Definition of owner-occupied residential property

Definition of owner-occupied residential property The Banking Supervision Handbook documents Capital Adequacy Framework (Standardised Approach) (BS2A) and Capital Adequacy Framework (Internal Models Based Approach) (BS2B)) provide a definition of owner-occupied residential property (paragraph 4.7(a) of BS2B and 43(e) of BS2A). This definition is used in the Capital Adequacy Framework to enable determination of whether a residential mortgage loan is classified as a property-investment residential mortgage loan or a non property￾investment residential mortgage loan. The definition is also used in the Banking Supervision Handbook document Framework for Restrictions of High-LVR Residential Mortgage Lending (BS19) to define when a property is an Auckland investment property. The following is a non-exhaustive list of property that is owner￾occupied. These examples are illustrative; banks should refer to the requirements in BS2A or BS2B to ensure compliance with their legal requirements. Owner-occupied residential property Emily owns a house and occupies the house as her principal residence. Frank owns a house. While he is overseas, the house is occupied only by Frank’s wife as her principal residence. Frank owns a second house. His wife occupies the house as her weekend residence. The house is not rented out. Ashley owns a house and occupies it as his principal residence. Ashley also has a boarder that pays board to Ashley. Ref #6318106 v1.0

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Geoff owns a house and occupies it as his principal residence. The house has a granny flat attached in which Geoff’s mother lives. Geoff’s mother pays Geoff a market rent. David and John own a house in town that they occupy as their principal residence. They also own a bach at the beach. They do not rent the bach out, except on the odd occasion to friends. Both houses are owner occupied. Melissa is a shareholder in F ltd. F ltd owns a house that Melissa occupies as her principal residence and also owns a house that Melissa occupies over the holidays. Melissa does not rent the holiday house out. Charles is the beneficiary of a trust and the house that he lives in is trust property. Sally is the trustee of a trust and the house she lives in is trust property. Lewis is the trustee of a trust and his wife lives in the house that is trust property. Rock ltd holds a legal interest in a house as trustee for a trust. Freda is the shareholder in Rock ltd. Freda occupies the house as a secondary residence. The house is rented for one week a year. Ref #6318106 v1.0