RENTALS SECTOR WOES
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