Landlords are nervous and some are wondering about the future of property investment in New Zealand and if it’s right for them in 2018. There’s definite cause for their concern too. Change makes us nervous and with so much it threatening to affect the profitability of property investment the question on many a landlord’s lips is “shall I stay or shall I go”. (Editor Note: here’s the link to the official video).
So what’s all the fuss about? Well, there’s increase in the bright line test from two to five years; extra costs and compliance and a perceived tenant bias with recent tenancy tribunal cases and also the loosening of tenancy conditions and this is a lot of change for anyone to cope with. So what is the future for this type of investment in 2018?
Depending on your perspective – the glass is either half full or half empty. Some investors whom are more of the persuasion: “prove me wrong” (Editor Note: click the link and watch the youtube video – the lyrics explain perfectly how some landlords are feeling right now), would say the future isn’t looking good and time to bail is now while others whom have been through many property cycles say ‘suck it up’ and carry on. A blog post on Pedersens property management website says their sources report the Auckland market has shrunk and competition will be tighter in 2018. Rent increases last year where just 2.9 percent however with the new Government comes no letting fee, and only annual rent rises, more costs, compliance and oh did I mention more costs? Therefore the Landlords in it for the long-haul will pass on the extra costs with steeper annual increases in 2018.
There’s been some good gains for tenants over the past year or so with the previous National Government and now more are on the way with the current Labour Government. There is no passing on of the letting fee, the increase in notice period from 42 days to 90 days and the talk of allowing pets. Plus the insulation requirement by July 2018 and maybe an actual property WOF. However it’s not free and the cost will be passed on to the tenant. Rents will rise and with many Landlords bailing there will be less rental stock to choose from. So is it all doom and gloom for Landlords?
As the saying goes: “In every adversity there’s a seed of equal or greater benefit” and there is a upside for landlords. The loosening of the LVR restrictions will see a return of many investors keen to purchase while they can take advantage of less competition from their peers. Hopefully over time rental stock will be replenished and the natural order of things restored so to speak with happy landlords and happy tenants.