Cheaper To Rent Than Own - But For How Long?
Cheaper to rent than own but for how long?
A NZ Property Investors' Federation (NZPIF) study has shown that renting the average NZ property is $218 per week cheaper than owning the same property.
The gap between owning and renting the average NZ home has increased by $21 per week over last year due to slight increases in the cost of buying a home and rising interest rates.
"New Zealanders don't value renting as an acceptable accommodation option. They tend to regard pay-ing rent as dead money and consequently want to pay the cheapest rental price they can," says NZPIF Executive Officer, Andrew King.
The study also examines what it costs a rental property provider, in their first year of ownership, to sup-ply an average NZ home to a tenant. This cost has increased from $5,331 last year to $6,177 this year.
While rental prices have necessarily increased over the past year, they have not managed to keep up with the increased cost of providing rental property.
"The study shows that it's already difficult to provide a rental property in New Zealand and it is getting harder and harder to do so" says King. "Political parties, regulators and tenant lobbyists calling for more regulation must consider that this will make it harder for tenants to obtain rental accommodation. We are already hearing stories of tenants finding this difficult and the situation is just going to get worse."
As an example, tax deductions that are available to any other business are to be removed under a La-bour policy which says they are "dealing to speculators". In fact this would not affect speculators, but it will increase the cost of providing a rental property from $6,177 to $10,261. That's an increase of $78 per week.
"It is unlikely that renters will appreciate having to pay for tax increases such as this," says King.