Auckland housing tenants could be in for a shock — two-thirds of landlords are intending to put their rents up.
Kiri Barfoot, Barfoot & Thompson director, has just released the findings of its annual landlord survey which revealed that the landlords said they would put rents up by about 5 per cent.
"Every year we survey our landlords to find out what they think will happen in the rental market over the next year, and what intentions they have regarding their own portfolios. Increase confidence in your property portfolio," Barfoot's chart said.
Feedback was compiled from 505 of the 9,369 landlords who used Barfoot to manage their property during the period ending July 31.
"This year's results indicate that the majority of our landlords expect the market and their portfolios to be reasonably stable: 66 per cent of you are not currently planning to make any changes to your property portfolio, 28 per cent of you are planning an increase, 6 per cent of you are planning a decrease," the survey found.
Scott Figenshow, Community Housing Aotearoa director, expressed concerns. "Whether tenants can afford to pay more rent has nothing to do with this. Can they? No, because incomes have not gone up to a point that they will be able to afford more, particularly low and moderate income people who are renting. There's still a huge gap between rents and the capital values that they relate to and what CVs are," he said of rising house prices.
"Will this make the housing situation worse? Probably so. We have increasing homelessness. We are not seeing wage rises for low income people so what are people going to do? They're going to be more stressed and further stretched. These are further problems for housing in New Zealand. What have we seen that's creating an improvement in housing affordability and returns for landlords? We're seeing it go backwards," he said.
Labour Auckland MP Phil Twyford was also concerned at the survey.
"Even modest rent increases will hurt cash strapped renters who because it is so long ago have probably forgotten the last time they had a pay rise.
"The real problem here is that the Government's failure to rein in the Auckland housing market has pushed prices so high. Of course landlords want a return on their investment and that flows through into higher rents," he said.
Kiri Barfoot said that if rents did rise, it might not be by a lot.
"With the current average rent for a 3-bedroom home being $472, that represents a maximum increase of $24 a week," she said.
The survey found 82 per cent of its landlords expect to pay higher mortgage interest rates in the coming 12 months.
A slight rent rise won't potentially offset the negative effects of rising mortgage repayments.
"It means that the majority of landlords are prepared to accept lower returns. Based on an average sales price for a three-bedroom home of $677,000 and an average rent of $472, landlords are currently receiving a return of 3.63 per cent," Kiri Barfoot said.