RENTALS SEC­TOR WOES

Eastern Courier - - YOUR LOCAL NEWS -

It’s said that on av­er­age the land­lord of a rental prop­erty in New Zealand makes a re­turn of only 3 per cent on their in­vest­ment and that’s be­fore nec­es­sary ex­pen­di­ture on in­sur­ance, rates, main­te­nance and also as­sum­ing 100 per cent oc­cu­pancy.

The pro­posal to en­force the fol­low­ing rules will cause many land­lords to sell: Ter­mi­na­tion no­tice to a ten­ant of 90 days; the cost of war­rant of fit­ness of the build­ing and any up­grad­ing needed e.g. in­su­la­tion etc; cap­i­tal gains tax; land tax.

If land­lords sell in large num­bers, prices for cheap homes will crash with sev­eral re­sults.

It’s good news for pos­si­bly 50 per cent of ren­ters who may now be able to pur­chase a house, but bad news in that de­vel­op­ers may find it no longer vi­able to build cheap af­ford­able houses.

House val­ues may even drop to such a de­gree that many land­lords will find them­selves in fi­nan­cial strife and as a re­sult banks will in­cur many bad loans.

Be­cause many ren­ters will never be able to raise a de­posit to buy any­thing, the Gov­ern­ment will have to buy up a num­ber of these ex-pri­vate rentals from the banks to house the needy.

Les Jones Half Moon Bay

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