As we have moved towards and enviably past the 11th of February 2021, the Residential Tenancies Act changes have captured a significant amount of media attention and opinion. The ten changes that come into law on the 11th of February are undoubtedly the most considerable change we have seen since 1986. We are yet to see how these will integrate into the industry and everyday life of New Zealanders.
As Property Managers, we remain fairly impartial to what is happening and need to keep an open mind to the changes and opinions held by both owners and tenants. But, having a grandstand view of what has happened since the amendments received royal assent in August 2020, it certainly appears to have been quite divisive. Landlords look like the enemy, and tenants appear to be the victims of neglect and abuse of power - the reality of what we see every day as property managers couldn't be further from the truth.
The RTA amendments' intended purpose is to help move old legislation to a more contemporary level to coincide with society today. For the most part, the changes are well balanced, and each party's best interests have been considered. For example, if a tenant wishes to do a minor renovation to the property they are renting, they can do so with the owner's consent; however, any changes made need to be fully reinstated at the end of the tenancy. Therefore, everyone is covered.
Property Brokers manages properties right across provincial New Zealand, has a good overview of the market, as well as the reasons why any of our current owners are selling properties. There has been strong sentiment behind the unbalanced reforms, and anecdotal comments that long-term investors are exiting the market as a result of the amendments. Again, this is not what we are seeing across the country.
The amendments to the Residential Tenancies Act also coincide with some of the largest increases in capital gains across properties in provincial New Zealand. The data we see daily shows that investment properties being sold are from long-term investors looking to realize the capital gains. It has got nothing to do with the increasingly litigious environment.
One of the areas that have seen a large turnover of rental properties is the West Coast of the South Island.
Vicki Calder, Property Brokers Property Management Team Leader, says, "Prior to November, several owners advised that they were selling due to the law changes and that they were over owning rental properties. The recent sale of rentals in Greymouth/Hokitika definitely relates to capital gains. The majority of owners that are now selling are long term investors who see this as an excellent time to exit due to the capital gains. Our area has not seen gains like this since the early 2000's when the market went crazy."
Calder continues, "October/November sales were achieving asking price, with December onwards, exceeding the asking price with multi offers on the majority of properties. Westport's market has been even stronger than the Greymouth/Hokitika area. Westport has had a large number of homeowners purchasing, where the Greymouth/Hokitika areas have a good mix of both homeowners and investors purchasing. The inquiry from investors looking for rental appraisals and management information has been very steady".
The new tenancy reforms are undoubtedly complex and will result in an increasingly specialized ability to navigate both owners and tenants through the changes. But the key message is; it is not all bad. Our best bit of advice for anyone in the market looking to buy is to seek good advice and carefully select an experienced Property Manager from a reputable Real Estate company.
We’ll save you time and money, so you can make the most of yours.