Too Many Good Landlords Leaving The Housing Market

“Often the best landlords are the mum and dads, but unfortunately many are now exiting the market as it has just got too tough,” says Tim Kearins, Owner of Century 21 New Zealand.

Tim Kearins

He says the pressures on rental stock have only grown, not helped by the Auckland floods and Cyclone Gabrielle earlier this year. Then there’s more regulation and a loss of tax deductibility on landlords’ mortgage interest costs.

“Housing supply is coming on stream, but the demand is huge, particularly when you consider the likes of strong inbound migration, people living longer, and more families banding together under one roof to minimise cost.

“Further, thousands remain in emergency housing including motels, and over 20,000 are on the public housing waiting list. The social need is massive, and we see it every day in Palmerston North,” he says.

In March MBIE’s Tenancy Services Rental Bond Data released showed that median rents nationwide are up $175 per week since 2017 – reaching $575.

“We need more landlords, not fewer, but sadly many have chosen to invest elsewhere, such as commercial property syndications, or keep their money in the bank given rising term deposit returns,” he says.

The Century 21 leader says a final nail in the coffin for many ‘mum and dad’ landlords has been the loss of tax deductibility on interest costs.

Previously, 100% of interest could be claimed as an expense by residential landlords, but that is now being incrementally phased out. Currently at 50%, it moves to 25% on 1 April 2024, and then to zero on 1 April 2025.

On 24 May, the Reserve Bank will again review the Official Cash Rate (OCR).

“With the cost of living crisis in full swing, it’s a tough time for tenants, and with all the red-tape and expense, it’s tough for landlords. However, this challenging real estate environment also throws up opportunities for those considering getting into residential property investment or looking to buy their first home.

“With rents not easing, this winter will be a good time for investors and first-home buyers to purchase with vendors getting more realistic, and more choice both in with new-builds and existing homes,” he says.

Tim Kearins says potential first-home buyers should also check out government support schemes to help them pull together a deposit, as well as consider a flatmate or border to help prove debt serviceability and secure adequate finance.

www.century21.co.nz

© Scoop Media