NZ Property Investment meets Social Policy

[kmor110]

I thought this might be an interesting topic to start a thread on. It would likely touch on threads regarding housing affordability, tenant and landlords rights, and tax. But then again who knows how deep the rabbit hole might go...



To start things off here is a question and brief statement, let me know your thoughts!

Which new policy would be most effective at closing the gap between average tenancy length (10 months) and average owner occupied length (7 years)? When discussing the topic of elderly renters, our Retirement Commissioner is cautious about implementing measures - such as 10% cap over market rent - that would put landlords at risk. Personally, I'm open to any ideas that might address this issue and see opportunity for a win/win outcome for both landlords and our tenants.

[Bobsyouruncle]

I think one big problem is that there are 2 different species of tenants typically. In Auckland for example our average tenancy since we started investing in 2003 is around 7 years. People simply don't move much when renting nice homes in nice areas. We have a lot less doors now than our peak but right now we have tenants who have been with us for 9 years, 2 at 5 years and the rest are first tenants after purchasing.

Then you have lower socio economic areas. In our case it was Otara, Huntly and is currently Rotorua. Those people just move frequently for no apparent reason and no amount of management or tenancy pandering makes any difference. So you can't fix that as a landlord, it's a mindset and a lifestyle that doesn't value stability. Not to mention the damage they cause.

[Keithw]

Why do you want to close that gap in the first place ?
just because there is a gap, does not automatically make it a bad thing.
The reasons behind the gap need to be determined before making an arbitrary decision that it must be a good thing to close it.

In my experience, tenants move when employment situation changes, or visas run out, or personal relationships change.

For an owner occupier it is far less likely they are here on a visa, so visa running out is less of an issue, and if they have purchased while on a visa, they most likely live overseas and the NZ property is an investment or place for family to stay, so there is no need to suddenly move. Hence it could be concluded that there is a much higher proportion of tenants on visas than owner occupiers, which will automatically skew the stats between rental & ownership.

For an owner occupier having a change in employment or relationship, the "Stiction" effect causes them to stay living where they are & travel further to work, rather than simply move house as a tenant might do. So it could be deduced from stats that changing employment conditions have less impact on an owner occupier than tenants, which is just wrong on so many levels.

In the case of relationship change, it is also more likely that one person will stay put and maybe over time the place gets sold. So it could be deduced from stats that relationship change is more prevalent in tenants than owners, again probably rubbish.

Statistics might show that owner occupiers stay in one place longer than tenants, but that does not automatically mean they haven't undergone the same personal upheaval that a tenant may do, and it is the upheaval that needs to be addressed, not the fact that there is a difference in how long people stay in one spot.

As Perry often likes to say there are Lies, Damned lies and Stats. all used and manipulated to (mis)represent the outcome or effect desired.

[Don't believe the Hype]

Why should average tenancy length be even close to similar... Many renters do so because they have a short term need to be in a given location so skew the numbers down.

there is a huge difference between the average time of car ownership and car rental... Is this a problem?


many of my tenants have been in houses I own for longer than 7 years and the great majority of tenants who have stayed in my houses for less than 7 years left at their own discretion...

simply looking at duration of occupancy will not in itself identity tenants issue and I question your ability to assess and issue if you think duration of tenancy is a measure even worth looking at.

[kmor110]

Thanks for your interesting and valid viewpoints on how to interpret the issue, particularly the statistics. I have had similar feedback in discussions outside the forum that most tenants stay for a good few years.

One of the reasons I initially put some weight behind the measure is because it has been similar to my experience, but then again my partner has a bias to let our 2brm property to young parents with 1 child who seem to be quite transient by nature. The art of selecting the 'right tenant' is something we need more experience in it seems.

[Bobsyouruncle]

Our PM is a bit of a nazi but it pays off. I'll take 4 weeks to get a tenant who stays for ten years any day!

[flyernzl]

Given the options, most tenants seem to choose periodic over fixed term.

[McDuck]

I'm personally into the idea of stability in any sort of financial relationship.
It saves in time and cost, lost in the learning and swapping.
Also for a street and community smooth operation, longer term stays are good for children and gives a connection between people and places and local businesses.

But the nature and social education of both landlords and renters works against this.

You could argue that the silly short term thinking that spends money on booze and cigarettes and thoughts on reality shows and cheating on partners is at the heart of the tenants problems.

while the short term greed and tightness of landlords is at the heart of them loosing the good tennants to better landlords or situations.

So, can you legislate human nature, well you can try, but the booze wagons seem to have lots of customers, and the serious fraud office is also busy.

[eri]

slowly have found good tenants select themselves

ie when they find a good place at a good price they look after it, pay their rent on time and stay + stay + stay

bad tenants don't seem to realise a good deal

tdon't look after the place, have trouble paying rent on time and move because;

- they think they're being hassled about keep the place in good order

- think think they're being hassled about paying rent on time

- think the neighbors are hassling them by calling noise control + the police

- have a relationship or family feud so race off to the other end of the country

their issues run pretty deep

no amount of occasional tinkering round the surface has much effect but for the few who independently decide to change their mindset

by which time their credit + employment records are trashed

so they really, really have to start again

[kmor110]

I think there is a common logic here that certain areas contain certain tenants who are suited to certain properties and certain tenancies and as a result of these unique factors they act a certain way!

For example in Orewa we have 2 bedrooms detached house and only seem to get applications from nice young families who inevitably are good tenants but only stay for around 12 months.

[McDuck]

I think there is a common logic here that certain areas contain certain tenants who are suited to certain properties and certain tenancies and as a result of these unique factors they act a certain way!

For example in Orewa we have 2 bedrooms detached house and only seem to get applications from nice young families who inevitably are good tenants but only stay for around 12 months.

Well there are subcultures within our society that have differing values.
There is a sort of hedonistic value system that really needs a good education and work ethic to get away with.
Then there are those socially I'll equipped to navigate throughout the temptations in early life.
Once you get those hedonistic value systems meeting up with brain altering chemicals, reason and will power go out the window.
a potentially wonderful expression of humanity is dulled down to more of the reactive obsessive anti-social end of the scale.