Monthly Landlord Newsletters

Welcome back to the Propertyscouts monthly landlord newsletter, where we update you on all things New Zealand property market, investor insights, seasonal reminders, and more.

Hello, 2024! What’s Happening Around The Country? 

Happy New Year! We trust you had a wholesome festive season. As you ease back into your routine, whether it's getting the kids back to school or diving into work and other projects post a rejuvenating break, we are thrilled to kick off the first 2024 edition of our Monthly Landlord Newsletter with a few insights from the Propertyscouts "brains trust" – our very own local property management experts.

Local Rental Market Insights:

• South Auckland: The demand for rentals in South Auckland continues to soar, driven by increased living costs and high mortgage rates. Average rents for a 3-bedroom property have surged 18%-30% compared to pre-COVID levels. Additionally, there seems to be a trend of landlords selling or moving back into investment properties, contributing to a challenging market.

• Auckland: The Auckland region is experiencing a surge in demand for rentals, as mentioned above this can be partially attributed to properties being sold or owners moving back in. Rents in the area have seen a rapid increase of 6-8%, with 3-bedroom properties in Central Auckland renting for around $795- $850 per week. There is also a noticeable trend of owners who, unable to sell higher-end properties, are opting for renting to ensure the mortgage is paid. 

• Northland/Whangarei: While the region has ample rental properties, challenges arise in finding quality tenants. The influence of social housing on rent prices makes it difficult to attract desirable tenants. Some tenants are opting for alternatives like renting out of town, sharing larger spaces, or exploring tiny home living rather than paying more rent.

• Tauranga: Tauranga is noticing an increasing number of immigrants - largely in the health sector and reflective of the Indian and Korean immigrant groups. The demand for furnished, fixed-term rentals is growing, driven by the appeal of better schooling and employment opportunities.

• Hawke’s Bay: After a quiet period following the COVID-19 pandemic, Hawke’s Bay is experiencing a strong influx of skilled workers requiring accommodation for themselves and their families, with the majority falling into the Filipino and South American immigrant groups. 

• Central Otago: The rental market in Central Otago remains tight, with a limited number of listings. Workforce shortages are also prevalent in Central Otago and Queenstown, making it challenging for migrants to secure accommodation. Going forward into 2024, continued rental shortages are anticipated, with lower-end rents potentially peaking due to affordability concerns.

Looking Ahead:

As we move further into the year, the real estate landscape is marked by both challenges and opportunities. Whether you're navigating tenant applications, considering investment opportunities, or staying abreast of regulatory changes, our team is here to support you every step of the way.

Should you have any specific questions or concerns regarding your investment property, feel free to reach out to your local Propertyscouts office. 

Tax Changes Are On The Horizon…

Good news for property investors - the bright-line test is set to be shortened to two years for all properties from July 1. This move might lure back some investors, easing worries about capital gains tax on properties purchased before July 1, 2022. 

And for those eagerly awaiting the return of interest deductibility, it's on the horizon. The ability to claim home loan interest against rental income will be phased back in, though there's a bit of confusion regarding the start date. According to Stuff.co.nz, a Government press release implied that it would start from April 2024, while the coalition agreement had suggested the change would take effect from the 2023/24 year.

Insights from a Recent Tenancy Tribunal Ruling

In a recent Tenancy Tribunal ruling, tenants Christine Corke and Ateria Pile secured $6,570.44 in compensation from a property management firm and landlord. The couple, renting a rural Marton property, faced issues ranging from inadequate insulation and a non-functional swimming pool to unannounced visits by the landlord. Despite seeking $20,000 in compensation initially, the adjudicator, M Brennan, awarded $2,050 for failure to maintain the property, $1,000 for disruption of quiet enjoyment, $600 for pool-related loss of amenity, and $2,400 in exemplary damages. 

So what can other landlords take away from this situation?

• Compliance is crucial: The case emphasises the importance of landlords meeting statutory requirements, such as proper insulation, to ensure tenants' well-being.

• Communication Matters: Prompt and respectful communication, especially regarding property inspections and repairs, can prevent disputes and maintain a positive landlord-tenant relationship.

• Prioritise Property Maintenance: Landlords should be vigilant about property maintenance to avoid legal consequences, exemplified by the compensation awarded for failure to maintain the premises.

• Respect Tenant Rights: Ensuring lawful entry and providing notice are crucial aspects of respecting tenants' right to privacy and quiet enjoyment of their rented space.

Nuisance Neighbours: A Tenant's Fight for Peace

In a bizarre turn of events, Auckland tenant Felino Turner faced a series of challenges when he moved into a Grey Lynn property in April 2023. Turner reported a staggering 25 incidents involving neighbouring tenants, ranging from petty offences like urinating on his unit's wall to more serious offences such as finding someone hiding in his ceiling. Despite his attempts to address the issues with the landlord, Turner faced continuous threats and harassment, impacting his sense of safety and well-being.

The Tenancy Tribunal recently ruled in Turner's favour, acknowledging that the landlord hadn’t taken adequate steps to protect Turner's peace, comfort, and privacy. The tribunal adjudicator emphasised the seriousness and frequency of the incidents, stating that standard security measures such as locks for the letterbox, opaque film for windows, and centrally monitored CCTV cameras could have deterred offensive behaviour from the troublesome neighbours. As a result, the property management company acting on behalf of the landlord was ordered to reimburse Turner for security expenses and compensate him with a rent reduction, amounting to a total of $915. 

This case, once again, underscores the importance for landlords and property managers to proactively address tenant disputes, implement effective security measures, and prioritise the safety and well-being of their renters.

The Latest Ask An Expert from Within the NZ Property Investor Magazine | February 2024

Question: I have a property with a fixed-term lease that is set to end in a month. I am looking to sell the property and am considering giving my tenant a 90-day notice. Can I provide this notice a month now, which would be 30 days before the fixed term ends, and will that month be considered part of the 90-day notice period? 

Answer: This is a question that is often the source of confusion for landlords. Yes, you can issue a 90-day notice to terminate the tenancy when there are only 30 days left in the fixed-term lease. In this situation, the tenancy is treated as if it were a periodic tenancy, and it will terminate in 90 days (60 days after the fixed term end date). The notice to terminate the tenancy falls under section 51(2)(a) of the Residential Tenancies Act. It's important to ensure that the notice is served correctly and includes all necessary information.

New Year Number Crunching: Four Important Numbers To Watch

The New Year is a great time to assess the success of your rental investments. Whether you're a seasoned investor or just starting out, running the numbers is extremely important. For leveraged investments, it assesses affordability during challenging periods like interest rate hikes. Even for non-leveraged investments, evaluating returns helps in making strategic moves to enhance profitability, such as property modifications. Here are a few key numbers to keep a close eye on to help ensure the success of your investment.

1. Market Rent: Regularly reviewing market rents keeps you competitive and maximises returns. While you can only increase rent once every 12 months, we recommend proactively checking market rents every six months. This approach will help you remain well-informed and ahead of the curve.

2. Occupancy: High occupancy rates signal strong demand and steady rental income. Track weekly property rental throughout the year for valuable insights.

3. Average Tenancy Tenure: Long-term tenants contribute to stability. If average tenure consistently falls below 18 months, it could indicate issues discouraging long-term tenancies.

4. Maintenance Costs: Strategic management of maintenance enhances profitability. Regularly monitor costs to ensure they remain within budget.

January Rental Market and Investment News Roundup

And of course, no newsletter is complete without a quick recap of recent news. Here are a couple of key updates in the New Zealand property investment landscape. 

First Home Buyers Set New Property Market Record In 2023

• In 2023, first-home buyers set a new record by representing 25% of all property purchases, surpassing the previous mark of 23.1% in 2021. The first-home buyer market share reached a record high of 25.8%. However, the property market's recovery in the coming year is expected to be underwhelming due to high mortgage rates and potential debt-to-income ratio caps. The Reserve Bank's consultation on new debt-to-income restrictions may make it challenging for some to secure mortgages. The government's plan to restore interest deductibility for rental properties will also impact the market, and the economist anticipates changes in investors' demand.

The Region That's Overtaken Auckland As Most Expensive Place To Rent

New Zealand's rental prices have reached a record high, with the national median weekly rent rising to $625 in December, marking the first increase in almost six months, according to Trade Me's Rental Price Index. The Bay of Plenty has overtaken Auckland as the country's most expensive region to rent, with a rent increase of 11.7% compared to the previous year, reaching $670 per week in December. Auckland's median rent was $660. Marlborough was the only region experiencing a year-on-year decrease in rental prices, with a decline of 0.9%, making the median weekly rent $530. Southland retained its status as the most affordable place to rent at $440 per week. In December 2023, nationwide demand for rental properties decreased by 19% compared to November, with listings also down by 17%, reflecting a slowdown in demand ahead of the holiday season.

Quote to Ponder

"Don't watch the clock; do what it does. Keep going." - Sam Levenson

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Disclaimer

Given the opinions expressed in parts of the email, it’s important that we make it clear that the contents are opinions and observations and made in good faith.  

Propertyscouts NZ (2020) Limited, trading as Propertyscouts, and its associated parties (including directors, agents, employees, officers or otherwise) have attempted to provide this information to the best of their ability but do not make any representations or warranties of any nature (intended or implied) as to the accuracy of the information on this communication. All recipients of this communication should conduct and rely on their own enquiries in relation to the information on this communication.

The information available on the properties listed for sale, rent or otherwise, has been obtained from the vendor or landlord of the property and the appropriate professional service providers. We do not and cannot verify or guarantee the accuracy of the information obtained in relation to the properties.

The information and/or materials available in this communication are intended to be general information only and may be changed at any time, without notice to you. The information and/or materials in this communication should not be relied on under any circumstances as a substitute for legal, financial, real estate, or other professional and/or expert advice. To the maximum extent permitted by law, Propertyscouts and its associated parties disclaim all liability, responsibility, and negligence for any direct or indirect loss or damage suffered by any person arising from the information and/or materials presented in this communication or any information and/or materials that arise from it.