An increasing number of residential landlords think rents are below a “fair value”.
Auckland-based property management and research company, Crockers, surveyed its investor clients and found the number who think rents are below fair value had risen from 30 per cent in October 2015 to 35 per cent in April 2017.
At the same time, the percentage of landlords in the survey who felt rents were above a fair price increased from 9 per cent to 13 per cent in the same period.
Crockers researcher Kim Sinclair said increases in costs associated with rental property – rates, insurance and maintenance – were contributors to decisions to increase rents.
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More than half the investors interviewed were planning to increase rents in the next six months, which was 57 per cent up from late 2016.
Most of those planning to increase rents were anticipating increases of 1 per cent to 2 per cent.
Sinclair said increases in local council rates were cited by most landlords as the main reason for raising rents (65 per cent) but other costs like property maintenance and insurance costs continued to be significant.
Compared with 2016, another major and growing factor to increase rents is an increase in interest rates, cited by 50 per cent of survey respondents.
“If landlords are going to be hit by the banks, they are looking to pass those costs onto their tenants,” Sinclair said.
Average rents across the North Shore remain slightly above the average for the greater Auckland region stretching from Pukekohe to Rodney.
Over the past 12 months, North Shore three-bedroom rentals had an average weekly rental price of $611, which is 3 per cent more than the average greater Auckland three-bedroom rental of $596.
Two-bedroom rentals on the North Shore were also 3 per cent higher with an average rental price of $484, compared with $470 for greater Auckland.
In other suburbs, rental price increases for two-bedroom properties varied considerably.
The proportion of investors looking to increase their property investments over the next 12 months has increased this month,
indicating that while no dramatic increases in return are predicted, around a fifth are still intending to buy more properties, Sinclair said.