicitors are wary of putting their name near these types of agreements which can make them hard to put together. Coming from a finance background I see these as a counter-cyclical play which are more useful in the recession when buyers may find it harder to get credit rather than through periods such as now when credit is more readily available. Straight vendor finance has been used in NZ for decades however with the introduction of the LVR rule this has meant that the banks can't accept it. Regard, Kris
Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. www.krispedersen.co.nz