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  1. #1
    Join Date
    May 2004
    Bay Of Plenty, NZ

    Default Landlords plan rent hikes


    Nearly half of landlords say they plan to put up rents because of a move announced in the Budget to stop depreciation of buildings as a means of reducing tax.

    Analysts were divided after the Budget on whether rents were likely to rise because landlords will pay more tax. Some said the market would not allow increases.

    An online post-budget survey conducted by ShapeNZ for the New Zealand Business Council for Sustainable Development found that more landlords approved than disapproved of the Budget.

    Asked if denying depreciation would cause landlords to put up rents, 65 percent of New Zealanders and 69 percent of landlords said yes. Only 17 percent of landlords said no and 14 percent said they did not know.

    When landlords alone were asked if they intended increasing their rents as a result of being denied depreciation, 47 percent said yes, 39 percent said no and 13 percent did not know.

    The Budget also increased funding for Inland Revenue's property transaction audit team, which looks for property speculators who fail to declare the profit as income. Some people buy rundown properties with the intention of selling them at a profit.

    They claim they are rental properties and never rent then out, tax experts have said
    Those "bunnies" who said LL's wouldn't put their rents up, had to live in La-la Land. Honestly, did they really expect anything else??
    Patience is a virtue.

  2. #2
    Join Date
    Dec 2003
    Auckland, New Zealand


    I've just been asked to speak on TV Ones news program at 7am tomorrow morning on this.

    It's great that 69% of landlords believe that rents will rise because of the tax changes, but even better is that 65% of the general population think that too!

    It confirms that tenants are more likely than not to accept rent increases between now and April 1 next year due to the Budget.
    Andrew King,
    Too many tenants in your property? Hire a sleepout from Cabin King and increase the rent
    NZ Property Investors' Federation

  3. #3
    Join Date
    Oct 2008
    Auckland/Melbourne/ whereever the money is


    Seems basic common sense to me.
    Provide an excuse to put up the rent a bit more, to get closer to covering the deficit betweeen costs & income, & who wouldn't take the opportunity.

    Just the same as the Petrol companies
    and the same has happened with the supermarkets over the last year or so
    and will happen in any retail sector that is not overly competitive.
    Watch all the price increase that will happen between now & the introduction of higher GST, then even more once GST does go up.

    The fundamentals are that everyones costs are going up, so as much as possible will be passed on to the end user, whatever the sector.

    One of my tenants just gave me notice, so the new rent on the place is $20 higher pw ($440 - 460) in anticipation and because it is due for review anyway.

  4. #4
    Join Date
    Apr 2005


    I thought that rents were more based on supply vs demand, and I'm sure they are to a large degree.

    But with all these new costs coming in, rents are definitely going to have to move. All outgoings (excl interest) are going up 2.5% in October, depreciation cuts will cost an average investor $x,000's, some accommodation providers will have to charge more due to GST increases. The ETS is going to increase the cost of petrol and electricity. Council's keep charging and increasing costs ridiculously.

    Everyone is going to be increasing prices over the coming year, and PI's will be no different. Small rental increases can really make a big difference to PI's, so bring it on I say.

    e.g Someone has a $300k house rented for $400pw and is making $2,000pa positive cashflow. If rents go up 10% then their profit increases by more than 100%!

  5. #5
    Join Date
    Aug 2005

    Default Rent Rise

    We will certainly be passing increases directly on to the tenants, some we are already increasing by $10 a week. The message needs to be clear that increases will be passed on, why should we suck this one up? There are many landlords who rely (rightly or wrongly) on the depreciation benefits who's only choices will be put the rent up or get out.

    Fixed term tenancies we are ensuring we have a clause in the agreement allowing an increase after 6 months, unfortunately some of the agreements we took over from other rental companies didn't allow for this.

    All other businesses pass GST increases and increased product cost directly on to the consumer, why shouldn't we?

  6. #6
    Join Date
    May 2008
    Torbay, Auckland


    I am new to having rental properties, and what I cant believe is the amount of ongoing maintenance that I keep getting hammered with, it seems never ending problems.

    With depreciation going, and interest rates rising in the next 2 years, its looking like I will have to quit 1 of my 4 properties as a safeguard to get my R/C balance looking healthier.

    And then I can get the cash flow side of my business going with the odd flip or assignment.

    I dont think anyone outside of being a landlord know just what is involved keeping these sorts of operations afloat.
    Depreciation might have been a myth in some peoples eyes but its a real live cost fixing leaks, replaceing ovens and HWC's, and eveything else under the sun.

    I was thinking of aiming for 30 properties but that just seems like a nightmare to me.
    I must just tone down my plans and do some flipping and see a real profit (or not) and pay some tax, which is nigh on 50% but at least you can see some concrete profit, rather than pain and misery with the chance of some cash flow gain further down the line.

  7. #7
    Join Date
    May 2008
    Torbay, Auckland


    Actually that post ended quite miserably didnt it

    Heres another smily face then

  8. #8
    Join Date
    May 2010


    rent increases are going to be a natural progession

  9. #9
    Join Date
    Sep 2007


    BK, your assessment of residential property investment is about right imho.

    It's not a glamorous thing at all most of the time. It's ongoing little jobs like fixing things, chasing tardy rents etc.

    It's actually quite surprising that it's been the investment of choice in the recent past. I think we may see a number of people get out of it in the next 12 months as they get sick of propping up their cashflow negative properties with problem tenants.

  10. #10
    Join Date
    Nov 2006


    Quote Originally Posted by Davo36 View Post
    .........propping up their cashflow negative properties with problem tenants.
    I have problem tenants. How do you position them to prop up cashflow negative properties. What sort of knot is used on the rope?


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