New Zealand has a record number of residential rental properties.
Data from the Government’s Tenancy Services, supplied via the Ministry of Business, Innovation and Employment, shows a big upswing in the number of active rental bonds deposited.
That indicates more places are being rented.
By November 1 last year, bonds were lodged on 410,904 residential rental properties: townhouses, apartments, flats, units and stand-alone homes. That’s up 38 per cent from 2010 when 297,624 bonds were lodged.
The 2018 Census showed more than 1.4 million people live in rental housing.
Herald multimedia journalist Julia Gabel compiled this chart showing the rising numbers.
Bonds are held to cover unpaid rent, damage to a property or any claims but tenants who have looked after a place, paid rent and any other amounts owing should get a refund of their bond when the tenancy ends, Tenancy Services says.
“At present, Tenancy Bond Services holds more than $820 million of bond money in the Residential Tenancies Trust Account,” the Crown entity said.
An MBIE spokeswoman said this month the ministry did not have information on the exact number of tenants in this country.
But data from StatsNZ shows the estimated number of rented dwellings in the December 2023 quarter was 663,700, according to the dwelling and household estimates, published on January 11.
Why the gap between the 410,904 bonds taken on rental properties and the 663,700 properties estimated to be rented?
The MBIE spokeswoman noted the estimated number of private dwellings as at the quarter ended December 2023 was 2,072,100.
StatsNZ data showed New Zealand has 1,337,400 owner-occupied dwellings. Of those, 663,700 are rented and a further 71,000 are provided free.
Why does the estimated number of rented dwellings not align with the number of dwellings which have active bonds lodged?
The MBIE spokeswoman said the Residential Tenancies Act 1986 required a landlord to lodge a bond with Tenancy Services if one is required for a tenancy.
However, a landlord does not have to request a bond. That is their decision. Kāinga Ora, for example, does not always require a bond.
Consumer NZ says: “It’s the landlord’s choice whether they charge a bond but most do. You have to pay the bond if one’s charged. The maximum amount is four weeks’ rent. Once you’ve paid, the landlord must give you a receipt and pay the bond money to Tenancy Services within 23 working days.”
Boarding house landlords are only required to lodge a bond if they are taking more than one week’s rent equivalent.
The MBIE spokeswoman noted Tenancy Services does not hold bonds for some tenancies that are outside the scope of the act.
This includes emergency or transitional housing, situations with flatmates, boarders, family renting from family, etc.
Kāinga Ora owns or leases around 72,000 properties so it accounts for more than 10 per cent of our housing stock.
Kelvin Davidson, CoreLogic NZ chief property economist, says the rental sector is a hot topic, with rents rising.
On February 22, StatsNZ released household income and housing cost statistics for the year to June, 2023 showing the average weekly spending on total rent payments increased from $410.70 to $427.20, up 4 per cent.
Davidson said key areas where rents were rising faster than elsewhere were Auckland and Christchurch.
More demand for tenancy properties is the reason for rising rental property numbers, Davidson said.
“Migration is boosting property demand very strongly at present and arguably the stock of rentals is lower than it might otherwise have been, given that investors have slowed down their purchasing activity over the past few years,” he said.
These factors may not apply to quite the same degree over the next year or so, but they’ll still be present, so there’s probably further rental pressure to come which will be good for landlords, not for tenants, Davidson said.
Barfoot & Thompson’s latest rental update released on January 30 showed Auckland’s average rent rose 5.27 per cent annually from $629.09/week in the December 2022 quarter to $662.23 in the December 2023 quarter.
Those statistics come from rents paid on nearly 17,500 Auckland properties managed by the agency, including existing and new tenancies. Samantha Arnold, property management general manager, said the new data showed the highest annual increase in average weekly rents recorded by the company since 2015 when rents rose nearly 7 per cent.
Rents were up due to a rising number of tenants, high immigration numbers and Auckland floods, Arnold said.
“Supply also remains constrained. There are too few rental properties available and we are seeing a slightly lower turnover as tenants seek to avoid the added costs of moving and landlords seek the security of longer-term tenancies.”
StatsNZ’s Housing in Aotearoa: 2020 cited a range of sources for housing information although it is somewhat out of data, having a lower number of homes than the current two million-plus.
For example, it said Census 2018 showed more than 1.8 million dwellings in this country. Just under 1.7 million were privately occupied, housing about 4.3 million people.
While our oldest dwellings date from the 1840s, under 10 per cent of them were built before the 1940s. About a third of our homes have been built in the last 20 years.
Homeownership peaked in the 1990s at 73.8 per cent of households, but by 2018, homeownership had fallen to 64.5 per cent of households.
Homeownership rates fell in all regions since 1991, with the largest falls in the Auckland region, which has well-documented affordability and supply issues, StatsNZ said.
Homeownership continued to be higher outside the main centres. For example, eight out of 10 households in the Waimakariri and Selwyn districts lived in an owner-occupied dwelling. Homeownership rates in our major cities in 2018 were generally well below the national average.
There were considerable disparities in homeownership rates by age, with homeownership rates higher for older people.
Pacific peoples and Māori were less likely to own their home or hold it in a family trust than other ethnic groups. They were also more likely, along with people with Asian, Middle Eastern, Latin American, or African ethnicity, to live in public housing.
By 2018, just over 1.4 million people lived in houses they did not own, including 120,000 children aged under-5. Although private renting predominated for all age groups, almost one-third of renters aged 65 and over lived in social housing.
Owners tended to have higher income levels and were more likely to be partnered than non-owners.
Non-owner-occupiers had less security of tenure. They moved more often than owner-occupiers and were much less likely to have lived in their house for long periods of time, the StatsNz information said.
In 2018, the most common reason given by renters who had moved to another rental in the last five years was because their landlord ended their tenancy, that said.
Anne Gibson has been the Herald’s property editor for 24 years, has won many awards, written books and covered property extensively here and overseas.
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