Supply Of Rentals Decreasing

“A survey of members in February this year, highlights the changes in members’ attitudes since 2021 when the same survey was carried out” said Sue Harrison President of the NZ Property Investors Federation. “Comments within the survey indicate many are coming close to selling all their properties and exiting the industry all together. This is due to increasing costs which are not being covered by rents received and also to the way landlords have been negatively targeted in recent times.”

Overall there are now 10% less rentals available and the responses to the survey indicate that this situation will only get worse. The inability to deduct the cost of interest on top of increases in interest rates themselves often means that owners feel they can no longer provide the quality accommodation they have in the past. Many landlords have traditionally charged less than market rent and been able to attract good tenants who often stay for long periods of time. However now some respondents are taking second jobs, and using savings to cover increases in costs and this is not sustainable.

The majority of Mum and Dad landlords have debt with their rental properties. With higher interest rates and now this new tax, many are telling us they will struggle to keep their heads above water and will sell up. The percentage of respondents who will or who are likely to sell their properties increased from 21.22% in 2021 to 34.5% in 2023. At the other end of the scale, in 2021 the percentage who said they would not sell or probably not sell was 58.1% and this reduced to 44.26% in 2023

“It will leave a big gap to fill with mass housing which won’t suit many renters. The market will get badly out of balance” said Harrison.

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