Investors won't make a loss: King

Friday 15 November 2013

Rent increases are bad news for everyone, the New Zealand Property Investors Federation says.

By The Landlord

The Salvation Army has released a report which says that rent rises over the past five years have made all low-income groups in Auckland, except superannuitants, worse off in real terms.

A report by the army's social policy analyst Alan Johnson shows rents for the cheapest quarter of rented homes in the former Auckland City have risen faster than average since 2008 - by 21.6% for three bedrooms and 25% for two bedrooms, when median rents across Auckland rose by 17% and consumer prices by only 12.5%.

Benefits have been adjusted only in line with consumer prices, and the maximum rates of accommodation supplement have not changed since 2005.

The report, Give Me Shelter, calls for a rethink of housing policies.

NZPIF federation Andrew King said it was not surprising that rent prices had increased at a faster rate than general inflation. Rent was affected by increases in rates, and the cost of repairs and insurance as well as the removal of depreciation as a tax deduction.

He said no landlord would stay in the business of providing rental accommodation if they were making a loss.

“Auckland has experience a higher percentage of population growth than other areas in New Zealand. This fact will create pressure on available accommodation and cause higher rent increases in this city than in other parts of the country.”

He said it was important to note that the maximum rates of the accommodation supplement had not changed since 2005.

Comments from our readers

On 20 November 2013 at 7:42 am lorraine said:
I have been a landlord for over 10 years with five rental properties. It has taken me a lot of time (and two jobs) to get these properties and I maintain them to a high standard. In the last year or so, I have had to increase the rents six monthly as everything has gone up so much (insurance, repairs and maintenance). My long term tenants have not been happy with the increases as they have had it good for so long, however as a Landlord I have come to the conclusion that we are providing a social service and if they are not happy, they can move on. They know that they are on a good wicket and have not moved. From my perception and talking to my tenants, a lot of the rental stock is held by 'slum landlords' (South Auckland is where my rental stock is situated). There seems to be a lot of people who would rather rent than buy their own property. The LVR restrictions will make it even harder for the first home buyers to reach their goal. Good quality rental accommodation will attract the right tenants. The Salvation Army do a fantastic job with all the services they provide, but I refuse to let any of my properties to the 'low income groups' as they do not appreciate or look after the properties (talking from experience here). Unfortunately there will always be the problem of housing a lot of the low income tenants as most landlords expend a lot of money and time to maintain their properties and will not rent to this sector. Once bitten - twice shy is the old addage!! I do not know what the answer is to this problem - Housing NZ seem to be floundering still with not enough rental stock for the people who need it.

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