Half of landlords will put up rents

Around half of rental home landlords (48%) say they will put up rents as a result of being denied depreciation.

Monday, May 24th 2010, 1:53PM 9 Comments

by Jenha White

The first nationwide survey on the Budget of 2,097 people, commissioned by the New Zealand Business Council for Sustainable Development, found that denying depreciation on rental properties and commercial buildings is supported by 46% and opposed by about a fifth of people.

A strong majority (65%) think it will result in landlords putting up rents and around half of landlords (48%) say they will put up rents.

The survey also indicates the Budget could influence investment decisions in the way the Government wants.

Asked if changes to tax and property depreciation will make them more or less likely to invest in the resident or commercial property or other investments (like KiwiSaver, businesses and cash deposits):

Overall, nearly twice as many New Zealanders approve of the 2010 Budget overall than disapprove. 40% rated the Budget good to excellent (7% excellent). It was rated poor to very poor by 22% (7% very poor) while 26% were neutral and 11% say they don't know.

Jenha is a TPL staff reporter. jenha@tarawera.co.nz

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Comments from our readers

On 25 May 2010 at 10:28 am Eddie Clark said:
In reality, putting up rentsw really depends on whether the tenant will agree to increase. Rental market is not the best it has ever been and good tenants have more choice now.
On 25 May 2010 at 10:42 am Arthur said:
Are those 48% naive or stupid thinking they can arbitrarily increase rents? Rent is determined by supply and demand, and as a landlord over many years know "it aint that easy" to increase rents above "the market".
On 26 May 2010 at 8:08 am Hamish said:
I have increased rent over tghe last few years, however, the market is very soft at the moment and I am having to reduce rents at the moment. The market will always dictate and if the tennants don't have the money they will go for the more affordable property.
On 26 May 2010 at 10:28 am David said:
This is a time when owners of rental property need to gather strength from numbers. One of the best ways to do that is by appointing a professional property management company. Its more effective to collectively move rents over a portfolio, rather than just individually. Some comment from Professional Property Managers would go down well in the media at this time.
On 26 May 2010 at 11:15 am Martin said:
Eddie, Arthur, and Hamish - I agree with your sentiments and experience - tenant demand rules. It is a flexible market wherein people can only pay what they can pay. Their alternative, as we have seen over the last year or two, is to bunk-in in higher densities, i.e. move back with Mum and Dad, brothers/sisters, couples sharing flats, etc.

On 26 May 2010 at 11:21 am Martin said:
Question for you...
Will the changes in the Budget ultimately create a better environment for those of us who approach this as a "business" more than as an "investment scheme"? i.e., will the rental business people get advantage from having fewer Mum and Dad "investors" prepared to discount rents to gain tax and capital gains advantages?
On 26 May 2010 at 11:43 am slu said:
I have increased the rent by 9% and my property was rented out within 2 days after advertised in Trademe. Last year the same time, it took me one week to rent it out the same property. I would say it's a demanding market.
On 26 May 2010 at 12:03 pm Sean said:
Arthur I don't expect the 48% expecting to increase rents are naive or stupid. As indicated the budget changes will see less investors enter the market but the number of renters is unlikely to decrease, therefore we have the basics of supply and demand and elasticity of pricing. Market rents will naturally increase. Investors that operate in a business like manner will be more motivated to increase rent as they lose the temporary interest free loan that depreciation on buildings was and take on higher costs related to the GST rise in relation to rates, insurance, maintenance etc. Most investors will also face higher interest rates over the coming months as less are locked into fixed terms than were in the past. Yes some slack on demand will be taken up with financially prudent renters who are prepared to bunk with others or back at home for a while if they have the option, however there is no getting away from it market rents will now increase at a faster rate whether we like it or not.
On 1 June 2010 at 10:16 am John said:
Most investors should not base the rent increase for the hell of it, it must be run as a business, so if the cost go uo, it makes business sense to compensate acccordingly otherwise is there any point of being in business?
Commenting is closed

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