Property investors banking on higher rents

Photo / Herald On Sunday

More Kiwis are holding onto their property investments in anticipation of increased cash flow on higher rents, rather than expectations of capital gain.

The results are contained in the latest ANZ Property Investment Survey of more than 1800 property investors, 80 per cent of whom said they were planning to hike rents by up five per cent in the next year - 26 per cent of them because of the May Budget.

ANZ New Zealand general manager specialist distribution Craig Moffat said landlords were recognising the dynamics of their industry had changed.

"They are wisely managing their portfolio as a business, focusing more on achieving positive cash flow and managing risk, rather than capital gains."

The survey, run in conjunction with the NZ Property Investors' Federation shows more investors expect rental growth this year than they did last year.

Similarly more property investors think the value of their properties will increase in the next year - up to 2.4 per cent growth- though most of that growth is expected to eventuate in the longer term.

NZ Property Investors' Federation President Andrew King said the prospect of higher rentals was a natural expectation among many investors.

"Rental prices have not kept pace with general inflation or the price of properties, so when combined with tax changes, rental increases are overdue in many cases."

Government regulations and tax changes were considered the biggest risk for investors (26 per cent, up from 13 per cent in 2010), ahead of tenants defaulting on payments, properties remaining vacant, and property prices falling.

This year's survey also reveals that almost 40 per cent of investors have examined their insurance cover as a result of the Canterbury earthquakes.

Meanwhile owning a property in a family trust is now less common than it was two years ago - 30 per cent in 2009 down to 23 per cent in 2011.

- NZ HERALD ONLINE