Q. As an investor, I am interested in the government’s plans to scrap councils’ minimum apartment and balcony sizes. Do banks have restrictions in place for lending on small apartments and are these likely to change?

A. There are variances from bank to bank over their minimum sizes. Note that we have had a market previously where we had very small apartments built, and while some banks relaxed lending criteria at that stage, others kept away lending on the very small apartments either altogether or required large (often 50 per cent) deposits.

At present the minimum size any bank has under standard criteria is 38m2, although it’s possible to access funding with 50 per cent deposits in some cases where they are 30m2 and above. The banks can set their own lending criteria based on how they perceive risk. While there may be a bank who decides to relax criteria early on as an attempt to get larger market share, I suspect most will want to see how things play out in this market before relaxing too far.

Kris Pedersen

krispedersen.co.nz