Not Many Mega-landlords

A Sunday Star Times article today claims that New Zealand is owned by a group of mega landlords and not the “mum and dad landlords” owning one or two rentals.

However, the numbers do not appear to add up. The article states that the study included 605,722 investment properties owned by 533,000 people or businesses. There are two problems with these numbers.

The first is that this equates to an average ownership of just 1.14 rental properties per owner. Hardly a rise of mega landlords.

The second problem is that the study says there are 605,722 investment properties, yet there are only around 500,000 rentals in New Zealand, with around 70,000 owned by the Government and many more owned by Councils and Community Housing Providers. What are the other roughly 100,000 investments claimed in the article?

It is highly probable that the study assumes that in every case where more than one property is owned, that property is classed as an investment property. However, it could be a holiday home, a second residence, a property provided for children to live in or the owner may be on an extended period overseas.

The article then appears to count each investors own home as an investment property, reducing the number of people classed as owning 1 or 2 and inflating the number owning 3 to 5. If this is correct, then 66% of investors own one property, 26.5% own 2 to 4 and 7.5% more than five. This doesn’t demonstrate investment properties owned by mega landlords.

Even if it is assumed that the data is correct, which it doesn’t appear to, it still doesn’t show that mega landlords own New Zealand. The data shows the following people owning investment properties:

• 1-2 properties 205,945
• 3-5 properties 82,315
• 6 plus properties 23,600

According to the article, only 1,163 people, or 0.37% of all investors, own more than 20 properties. This number presumably also include the Government, Councils and Community Housing Providers.

The article did contain some interesting points. The first is that the Government’s policy of targeting people who own investment properties isn’t having any effect on rising house prices. The article quotes James Wilson from Valocity saying that the demonisation of investors is unhelpful.

The other interesting point is that while the number of mega investors is extremely low, the proportion of properties they own seems to be increasing.

This is actually likely, as the State builds more rentals. In addition, the changes Government has made over the last few years aims to increase the attractiveness of large corporates owning rental property in New Zealand.

As a nation we need to consider if this is really in our countries and specifically tenants’ best interests. These large organisations tend to have large overheads and requirements for larger profits that will lead to higher rental prices.

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