Rental crunch could help buyers
More pressure going on landlords to update their properties could be good news for first-home buyers.
There have been claims warrant of fitness schemes, such as that being run on a voluntary basis in Wellington, and the Healthy Homes Bill, which introduces minimum standards for rental properties and is working its way through Parliament, could prompt some landlords to sell up rather than do up their houses.
Ryan Greenaway-McGrevy, of the University of Auckland Business School, said that would be a benefit for those renters looking to buy a first home.
Properties that are owner-occupied do not have to meet the same standards.
‘‘The houses that are most expensive to upgrade will likely be sold to prospective owner-occupiers who are not required to bring the property up to standard. That would probably be a good outcome for renters that are looking to buy.’’
Auckland Property Investors Association president Andrew Bruce said there would be many landlords around the country who had let their maintenance slide.
He had struggled to keep on top of it when he started out, he said.
‘‘I haven’t come from high-paying jobs but I always wanted to get into property investment. When we got in, we made serious sacrifices to buy our first property and then get into the second. We didn’t have a lot of spare moey floating around for a $5000 or $10,000 bill.’’
He said some residential investors might decide to move into commercial property instead. ‘‘I can definitely see that some people will say I’ve got a $4000, $5000, $6000 bill to do what I have to do to get the house up to standard, I don’t have that money.’’’
He said it felt like ‘‘death from a thousand cuts’’ for landlords, with these changes on top of the Osaki case, which handed landlords more insurance liability. ‘‘We’ve had the blow torch on us for the last year or so.’’
Bruce said there would be a number of landlords who were unaware of the coming changes. ‘‘The vast majority own one or two properties and they very much set and forget. The property is just something that ticks along.’’
Tony Alexander, BNZ chief economist, said there was still a lack of information on landlords in New Zealand, which made it hard to predict how they might react. ‘‘Who are they? Why did they buy and when? How many own multiple properties? How many run negative cash flows?
‘‘Without this information all that any of us can do is note that some will react in certain ways to certain developments but we can give no insight into how many will do so. I think some recent investors will sell out because managing their properties is going to become more difficult. But there is no basis for claiming that the number in this position will be large or small.’’
Wellington landlord Nick Gentle said he was planning to stick with it, despite a looming bill.
‘‘My properties are very old, turn-ofthe-century homes in Wellington that I bought and did a lot of work upgrading and modernising the interior including insulating. I will probably need to install some modern kind of ventilation system as opposed to people just opening the window, which has worked for 100 years, and maybe a bit more heating.’’
He said he was still not sure what would be required in terms of heating and ventilation systems under the new law.
He would consider the WOF over the summer but said it would probably be best to wait. ‘‘I’ve heard from people with brand new homes who think they would fail that... my understanding is that it’s a checklist and if you miss one item it’s an automatic fail.
‘‘Why not have a grade instead, so a house is at standard x and it becomes something a tenant can consider when choosing a rental? I think there will be a lot more pushback on this not because improving standards of a house is a bad thing, it just seems like an impossibly high standard and not useful in how it is being imposed.’’
"We've had the blow torch on us for the last year or so."
Andrew Bruce, president of Auckland Property Investors Association