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Market rent comparison – where stands New Zealand, and why does the legal frame work around the RTA not really meets tenant’s and landlord’s expectations?

 

 

Rental Housing Market

Tenancy Act and Market Rent Comparison

http://klausterproperties.info/

Renting - a straight forward process?

 

Renting a residential property in NZ is simple if you follow the rules, which are directed by the Residential Tenancies Act (RTA) and the Amendment Act 2010. For properties on unit title (apartments, townhouses and flats) apply furthermore body corporate rules which are by law attached to the tenancy agreement.

 

Tenancy services, part of the Department of Building & Housing, managed by the Ministry of Business, Innovation & Employment run the Bond Lodgement Centre and free services for disputes resolution for tenants and landlords alike.

 

If you know the legal frame work, you will have better chances to find help and information you need. Getting into a rental home with a letting agent or landlord is not different; you sign the tenancy papers (periodic or fixed-term rental agreement), pay the bond (maximum four weeks rent), obtain the keys, pay weekly rent and enjoy your home. That is the theory. You might find out that the renting culture, tenancy application and getting a rental you really want is sometimes tricky because of the number of applicants. So, let me help you with few considerations.

 

 

 

Renting in NZ has its specific

 

Nowhere else I have seen so many dated rentals and a sub-culture around bad housing. On historical grounds renting is still regarded as second (class) option. Scarcity of land for developers, taxation rules for investors, booming property values because of housing shortage and high immigration numbers are driving the housing market nuts. 

 

Government and council regulations are targeting homeowners and investors to upgrade heritage housing and forcing (with new laws) home improvements and the build of new housing, at least that is my understanding. It is visible over the last two decades NZ’s housing missed the mark.

 

In developed counties I worked and rented has the housing market a different dynamic. More and more renting has become dominant and status quo. It makes little sense to me having different rules and regulations for owner-occupied housing and rentals. If you look e.g. at the regulated housing market in Germany, where the political system is highly sensitive to tenants’ rights and obligations, then you will understand why the legal frame work around the Residential Tenancy Act does not really meet tenant’s and landlord’s expectations.

 

Market Rents and House Values and Speculations

 

First time in England I experienced the speculation-based housing system with over-valued properties and cyclic housing bubbles creating an unpredictable housing market for renters and home buyers alike. A similar housing market is well established in New Zealand and Australia.

 

The market value for a property is the average price a buyer is willing (or able) to pay at the time. That explains huge seasonal fluctuations combined with inflation and interest rates. Nobody can explain, why so many different valuations like CV, QV, and RV are needed as the basis for an estimated guess is the same.

 

Only RVs (rated valuation) are based on a property inspection that describes the property value in comparison with similar properties in close location. But also here is much room for speculation because the interested party (seller, buyer, or the purpose such as a mortgage) pays for the RV.

 

In a similar way do market rents work but limping behind property values. The figures released on the government website are based on statistics from the bond lodgement centre. As you see here, housing costs and market rents are not  directly connected. That opens doors for speculations

 

How do rents compare internationally?

 

The trouble starts when trying to compare NZ’s market rents internationally.  Rents are not transparent and include all housing costs imposed by councils and landlords. That is a major difference to countries which bill local (council) services to the residential address, not to the property owner’s address as it is in NZ. When for instance the council levies increase (happens every year), landlords try to pass on those extra costs.

 

If you are curious to compare figures from  New York, Munich, Auckland and Wellington have a look at the table below (figures are from 2014):

 

http://klausterproperties.info/

Klauster Properties Ltd - Renter’s Blog

Rent or Own - Decision at some stage in life?

True, the figures don’t tell very much, or not what you get for your money while the housing standards differ. Also the rent e.g. in Wellington should be lower than in Auckland if you compare “apple with apples”. (The source of information see below, but if you search today, the numbers might differ.)

 

Comparing rents in different countries (e.g. lower rents in Munich where landlords charge extra for heating and communal services and on top of it councils directly bill to the residents for services) with rents in NZ (everything included) makes little sense to me.

 

The interesting question has always been (for me) —what do renters get for money? To find out do your homework (due diligence) and make a decision that supports your lifestyle. Good luck.

 

 

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Renter’s Blog lead to a real person, IT professional, investor, landlord and business owner with interests in sharing experiences. Life is a dream with a deadline, happiness comes from making the right choices and having realistic expectations.

 

Confession: I have been a happy renter for more than 25 years before buying a family home and later becoming involved in property investments and developments.

 

I used to live in apartments or rental homes, worked in many different countries and experienced different housing standards and renting cultures. I would love to see a social and legal frame work around housing policies that supports renters and landlords alike.

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Rent per month

New York

Munich

Wellington

Auckland

1 Bedroom

1800 $US / 2158 $NZ

540 $EU / 853 $NZ

1360 $NZ

1540 $NZ

2 Bedroom

2130 $US / 2554 $NZ

865 $EU / 1367 $NZ

2200 $NZ

2100 $NZ