Rents Are Sure To Rise Under Labour

New Zealand has a new Labour led coalition government and property investors are worried. In PropertyTalk’s investor discussion forums a well known user (an Accountant nonetheless), has started a thread suggesting investors have cause to be concerned about what this Government will do not only in their first term, but how it will challenge the viability of property investment in New Zealand in the future. Tenants have had a good ride over the past couple of years with modest rent rises however they are sure to rise steeper under Labour as Investors ‘insulate’ (interesting choice of word) their portfolios from forthcoming upheaval.

From the discussion on PropertyTalk:

The property market has already turned, or is showing signs of turning. LVR rules have had a huge impact, and I was getting set for a consolidation phase. My prediction was that the market would go flat, and that in 2-3 years there would be some desperate vendors, therefore some opportunities to pick up some bargains.

Now the game has changed a little bit more:

5 year brightline test. This personally doesn’t worry me, but the majority of property investors are after a quick buck. They want to buy a property now, it to jump up in value $100,000, and then to sell so that they can reduce their personal house loan, or buy a fancy car, boat , holiday etc. Paying tax on a property gain scares these investors.

Tenant friendly. Everything seems to be going the tenants way at the moment, no letting fee, only annual rent rises, 42 day notice becomes 90 day. There is also a lot of tenancy tribunal cases going against landlord, and some landlords are having to pay some serious money back to tenants.

Extra costs and complianceinsulation, smoke alarms and especially Health and Safety. Health and Safety is frustrating some landlords and also pushing up ‘Tradie’ costs.

In July, we reported rents in Auckland rose just 3 percent in the year to June 2016 and just 3.6 percent in the last year to June 2017. Odds are, the good times for tenants in regards to rent rises are probably over. However it’s better to see the rises as a trade off says an Auckland property manager. Tenants in homes that are marginal will have warmer and healthier abodes; and with less frequent rent rises, no letting fee and a longer notice period there is upside for tenants whom already enjoy properties of a good to high standard.

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