2019 The Year Of The Rent Rise?

Posted by Jack Vale on January 24, 2019 12:27:02 PM NZDT
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Christmas and New Year breaks never seem to be long enough. 😔

 

Of course, we are glad to have you back and hope that you and your families all had an enjoyable and safe break. If there is one thing that can be said of 2018, it’s that there seemed to be no respite for the property market.

Countless media articles aimed at poor landlord behaviour shone a spotlight brightly on the poor landlord-ship experienced by some. Other media articles shone the spotlight on shocking tenant behaviour.

These articles, inevitably (and rightly in our opinion) drew some much needed attention to the state of the property investment industry.

 

For a long time, property investment has been a dangerous place to live, for both tenants and landlords. Luckily, all of that seems to be changing. 2019 is already shaping up to be a huge year in the investment property space. Change is upon us, but at what cost?

Most obviously, July 2019 signals one of the most important legislative changes in rental property for a long time. The long anticipated insulation requirements coming into action will finally see an reduction in damp, cold and mouldy homes.

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Landlords will be required to have insulation installed in their properties, in-line with the specified R values for their regions and provide a supporting statement of insulation with all of their tenancy agreements.

 

Failure to do so could see landlords held liable for exemplary damages of up to $4,000. ☠️☠️

 

Rest assured, the Tenancy Tribunal and Tenancy Services NZ will not take breaches of this legislation lightly, so if you still haven’t insulated your rental property, it is imperative that you take action quickly before installers and assessors are being quickly booked up. 2019 too, could see the introduction of the Healthy Homes Guarantee Bill.

This is another bill aimed at improving the standard of rental property throughout New Zealand.

It focusses predominantly on the steps required to produce warm, dry and safe properties. Insulation, heating and even a rental warrant of fitness are possibilities in this bill.

The suggestion at this point is that tenants should have the ability to heat and maintain the property at eighteen degrees – something which may be difficult given the condition of some properties across the country.

In regards to the rental warrant of fitness, this would include items like high lockable cupboards to store chemical products, adequate insulation, weathertightness, working smoke alarms and more.

Going through your property with a rental warrant of fitness is voluntary at this stage, but may be well worth considering so that you can start taking the steps required to ensure that the property is compliant with the warrant of fitness standards should this be something that is introduced as compulsory as a part of the Healthy Homes Guarantee Bill.

 

This new year also will give us the opportunity to see the full impact of the letting fee ban. 🚫🚫

 

On December 12th last year, the letting fee was completely banned and landlords and property managers can no longer charge this to tenants when they move in.

With such a short period between the ban introduction and the end of the year, it was difficult to ascertain the immediate impact of the bill.

2019 will offer ample opportunity to see what impact the ban will truly have on the market, although most assume that while the letting fee can no longer be charged directly to the tenant, it is inevitable that the tenant will still incur this cost as landlords and property managers increase rents in a quest to recuperate their costs.

 

How much these rents will increase remains to be seen, but for now it could be expected by many tenants to see higher rental rates throughout the capital. 🏢🏢

 

There have also been rumblings from industry experts such as David Faulkner from Real IQ, that New Zealand could follow countries like the UK on their approach to pets in rental properties.

In the UK, there must be an extremely good reason for a landlord to reject a tenant having a pet. The Simple fact that the pet could cause additional wear and tear on the property is not enough, provided that the tenant is happy to either pay a slightly higher rental rate, or provide a higher security bond to accommodate for the pet living in their house.

In New Zealand, it is currently widely accepted that having a pet in a rental property is extremely rare. Landlords on the whole prefer tenants without pets although new legislation could prevent landlords rejecting tenants soley because they have a pet.

 

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It is easy to see how this could impact on the market’s rental prices. Landlords could seek to protect themselves for the extra wear and tear by increasing the rental price, allowing them to create a ‘buffer’ of sorts for damage caused by a prospective tenant having a pet.

While this may seem like a negative to a number of landlords, looking at the other side of the coin, this could encourage longer term leases as tenants with pets look to create a home; in the long run limiting vacancies for landlords.

 

2019 then, already looks to continue the trend of the last few years of cracking down on poor landlord and tenant behaviour. 

 

The legislative changes will inevitably impact the market extensively. This, of all years, is the year to get organised across your portfolio. For obligation free advice, we are more than happy to take calls anytime on 04 979 6363. Tommy’s welcomes you back to the new year and thanks you for your continued support. We look forward to working with you through 2019 and hope to guide you through the changes ahead!

 

 

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