Investors Seek Better Returns

propertyThe clamp down on investor borrowing has landlords diverting their attention from purchases to seeking better returns from their existing property portfolios.  Trade Me Rental Price Index confirms a recent increase in the median weekly rent rate in Auckland after months of no change. Wellington on the other hand has been experiencing steady increases in recent months and it is now up 7.7 percent for the year to October 2016. This represents a sharp turnaround – twelve months earlier the median rent in Wellington dropped 1.3 percent.

Tenants had months of stability however in October rents in Auckland  increased with Trade Me Rental Price Index reporting:

“Auckland tenants are being asked to cough up more. In the Super City they are being asked to pay $510 a week, an increase of $10 on the $500 mark where rents have been stuck for six months.”

Overall the increase in rent in Auckland is just 3 percent in the last 12 months. In the regions the percent increases are more notable with Marlborough, Southland and Bay of Plenty leading the way with their median rents increasing between 12 – 17 percent.

A news item on NZHerald “City of Slums: Inside the rental market” suggests landlords are ignoring wear and tear and delaying maintenance, particularly jobs that may result in the property needing to be vacant.   This Auckland property manager suggests it’s false economy to put off maintenance.  They recommend landlords keep on top of it and in the property inspection reports they make sure they itemise all potential issues and provide recommendations. Landlords need to look after their investments. Putting off to tomorrow a job that can be done today is false economy insofar as the repair needed later on is likely to be a lot more costly.

The new Residential Tenancy Act says all rental properties must have working smoke alarms and some insulation which is a good start however it is yet to go far enough to improve the general condition of properties owned by less discerning landlords and unfortunately it is these properties that end up in the news.

With investors focus now on achieving better returns, nicer properties will and do achieve maximum return therefore reinvesting in properties to add value or at a minimum maintain a satisfactory condition is essential so they don’t fall below par and attract the ‘slum’ tag.

This blog article was written for PropertyBlogs by Mobilize Mail.

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