As I have been saying for some time now, rents can only increase, thanks to Jacinda’s anti-landlord policies locking new landlords out of the market, causing some existing landlords to leave and ensuring that fewer rental properties are available at a time when we need a lot more of them.
Ring fencing of tax losses was the latest and one of the most fatal changes for the rental market. The negative cashflow effects rival only the removal of depreciation for landlords trying to make ends meet. The result is that new landlords, people buying for the first time who are tight on borrowing just can’t make the numbers stack up, so they don’t buy rental property. As most were buying new property off-the-plans due to the lower deposit requirement, 20% deposit versus 35% needed for an existing property, the fact that these landlords are no longer buying means less new property is being built.
The government should be trying to encourage residential property investment in order to bring on more new rental housing, but they aren’t, they are doing the opposite out of envy for landlords who might be profiting from the valuable service they provide. Every other business is allowed to turn a profit, why not rental property?
But landlords aren’t even the real losers here, it’s the tenants and first home buyers who are suffering most from Jacinda’s misguided attack on the rental property industry. The people who trusted her to help them are having to pay higher rent, meaning they will have to rent longer before they can save for a deposit, if they can buy at all, while she spends her time flying Clark to his latest fishing trip in the pacific on a tax-payer funded private jet.
Rental Property owners will be fine. In fact, rents are rising faster than any other time I can remember, so yields are rising. Sure, the higher rents are not all profit. Expenses like insurance and rates are rising quickly too, but I think over the next couple of years rents will rise a lot further returning the rental yield to a much more attractive level to properly recompense landlords for the time and money they invest in owning and maintaining residential investment property and giving around 40% of New Zealanders a home to live in.
John Kenel
Assured Property Investments
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