Rents rising as landlords are forced to adjust for the increased costs of owning rental properties.
The recent tax changes that removed the ability to deduct interest on rental properties have had a significant impact on the housing market, particularly for working mum and dad investors with just one or two rentals. These changes have resulted in rents rising, as landlords are forced to adjust for the increased costs of owning rental properties.
One of the main reasons for the rise in rents is the tax change that removed the ability to deduct interest on rental properties. This is a standard accounting cost of business practice, but it has had a detrimental effect on working mum and dad investors with just one or two rentals. On the other hand, large property investors and professional commercial and residential housing stock owners can simply repurpose debt (borrow against commercial and pay off residential debt) or lease housing stock to government-backed social housing providers and still be able to deduct all interest.
This is a clear example of how the current government’s policies are helping the rich and punishing the poorer middle to lower class. The average rent for residential properties in Auckland managed by the region’s largest real estate agency, Barfoot & Thompson, increased by just over $20 a week last year. The agency manages more than 17,000 Auckland residential rental properties on behalf of landlords and their average rent in the fourth quarter of last year was $629.53, an increase of 3.29% ($20.04) compared to the same period of last year. The biggest increase in rents was for three-bedroom dwellings, for which the average rent was $637.15, up 3.68% for the year.
The recent tax changes have had a significant impact on the housing market and have resulted in rents rising for working mum and dad investors with just one or two rentals. This is a clear example of how the current government’s policies are helping the rich and punishing the poorer middle to lower class.
It’s time for the government to revisit these tax changes and find a solution that works for everyone.
John Kenel
Assured Property
FULL ARTICLE FROM INTEREST BELOW
by Greg Ninness
The average rent for residential properties in Auckland managed by the region’s largest real estate agency, increased by just over $20 a week last year.
Barfoot & Thompson manages more than 17,000 Auckland residential rental properties on behalf of landlords and their average rent in the fourth quarter of last year was $629.53.
That was up by 3.29% ($20.04) compared to the same period of last year.
The biggest increase in rents was for three bedroom dwellings, for which the average rent was $637.15, up 3.68% for the year.
However there were substantial variations in the amount of rent increases by district.
Landlords in Auckland’s central suburbs, which includes desirable areas such as Ponsonby and Grey Lynn as well as the CBD, would have had little to cheer about with annual rent increases of just 0.96%, while rents in Franklin and rural Manukau on Auckland’s southern boundary increased by 7.58% (see the table below for the full rent breakdown by district and number of bedrooms).
“After being at a standstill in early 2020, the average weekly rent has made incremental steps over the past couple of years to settle into a pattern of steady but measured growth,” Barfoot & Thompson director Kiri Barfoot said.
“This is despite increasing operational costs, rising interest rates and peak inflation, indicating many property owners are balancing these pressures against considerations around tenant affordability and their desire to maintain longer-term tenancies.”
Average Rents for Properties Managed by Barfoot & Thompson
