Survey: Renters Save Over $6,000 a Year

11 November 2009

A study by Andrew King Property Management Services shows that renters are making substantial savings over home-owners, even with historically low mortgage interest rates.

The study compares the cost of renting and owning the average New Zealand home, currently valued at $350,000.

To calculate the cost of home ownership, the study uses the average floating interest rates from the four main banks, which is currently 6.12%. Other costs of home ownership, including rates, insurance, repairs and maintenance are also taken into consideration, making the annual cost of owning the average NZ home $25,879.

The study uses the upper end of the Tenancy Services national rental price statistics, which is $380 per week or $19,760 a year.

Comparing the results, renters in New Zealand are saving an average $6,119 a year by renting rather than owning their home. This is despite interest rates being at all time lows, making home ownership cheaper. If the interest rate was 8% then the saving would be over $10,000.

Andrew King says that the results show that rental prices in New Zealand are actually quite reasonable. The difference in costs between owning and renting in other countries is no where near as great as it is in New Zealand. This helps New Zealand renters to save a larger deposit for when they eventually buy their own home.

Some people are trying to claim that the lower rental prices in New Zealand are because of our tax laws, but this is ludicrous according to King. “Why would you charge $1 a week less than market value for your rental property in order to get a 33 or 38 cent tax refund?” he says, “It just doesn’t stack up as an argument.”

“The public needs to hear more from groups such as the Accountants Society and even the Inland Revenue, who have both stated that rental property does not have any tax advantages over other businesses or investments.

Rental property owners support the productive sector more than many companies in New Zealand, firstly by housing a third of the countries workers and secondly by spending money on goods and services in order to continue providing good rental accommodation.”

King hopes that Government will see through the concerted campaign aimed at portraying rental property owners as all that is wrong with our economy.

For further information please see the following website: http://http://www.AndrewKing.co.nz

Cost of renting versus owning

November 2009

(to view data charts please see the following document:
http://img.scoop.co.nz/media/pdfs/0911/Andrewking.doc)

ENDS

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