November 6, 2020
About 1.42 million people call Auckland, New Zealand home and yet, it has the lowest percentage of homeownership in the entire country. This means it has the highest rental tenancy rates, making it ideal for landlords.
The reason for Auckland’s low home ownership rates is largely due to the incredibly high prices of the homes here – the median price for a home is $910,000. So, 42% of the city’s population chooses to rent homes instead of buying.
What does the profile of an average renter in Auckland look like?
Male and female renters are nearly equally represented in Auckland. Tenants are of varying ages but the average age of a renter is around 43 years old. The city has a multicultural population and nearly 50% of renters are born overseas.
Work and income profile of renters
The median renter’s household income is placed at about $70,000. Sources of income are largely from wages (68%) and about 12% are self-employed. Other sources of income are scattered with some households depending on welfare, interest/dividends, pension, superannuation and rent among others. 74% of employed renters need to drive to work and the average commute is about 25 minutes. So, it’s not surprising that nearly 45% of households have at least one car and almost 35% of households have two cars or more. Only about15% have no cars.
Household structure of Auckland renters
Statistics among renters in Auckland show a median of two member households with 58% of renters being married. There are a number of families in the city as well, and the figures indicate that 43.7% of Auckland’s children (i.e. under the age of 15) live in rental properties. This may be the reason that the most preferred type of rental property is a home with three bedrooms. The demand for houses with two bedrooms comes a close second. Other choices include houses with four bedrooms, and then one bedroom properties.
Rent and tenure in Auckland
Auckland is one of the most expensive cities to rent a house inwith the average rent in Auckland hovering around $550 a week. An apartment may cost you around $500 and a townhouse will be about $630 weekly. Units are less expensive to rent at about $450. A three to four-bedroom unit would be around $600 and you could expect a five-bed place to be $850, depending on the suburb.
The most common type of tenure is one-year fixed arrangement. The other type of tenancy available in Auckland is a periodic tenancy. With this arrangement, the tenancy will continue for as long as both parties (tenant and landlord) want it to. To end this type of tenancy, one of them must issue a written notice. Tenants need to provide 21-days’ notice and landlords need to provide 90 days. If the landlord intends to sell the property then 42 days is considered to be sufficient notice. This is also applicable if the landlord intends to put up a family member in the space that the tenant is currently occupying, or move back in themselves.
It must be noted that 46% of renters have moved from their current homes in the last two years and the main reason for this high turnover is that the property they were renting was sold. The next biggest reason for renters moving house was to find better quality accommodation. Other reasons cited for moving include finding cheaper accommodation, moving closer to work, the end of a relationship, health reasons and wanting to move closer to family.
Tenant concerns and relationship with landlord
The biggest concern cited by tenants when it came to renting was hikes in the rent. In fact, rent in Auckland is not highly regulated, the sole restriction is provided by the RTA or the NZ Residential Tenancies Act which allows rent to be raised only once every six months.
The aspects of rental properties that tenants would most like to see an improvement in are insulation, heating and kitchen spaces.
Nearly a quarter of the tenants in Auckland felt that their rental applications had been turned down unfairly. But tenants in Auckland do value having a good relationship with their landlord.
Responsibilities as a landlord
If you are a landlord in Auckland, you will already be aware of the demand your property has in the city and that being a landlord is more than just about collecting rent. A landlord has plenty of responsibilities from ensuring records are kept accurately, maintaining the property to a specific standard, making inspections, being available to answer questions from new tenants and so on. If this is not your primary source of income, managing all of this after work hours and on weekends can be taxing. Whether you have just one property or a larger portfolio that needs to be taken care of, experienced professionals from a property management service can look after your responsibilities.
If your investment property is in Auckland’s North Shore, the Hibiscus Coast or Warkworth have a look at Morison Property. They can help you manage everything from tenant selection, choosing rental rates, rent collection, and ensuring adequate maintenance of the property. They offer competitive prices and more services than most. Using a property manager takes the workload and the worry off your shoulders, and allows your rental property to be truly a passive income source. To find out more about Morison Property take a look at their website https://www.morisonproperty.nz.