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Author John Kenel17 February 202302 Feb 2023

Economy

NZ Govt uses private property investors to fill tax coffers – leaving tenants to suffer.

Thrive and survive in year of challenges.

Successive NZ governments have actively encouraged rental property investment. That focus has now flipped with a raft of legislation to make rental property investment unattractive.

Meanwhile, not enough houses are built to replace private owners, causing rent hikes and less choices for tenants.

Why is the government causing such hardship for tenants?”

FULL ARTICLE FROM GOOD RETURNS BELOW:

By Sally Lindsay

New Property Investors Federation president Sue Harrison says despite the Government using private investors as a means to prop up their tax coffers which comes at the expense of tenants, the private property rental market is too important to fail.

She says more investors translates into more rental stock, which eases demand levels in the rental market and helps overcome an overheating of rents.

“Most of all good stewards of tenants and smart investing makes our investments reap rewards.

Statistics show how much the Government relies on private landlords to provide rental accommodation, with about 85% of rentals privately owned.

“The Government has introduced significant residential tenancy legislative changes favouring tenants and alienating landlords over the past couple of years,” Harrison says.

“While it might be politically convenient to make landlords seem a cause of social problems this has created an unpleasant ‘us versus them’ culture between landlords and tenants.”

She says the biggest changes are just lining the Government and banks’ coffers.  “If we are smart enough to manage owning investment rentals, then we need to be smart enough to manage the expenses involved with that.

“The biggest are mortgage, tax, rates, insurance and repairs. If the costs escalate, we have no option but to ensure the rent is managed well.”

Harrison says in these times new investors are not being attracted to existing older houses, because of the Government deliberately choosing to enact legislation to steer them to new housing, so the rental market supply starts to constrict, which in a fair marketplace increases rents.

“In most cases keeping good tenants comes well before raising rents, but survival in the rental market business must always come first.”

On top of the Residential Tenancies Act (RTA) changes, the Reserve Bank has made a succession of major official cash rate (OCR) decisions over the past few years that have flowed through the housing market and are now escalating this year as mortgages roll of low fixed interest over to much higher rates.

“Banks are under tight controls to enforce interest and principal payments so it’s not surprise we are heading into a perfect storm for those sailing close to the leveraging winds,” Harrison says.

“After all, most landlords are kiwi mums and dads, who own one or two properties to secure their financial futures. These property investors take on a commercial risk and expect to receive adequate rewards.

“The real kicker is that if investors are hurting and reacting, it’s their tenants who suffer as well.

“What happens when the economic activity, which was encouraged by previous Governments’ is actively discouraged?”

She says investors are forced to defend themselves, their finances, mental health and future.

“For most mortgaged owners there is no option but to increase rents or sell. The result of Government policy flows through to end users.

“Whether a tenant or home buyer they ultimately pay, making housing less affordable.”

“What happens when there is a shortage of homes to rent? Should the Government be building more homes as rentals due to lack of supply? Or should we have a democratic housing marketplace?”

Harrison says with the population increasing, rising investor activity is needed to assist with New Zealand’s limited rental market supply, advancements made for the build-to-rent sector and more Government assistance is needed to help shift more tenants into home ownership.”

She is urging investors to get along to meetings of their local property investors associations to interact with other investors and keep up with changes in the property market.

 

Source: Good Returns

Author John Kenel17 February 202302 Feb 2023
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