Landlords like Budget, but expect to raise rents

May 25, 2010

Media Release

Landlords like Budget overall, but expect to raise rents

More landlords approve than disapprove of the 2010 budget overall, but 47% say they’ll put up their rents as a result of it denying depreciation on their properties.

Overall, 45% of residential rental property owners rate the Budget good to excellent (compared with 39% of the general population), and 14% rate it as poor (23% of the general population).

Some 32% of landlords rate the Budget as neutral, compared with 28% of all respondents to the country’s largest scientific post Budget survey, being conducted by ShapeNZ for the New Zealand Business Council for Sustainable Development.

Survey results covering 2,459 people between 5.15pm May 20 and 8.30am May 25, are weighted to provide a nationally representative population sample. The maximum margin of error on the national sample is ± 2%. The online survey also covers 288 who own one or more residential rental properties. The margin of error for this sub set could be much higher.

While 46% of New Zealanders support denying depreciation on residential rental properties and 18% oppose, among landlords 35% oppose and 18% support (16% neutral, 1% don’t know).

Some 50% of landlords say denying depreciation on residential rental properties will cause their owners financial problems (compared with 26% of the national population who believe that).

Asked if denying depreciation will cause landlords to put up rents, 65% of New Zealanders and 69% of landlords say yes. Only 17% of landlords say no and 14% say they don’t know.

When landlords alone are asked if they intend increasing their rents as a result of being denied depreciation, 47% say yes, 39% no and 13% don’t know.

Intentions to increases rents are highest in Manukau City (74% will increase, 35% no change), Auckland City (61%, 14%), and Dunedin City (69%, 7%). The results could reflect migration and population growth.

In other main metro areas there is a 45% intention to increase rents in North Shore City (32% no change), Waitakere City 40% (20%), Wellington 30% (54%), and Hamilton 13% (42%). Results for city areas should be regarded as indicative only because of smaller sample sizes.

About 1 million people live in about 500,000 residential rental properties.

Reducing rental property investment

A substantial number of residential landlords, 44%, say they are less likely to invest in residential property as a result of the Budget. This compares with 29% of New Zealanders overall who say that. The Budget won’t change residential property investments for 45% of current landlords. Some 4% say they’re more likely to invest in residential property as a result of the Budget.

Some 18% of landlords say they’re more likely to invest in non property assets, like KiwiSaver, businesses and cash, while 25% say they are less likely to.

Commercial property owners

The survey also covers 50 commercial property owners, who will also be denied buildings depreciation.

The sample size means results are indicative only, but 74% rate of the Budget good to excellent, while 4% only rate it poor and none rate it very poor.

25% agree with the Budget’s move to deny them depreciation on their buildings, while 24% oppose and 47% are neutral. 4% don’t know.

55% of commercial property owners say depreciation denial is likely to result in rent rises, while 25% say it won’t and 21% don’t know.

Some 69% of commercial property owners say they intend increasing their rents, but the result is indicative only because of the small sub sample size.

Some 29% say the Budget will make them less likely to invest in commercial property (4% more likely), while 14% say they’re likely to invest more in other assets, like KiwiSaver, businesses and cash. Some 13% say they’re less likely to do this.

Results represent the views of survey respondents, not the Business Council’s policy views. The Business Council focuses on long-term solutions for New Zealand’s problems and conducts research on sustainability issues to allow public input on policy issues.

Detailed results of landlords’ and commercial property owners’ responses are available at http://www.nzbcsd.org.nz/story.asp?StoryID=1168

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