Landlords urged to raise game

Demand for rental housing is projected to soar over the next decade, far outstripping the ability of typical New Zealand landlords to offer suitable properties to tenants.

As much as $50 billion will be needed for rental investment to provide 204,490 rental properties by 2016, according to a new study.

Much of the demand will be in Auckland, said the report from property consultants DTZ NZ.

Auckland would need 43,850 additional dwellings between next year and 2011 and a further 48,710 dwellings between 2011 and 2016, the study found.

"Much of this demand will be for rental accommodation," the study said and mostly in medium-density housing, which was more affordable and took up less land than more traditional stand-alone housing.

But DTZ concluded that typical "mom and pop" landlords were ill-equipped to look after their tenants, let alone meet the unprecedented demand for housing stock - a finding strongly contested by the 1000-member Auckland Property Investors Association.

The DTZ report portrayed landlords as fast-flick, get-rich-quick merchants, citing a national landlord survey conducted last year which showed:

* A fifth of landlords were in the business a year or less.

* They expected "significant capital gains".

* Little use of business structures to own or manage their properties.

* Low levels of systematic property management systems.

* Discrimination against some people, in favour of others.

Many landlords had "pronounced preferences for tenants with certain social characteristics and against tenants with other social characteristics", the study said.

The property investment association's president, Andrew King responded: "This report is denigrating our sector".

The $135,000 DTZ study was paid for by the Government-funded Centre for Housing Research which put up $90,000 and Building Research which put up $45,000 from the building levy.

"New Zealand lacks dispassionate, professional investment management," the report said.

Instead, landlords were more interested in their own personal investment aims than contributing to our housing infrastructure.

For example, only a third of landlords saved regularly for maintenance.

Big business investment with more professional skills was therefore needed in rental housing.

"Government should further prioritise and encourage a more dispassionate and professional management of private rental accommodation through corporate, trust and other institutional investment structures," the report said.

But the association's Andrew King said the DTZ study was unfair and the Centre for Housing Research had been established to "hammer" private sector landlords and propose more regulations.

Although he agreed landlords viewed their properties more as an investment than as a crucial part of the social fabric, his members were professional and increasingly treated tenants as customers.

"This report is one of the reasons we think the Government wants to bring in more regulations against landlords," Mr King said.

An association survey last year showed members spent an average $3700 annually on maintenance.

Landlords instigated 80 per cent of the cases before the Tenancy Tribunal, mainly for unpaid rent, so it was unfair to say landlords were doing a poor job, he said.