CPII Survey May 2019
Tenants largely unaffected by banning of letting fees, as investors absorb costs.
- Just 26% of investors believed that banning letting fees has achieved the desired objectives of reducing price barriers and encouraging consistency in the rental market.
- Following the banning of letting fees in November last year only 16% of investors have made changes to how they manage their properties. Indicating that tenants have been largely uninfluenced by the change to the law.
- Following the axing of the proposed Capital Gains Tax by the government, the majority of investors (81%) plan to keep their investment portfolio the same, but of the remaining, 13% plan to increase the size of their property investment portfolio and 6% plan to divest as a result.
- Both the Auckland rental property investment index and the Auckland rental property performance index have experienced sharp increases this month. As a result of increased confidence in the rental property market, perhaps as a result of the Governments decision to scrap the proposed CGT.
This month we asked investors about letting Fees, as last November the government banned letting fees with the intention to reduce price barriers, and to encourage consistency in the rental market by ensuring tenants do not face different up-front costs depending on who they rent through.
As a point of comparison, we asked these questions at the same time last year in preparation for the introduction of Letting Fees.
Agreement that Letting Fees will/have achieved objectives
Last May 39% of investors agreed that letting fees would achieve their sought objectives, whilst 24% disagreed. This year there was a sizeable increase in those investors who were neutral to the issue.
Consequence of Letting fees becoming banned
Following letting fees becoming banned 84% of investors made no changes to how they manage their investment properties. A small portion of those (16%) increased rents to cover the cost of the changes. This shows the overall impact of the new law on tenants has been very minimal
Capital Gains Tax
This month we also asked investors whether or not they were more likely to increase their property investment portfolio, given the Governments decision to scrap the proposed Capital Gains Tax.
Following the government’s decision the majority of investors are happy keeping the size of their investment portfolio the same (81%). Double the number plan to increase their property investment portfolio than reduce it (13% c/f 6% respectively).
Crockers Property Investment Index
Auckland Rental Property Performance Index
Both the Auckland Rental Property Investment Index and the Auckland Rental Property Performance Index have experienced sharp increases this month, a result of an increased confidence in the market following the government’s decision to scrap the proposed Capital Gains Tax.