Making landlords and tenants into adversaries has been a popular narrative with the media and helps the current Government bring in some heavy disincentives to own rental properties. There have been so many levers pulled to ensure that house prices come down while interest rates, rates, insurance, maintenance and associated costs have gone up. The Government say they are helping tenants, but the tax grab and extra rules have brought significant negative impacts.
Rents have increased in New Zealand ahead of what is already a big influx of people migrating to this country. A Trade Me rental price index in February showed the median weekly rent had hit $600 for the first time and is up 15% on the same month in 2020.
There are a number of reasons why there is upward pressure on rents. Rental property owners are having to cover many extra costs, at the same time as demand is outstripping supply in many regions. As well as investors not purchasing, our survey found there are 15% more owners than usual planning to exit the market. This is at a time when extreme weather events have created extra demand for rentals and also as a result of the quest to obtain skilled workers, NZ is now experiencing an annual gain of 52,000 people through migration. This growth in population will require, it is estimated, 19,000 more houses.
It’s easy to set the parameters that will stall a housing market, but when that inevitably means fewer homes to rent and higher prices to own them, it is tenants that suffer as property owners struggle to manage the financial risks and personal stress of rental home ownership. When the cost of living is being bandied about, a caring Government would pay more attention to ensuring supply is sufficient for tenants.
This is not about which party is in power, as Dr Michael Cullen, Finance Minister for the previous Labour Government made it clear that ‘landlords are a necessary part of the housing market’. There were many tax incentives for owning rental properties during his Government's time. There were advantages to tenants, the economy, and to the futures of those taking the risks involved in owning rental homes.
Whichever party or parties win the next election will need to change the current Government's portrayal of private rental home owners as ‘uncontrolled, tax dodging speculators’. The vast majority of rental home owners are hardworking investors helping tenants into good homes and the only part that is speculation is how far a Government will go to bring a sledge hammer to the housing market. The demonising of rental home ownership helps make targeted fiscal punishment seem more acceptable, but has also brought about the current situation of high rents and rental shortages.
Yes it’s great to see first home buyers achieving a home, but there are ways to assist this without causing a shortage of rental homes for tenants unable to even consider buying homes.
Sadly its many diligent rental home owners selling up, leaving fewer homes available to rent so tenants are being caught between decreasing ability to purchase their first home and increasing difficulty in coping with rising rents. The consequence of fewer rentals in the rental market is that the waiting list for social and emergency housing will continue to grow in spite of the best efforts of those involved.
It’s private sector rental owners who can assist the Government achieve its stated goal of more housing for more people. It is the role of NZPIF to have dialogue with the policy makers because we are at the grassroots of providing housing for New Zealand’s rental market. Thank you to all our members of local nationwide Property Investor Associations for supporting this.