Who would ever have thought? Landlords passing on increased costs

Who would ever have thought that if you load up landlords with increased costs that they wouldn’t pass them on to tenants with increased rents?

Clearly the government believed that little fairy tale. Reality is somewhat different. Quote:

Extra costs for landlords are being blamed for rent rises around the country.

The NZ Property Investors’ Federation has released its latest statistics, drawn from government tenancy bond data, which compare the three months ended March to the same period the year before.

Across the country, rental prices were up 6.1 per cent to $433 per week. That’s about twice the annual increase recorded in March 2017 and March 2016.

“There have been so many cost and regulatory increases over the last few years that it isn’t a surprise that rental prices are increasing as they are,” federation executive officer Andrew King said.

“Unfortunately the situation looks likely to continue.

Gareth Kiernan, of forecasting firm Infometrics, agreed.

Gradual rises in interest rates will maintain upward pressure on rents during 2018 and 2019, and landlords are also likely to try and recoup increased costs associated with tougher standards for rental properties, including improved insulation requirements,” he said.

The extension of the bright-line test for capital gains from two to five years will limit the willingness of new investors to enter the market, thereby leading to further increases in rents.End quote.

Plus increased demand for rental, especially in student areas where free loot for rich kids is pushing up rentals. Quote:

But economist Shaumbeel Eaqub said how much demand there was for rental properties, the number of properties available for rent, and how much people could pay, were much more important factors than landlord costs.

“It’s not as if landlords have that pricing power, it’s a very fragmented market. It’s more around what people are able to pay and the demand for that particular location.

In Wellington rent went up a lot not because landlords’ costs went up but because of the squeeze caused by the earthquakes, and an increase in student numbers.

He said, if there was no demand for rental properties and lots of excess supply, it would not matter how much landlords’ costs had risen. “Rents still wouldn’t rise.” End quote.

Good to know an economist understands market forces. Shame the government don’t. The housing crisis doesn’t look like ending any time soon; in fact, it looks like it’s worsening. End quote.

I wonder what Phil Twyford will do now?


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