Why the aversion to paying market rent?

[Don't believe the Hype]

I've been buying bread from the same countdown every week for over a decade yet for some reason they charge me market price for each loaf. I'm a good customer with a great purchase history and I've never caused them any troubles or failed to pay for my loaf on time.

Why is it that I don't get a discount to market price like tenants who haven't damaged a house and have been there for a year or two expect?


While no-one want to pay more than they have to for anything, I find it very strange that there is almost an expectation (including being driven by government) that tenants who have been in a property for any period of time deserve a discount. What is wrong with 6 monthly increases if that is where the market is at?

In any business cycle there are times when top line growth goes nowhere... the landlord takes increased costs without increases in rent and in some circumstances reductions in rent... margins contract... other times rents go up faster than costs and profits improve.

I read articles that outline the terrible conditions a tenant is living in, often when pressed they say they don't tell the LL as they don't want the rent to go up. By this admission they realize they're paying under market rate, while no-one has an issue with them wanting to keep their costs down I can't understand how they want a home that is up to standard but want to pay less than market.

[Davo36]

Well I think you know the answer don't you? It's really just about LL's being the current scapegoat for the housing crisis (I know you love that word).

So the renting situation is tight, with listings sparse. So LL's can charge more. So then of course we're evil. Never mind all the increases in costs and the new BS rules coming like having to allow pets etc.

And of course people see housing as a basic right (I agree with them) just like your loaf of bread etc.

I guess food hasn't been going up in price recently? If you look back at the cost of food as a percentage of the household budget, it's actually gone down. Mainly because the percentage of the household budget spent on accommodation has gone up a lot.

[Bluekiwi]

Maybe if tenants did a little work themselves, like cleaning gutters, trimming tree's, changing lightbulbs, airing the house, a little bit of water blasting, stop blocking the drains, not drying clothes inside, not breaking windows and smashing walls and doors and expecting the landlords insurance to cover these "accidents".............. then rents might be a little lower.

Oh that's right, everyone in NZ is owed a comfortable lifestyle for free, and are not required to work if they don't want to.

I see the prisons now have sky inside their cell, as well as gyms, next they will be getting Fortnight and Grand Theft Auto to hone their skills.

[JBM]

I can get why renters aren't happy as I'm sure if they could scrap a deposit up to buy a house they would be in a much better position >>>>>>>>>>>>>>>>>>>>>>>

If you borrow 1million NZD interest only you are only paying $683 etc a week ...what kind of place to you get for $680 pw ??

Really Renters are mostly the no so smart or low income in this current market

[Bluekiwi]

I can get why renters aren't happy as I'm sure if they could scrap a deposit up to buy a house they would be in a much better position >>>>>>>>>>>>>>>>>>>>>>>

If you borrow 1million NZD interest only you are only paying $683 etc a week ... where I live you would pay that for a 700k-800k house etc

Nope, most wouldn't. Some would.

But most are not interested in buying a house, for a whole raft of reasons.

Foremost would be that its too much hard work, too much responsibility, not enough financial literacy, don't want to scrimp and save for a deposit, don't want a shitty first house, don't want to renovate a first shitty house on weekends.

For some its just too scary to owe hundreds of thousands of dollars.

Most wouldn't know how to calculate the weekly interest cost of $350,000 at 7.5% interest compared to 3.5%

If that surprises you, then I can see why you posted what you did.

[JBM]

Nope, most wouldn't. Some would.

But most are not interested in buying a house, for a whole raft of reasons.

Foremost would be that its too much hard work, too much responsibility, not enough financial literacy, don't want to scrimp and save for a deposit, don't want a shitty first house, don't want to renovate a first shitty house on weekends.

For some its just too scary to owe hundreds of thousands of dollars.

Most wouldn't know how to calculate the weekly interest cost of $350,000 at 7.5% interest compared to 3.5%

If that surprises you, then I can see why you posted what you did.

Well I'm not really surprised just know how hard it would be on min wages with current living costs esp with kids to buy even half decent property in major centres...esp without the right mindset.
we need more basic financial education in high schools to set-up many young kiwis to not just join the rent for life mindset ..

We have setup kiwisavers for our kids from 5yr olds should have a decent chunk of change when they get to the stage in life they want to settle down an buy a house

[elguapo]

Really Renters are mostly the no so smart or low income in this current market

I rent because I am much smarter than you.

[artemis]

Well I'm not really surprised just know how hard it would be on min wages with current living costs esp with kids to buy even half decent property in major centres...esp without the right mindset.
we need more basic financial education in high schools to set-up many young kiwis to not just join the rent for life mindset ..

We have setup kiwisavers for our kids from 5yr olds should have a decent chunk of change when they get to the stage in life they want to settle down an buy a house

Households that sort their housing before they have children are streets ahead. Nearly always media reports of households that can't afford the rent or the deposit have children. Seems simple to me and yet clearly not simple to others.

[Bluekiwi]

Too many deposits in the wrong place do you think.

Thinking with the wrong head.

Thrusting forward instead of pulling back.

[Don't believe the Hype]

Households that sort their housing before they have children are streets ahead. Nearly always media reports of households that can't afford the rent or the deposit have children. Seems simple to me and yet clearly not simple to others.

I think this is spot on. The number of articles about family X husband and wife with 2 kids and one on the way who can't afford the house they live in. In what world is it ok to have an extra child if you can't provide for the ones you have? - Oh yeah it's your RIGHT.

I'm not sure why it has become acceptable to be irresponsible. A couple of recent examples:
> Don't take kids in danger off parents - it's not the parent fault they wig out occasionally and beat their kids - a few hospitalised kids is a small price to pay to keep the hot heads happy
> Don't make smoking in cars illegal - it's not fair on the smokers they can't afford the fine ignoring the kids welfare?


I hear a lot about Human RIGHTS - we don't often hear about Human RESPONSIBILITIES

[JBM]

I rent because I am much smarter than you.

Really ...It's smarter to pay rent than own your own property ? put that over the last 10yrs etc say in "Queenstown" you telling me that renting rather than owning your own property 2009 they were auctioning of properties that are currently worth 200-300% more today

[Keys]

Maybe we should change the heading to:

Why the aversion to charging market rent.

[Don't believe the Hype]

Keys - this is actually a great point. Why is it that people feel they have to apologize for charging market rent to a tenant?

We recently met with some one who wanted to understand the financials of working in the area we invest in and I took them through the basics of costs. Then we went on to outline the line item of risk which we put a weekly amount on that we add to rent such as the below:
- Tenant Accidental Damage to property
- Tenant Failing to pay last months rent essentially rendering holding a bond futile
- Cost of chasing up awarded damages
- Clearing rubbish from sections


These numbers have been increasing over the last couple of years as the tenancy tribunal has been so willing to make the landlord pay for anything that goes wrong. What the TT doesn't understand is that it isn't the LL that pays, it's the next and subsequent tenants.

The IRONY is that the tenant that does the damage gets away with it... everyone else contributes to the cost.

No different to theft in a retail store - if a retailer has a loss through theft of 1% of COGS (cost of goods sold) they simply add that to their margin to ensure their profit margin is not impacted... in essence we all pay for the theft that happens in their store.

[Perry]

Just like all taxpayers should the cost of all theft in and by gummints.

[Beano]

I rent because I am much smarter than you.

Yes renting can be smarter than buying
Arthur did well to have a fixed rental for 9,000 years !

Originally leased in 1759 to Arthur Guinness at IR£45 (Irish pounds) per year for 9,000 years, the St. James's Gate area has been the home of Guinness ever since. It became the largest brewery in Ireland in 1838, and the largest in the world by 1886