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Home / New Zealand

Auckland landlords prepare to hike rents

By Lane Nichols
Reporter & Deputy Head of News·NZ Herald·
23 Jun, 2015 04:45 AM3 mins to read

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Only a quarter of landlords indicated that they would not increase rental prices to cover the rates hike. Photo / Doug Sherring

Only a quarter of landlords indicated that they would not increase rental prices to cover the rates hike. Photo / Doug Sherring

ARE YOU A TENANT WORRIED ABOUT RENT RISES? CONTACT THE HERALD HERE

More than three-quarters of Auckland landlords intend to hike rents in response to hefty rates increases announced by Auckland Council.

The latest Crockers Property survey asked how property owners planned to manage increasing council rates.

Read more:
•Generation Rent's woes continue to spiral

The council has announced an average residential rates increase of 9.9 per cent, which includes a targeted rate of $114 for transport - due to come into effect next month.

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Only a quarter of landlords indicated that they would not increase rental prices to cover the rates hike, while the remainder would increase prices to cover all (33 per cent), or part of the increase (43 per cent), the survey found.

It was based on responses from 127 landlords and was carried out on June 9.

The survey also found that changes announced by the Reserve Bank to Loan to Value Ratio (LVR) restrictions on Auckland investment properties would not change future investment plans for the majority (81 per cent) of property investors interviewed.

Nearly half (48 per cent) expect the changes to have no impact on the market, and another 41 per cent expect the impact to be minimal, "i.e maintaining current prices rather than reducing them".

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Crockers Property Management general manager Joe Schellack said landlords, like their properties, were unique. Some tenants could see rent increases if landlords decided to increase prices, as indicated by the survey. Others may decide to hold rents unchanged.

"Depending on their circumstances and what their yield requirements are from their portfolio, we will act on our landlords' requests as (or if) they make them and will ensure our tenants are informed with complete transparency at all times."

Auckland Property Investors Association president Andrew Bruce urged landlords to set rents at market rates.

"You'd be crazy to say, 'The market is bubbling away, let's see if we get over market', because in the end, that works out worse for everyone because you end up having more
vacancies, and vacancies are the thing that kill you as a landlord."

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Just because rates were going up 9.9 per cent, it did not automatically follow that landlords would immediately put prices up, he said.

"But in saying that, if you start making things harder for landlords, and their costs are going up, it will have an impact.

"Certainly there are some landlords who are more proactive about making sure their properties are at a market rent."

Mr Bruce said landlords were conscious of trying to keep good tenants who paid rent on time and looked after properties, rather than trying to "claw back 10 or 20 or 30 dollars a week out of a rental".

"People aren't stupid. They'll say, 'Bugger that, I'm off'."

Auckland Mayor Len Brown urged landlords not to use rates as an excuse to ramp up rents.

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"Rates on an average Auckland home will increase by around $4 a week (that's less than 1 per cent of a week's rent) as a result of the budget which Auckland Council is due to adopt on Thursday, and on some homes rates will actually decline."

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