Landlords have expressed shock and dismay at 30 per cent rental property loan-to-value ratio (LVR) rules, saying tenants will suffer, rents will rise and Auckland rental properties will become more scarce.

Andrew King, NZ Property Investors Federation executive officer, said Auckland was already suffering from a rental property shortage and the Reserve Bank would exacerbate that.

"This is going to hurt tenants and there is actually a shortage of rental property in Auckland," he said.

However, Auckland mayor Len Brown welcomed landlord LVRs.

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"The initiative targets one of the main sources of the issues facing the Auckland housing market and sends an important message while complimenting what Auckland Council and the government are working to achieve through the Auckland Housing Accord and other initiatives," he said.

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"Talk to the Salvation Army about the number of people moving in with each other and over-crowding," King said.

"If anything, we need more rental properties and this will stop that happening.

"This just shows how desperate the Reserve Bank is. How long do they want to keep this in place?

"They're singling out residential property investors as causing high prices in Auckland. I just don't see that being the case.

"The biggest thing is net migration and that's foreigners coming into the country, kiwis coming back or not leaving.

"Migration is the biggest factor," King said, referring to the causes of spiralling Auckland house prices.

Andrew Bruce, Auckland Property Investors Association president, expressed unhappiness about the new measures.

"If the Reserve Bank is wanting to create distortions and unintended consequences in the market they'll achieve this with the latest policy.

"Firstly if the aim is to limit investor purchasing this will in turn have an impact on the supply of rental accommodation.

"As we've seen in the Auckland market when you limit supply this has an impact upon price so by limiting the amount of investors able to provide accommodation for people will have an impact upon rents.

"Secondly having only an Auckland region policy will create distortions around where they classify the Auckland boundary to be.

"For instance if you can borrow 70 per cent on one side of the street which is in Auckland however up to 80 or 90 per cent on the other this has to have an impact on what people are prepared or able to pay.

"Unfortunately - as governor Graeme Wheeler doesn't have any influence upon the supply side of the equation which is where a significant part of the problems lies - he is using whatever tools he actually has at his disposal.

"As has been discussed at length if the supply side of the equation wasn't so imbalanced i.e. if there was an oversupply of 20,000 house as opposed to an under supply of 20,000 houses in Auckland would there be a need for such specific regulations?

"So on that basis the question needs to be asked why do we have such a shortage of supply of house in Auckland?"

David Whitburn, Auckland Property Investors Association immediate past president, predicted Auckland rent rises now running at about 3.5 per cent would almost double.

"They'll go up 5 per cent annually, which is higher than wage inflation.

"People will still come to the big smoke and get the big wages but rents will rise and that's an unintended consequence.

"It's bad for tenants and there's no question it will reduce the supply of rental properties.

"We have a migration boom on and not every migrant is going to buy a house, so they rent to people coming up from the Hawke's Bay - they need a place to live before they buy," Whitburn said.

Although he would have preferred 25 per cent landlord LVRs instead of 30 per cent, he was somewhat more philosophical about the situation than King.

"I actually don't mind it. It's quite sensible. It's the supply that's the biggest issue and that's where the Government and Auckland Council need to pull their socks up on a lot of issues such as high development contributions," Whitburn said.

"This will encourage owner occupiers to buy houses rather than landlords," he said.