Tenants Who Are Also Landlords

rentbuyMore New Zealanders are renting today than ever before and they will remain in rented accommodation longer than desired. Their first taste of home ownership is likely to be an investment property which they’ll rent out while they too remain as tenants in another landlord’s property.

Demand for rental accommodation in Auckland far exceeds supply however the tenant selection process still requires a lot of work by Auckland property managers. Therefore the optimum tenants for a property manager are those who may own a rental property. These tenants remain in rented accommodation while also being a landlord due to their choice of lifestyle and a desire to get on the property ladder.

Banks are now restricted to lending just 10 percent of new loans to home owners with less than twenty percent deposit. Prospective First Home Buyers (FHB) who could afford a home in a reasonable location with a five or ten percent deposit during the early part of 2013 suddenly realised they needed a much larger deposit due to the new LVR speed limit. So they either put off buying a home to live in until they have saved the twenty percent deposit or opt to buy a cheaper property in another location. Many prospective first home buyers have opted to buy the rental property.

The percentage of property sales to First Home Buyers has continued to dropped off since the Reserve Bank of New Zealand restriction. As early as February 2014 Quotable Value reported a falloff in FHB purchases and that’s continuing this year. The gap left by the non-show FHB’s has been filled by property investors and foreign buyers.

Currently there is no data available on the percentage of investment property sales by prospective First Home Buyers.

The latest round of LVR restrictions on Auckland property investment will no doubt challenge Auckland property managers further with potentially even higher demand for rental accommodation as landlords decide whether to sell up or put off purchasing more property.


This blog article was written for PropertyBlogs by Mobilize Mail.

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