Thank you to the 664 PIA members who took part in the 2015 NZPIF Membership survey.
Canterbury took out the honours for the most members participating with a total of 117. That's about 22% of their members. However Taranaki wins the other prize for the highest percentage of members participating with a whopping 36%.
Congratulations to these two associations, who each win a full conference ticket to this year's conference in Auckland this October.
Survey results
Rental property
The average number of rental properties owned by respondents was 6.2, while the number of tenancies was 8.6. So it would appear that multi dwelling properties are quite popular, with 31% of respondents having at least one multi dwelling property.
It also appears that our tenants like to stay in our rental properties. The national average length of a tenancy is 9 to 12 months. However tenants of around 1/3rd of respondents had been in their property for up to a year, with another 1/3rd for one to three years and the remaining third for more than 3 years. Nearly 17% of respondents’ tenants had been in their rental property for more than 5 years.
When looking at buying more rental properties, 31.2% said they were either highly or very likely to buy another rental property over the next year. Of the main centres, Waikato respondents were most likely to buy another rental at 44.4%, followed by Canterbury at 39.2%, Wellington at 31.4% (although none of them were highly likely) and Auckland at 28.1%. Otago respondents were least likely to buy more rentals, with 10.3% saying they are highly likely to, but none being very likely to do so.
Only 9.4% of respondents were planning on selling a property, and 17.6% might sell. The vast majority, 73%, were not considering selling any of their rental properties.
Of those who were planning to or considering selling, 5.9% had owned the property for less than 2 years. These respondents would be effected by the proposed Bright Line test coming into force on 1 October. The vast majority (82.2%) of potential rental properties being sold have been owned for more than 5 years. This confirms that rental property owners hold their rental property for the long term.
There were three main reasons for selling rental property. Retirement was the top reason at 28.9%, closely followed by high costs and low rental returns at 28.1%. Personal circumstance were the third main reason at 23.4%.
Increased regulation and risk due to Government intervention was a significant reason for selling rental property at 15.5%.
Costs in providing rental properties
Respondents spent a total of $12.9m on repairs and maintenance over the past year, which averaged $20,500 per respondent and $3,205 per property. The average spend per property has increased by $653 or 26% over last year's survey.
The largest cost for respondents was debt servicing. Fifty eight percent of respondents who answered the spending question had rental property debt, so 42% of respondents were debt free on their investments.
Respondents with a mortgage spent a combined $25.7m on debt servicing, an average of $82,600 per respondent and $13,650 per property. Using these results, it is estimated that the NZ wide membership spends approximately $289m a year on debt servicing.
Virtually all respondents, 96%, spent money on insurance for their rental property. The average spend per respondent was $10,835 and the average per property $1,790. As this cost affects virtually all rental property owners, members will be looking forward to a newly formed insurance business partnership about to be announced soon.
Thirty eight percent of respondents used a property manager at an average cost of $6,174 per respondent and $1,020 per property.
A full list of spending is in the table below. The results show that the combined membership puts nearly half a billion dollars into the economy each year.
|
Number spending |
% Spending |
Total spend |
Average spend |
Average spend per property |
Estimated total membership spend |
|
|
Insurance |
511 |
96% |
$ 5,536,463 |
$ 10,835 |
$ 1,790 |
$ 37,920,979 |
|
Building materials/ hardware |
402 |
75% |
$ 3,139,327 |
$ 7,809 |
$ 1,290 |
$ 27,332,449 |
|
Flooring |
217 |
41% |
$ 844,486 |
$ 3,892 |
$ 643 |
$ 13,620,742 |
|
Debt servicing |
311 |
58% |
$ 25,688,226 |
$ 82,599 |
$ 13,647 |
$ 289,095,791 |
|
Lawyers |
219 |
41% |
$ 819,383 |
$ 3,741 |
$ 618 |
$ 13,095,162 |
|
Accountants |
410 |
77% |
$ 1,025,080 |
$ 2,500 |
$ 413 |
$ 8,750,683 |
|
Property Managers |
205 |
38% |
$ 1,265,743 |
$ 6,174 |
$ 1,020 |
$ 21,610,246 |
|
Tradesmen |
420 |
79% |
$ 4,633,087 |
$ 11,031 |
$ 1,823 |
$ 38,609,058 |
|
Valuers |
116 |
22% |
$ 189,483 |
$ 1,633 |
$ 270 |
$ 5,717,159 |
Heating
A third of respondents, 212, had added a heating source into their rental properties over the past year. Heat pumps were the most favoured heater, with 164 respondents (77.4%) adding a total 315 heat pumps into their rentals. It appears that members are taking up the excellent special offer provided for them when purchasing Toshiba heat pumps.
The second most common type was electric wall heaters. Fifty one respondents (24.1%) bought a total of 146 electric wall heaters, being 28.5% of all heaters installed by respondents.
The data shows that respondents did not put cost ahead of their tenants’ wellbeing, or perhaps they saw rental increases through supplying heat-pumps provided a better return on investment. The average cost of providing a heat-pump was $2,572, just ahead of wood chip heaters and about twice the average cost of gas heaters. The following table shows a breakdown of heater costs.
|
Electric wall heater |
$ 20,701 |
$ 383 |
|
Gas heater |
$ 6,400 |
$ 1,280 |
|
Heat pump |
$ 416,660 |
$ 2,572 |
|
Ceramic |
$ 858 |
$ 123 |
|
Oil filled |
$ 544 |
$ 78 |
|
Wood chip |
$ 30,616 |
$ 2,551 |
Insulation
A high proportion of rental properties were insulated at 93.2%. However at least 837 properties (19.4%) will be affected by the new Minimum Standards legislation for rental properties.
This is made up from 3.6% of properties that could be insulated but aren't, plus 655 properties (15.2%) that don't have under floor insulation and 27 properties (0.6%) that don't have ceiling insulation.
In the last year, 183 respondents (28.9%) had installed insulation into 479 rental properties at an average cost of $$2,736 per property.
Of those that added insulation to a rental property over the last year, 35.3% received a Government grant to offset the cost. This is similar to last year's survey when 366.3% received a government grant.
Tenancy Tribunal
Over the last year, 21.4% of respondents took a dispute to the tenancy Tribunal. Most respondents, 57%, only attended once.
|
Tribunal applications |
Number |
Percentage |
|
1 |
69 |
57.0% |
|
2 |
30 |
24.8% |
|
3 |
5 |
4.1% |
|
4 |
9 |
7.4% |
|
> 4 |
7 |
6.7% |
|
Total |
121 |
|
The key reason for attending the Tribunal was rent arrears:
|
Reason |
Number |
Percentage |
|
Rent arrears, tenant gone |
89 |
30.2% |
|
Rent arrears, tenant still in property |
110 |
37.3% |
|
Damage to property |
82 |
27.8% |
|
Causing problems with neighbours |
5 |
1.7% |
|
Other |
9 |
3.1% |
|
Total |
295 |
|
Most respondents stated that the disputes were resolved satisfactorily. However another way to read it is that most were not completely satisfied. The message is that keeping away from the Tenancy Tribunal is still an owner’s best option.
|
Tenancy Tribunal Satisfactory conclusion? |
|
|
Yes |
39.3% |
|
Yes, mostly |
37.7% |
|
No |
23.0% |
The average number of weeks to obtain a Tribunal hearing has not changed significantly over the past year. It took 4.4 weeks this year and 4.5 weeks in last year's survey.
Mediation
This year 10.6% of respondents took a dispute to mediation, which is considerably less than the 22.4% in last year's survey.
Fewer respondents were dissatisfied with their mediation hearing (17.5%) compared to the Tenancy Tribunal (23%). The breakdown was:
|
Mediation Hearing Satisfactory conclusion? |
|
|
Yes |
38.1% |
|
Yes, mostly |
44.4% |
|
No |
17.5% |
Fast Track
Fast track is a new resolution service offered by the Ministry of Business, Innovation and Employment (MBIE). Less than half of respondents were clearly aware of it, so the NZPIF will work with MBIE to raise the knowledge level of members.
Of the 590 who answered the question, 44.2% had heard of fast Track, 23.6% thought they had heard about it and 32.2% had not heard of it before.
Respondent demographics
The gender imbalance closed a little this year, with 59% of respondents being male compared to 63% last year.
Our biggest age group is still between 50 and 70.
|
Age groups |
Responses– |
Percentage |
2014 response |
|---|---|---|---|
|
20-30 |
29 |
4.92% |
2.34% |
|
31-40 |
61 |
10.34% |
11.54% |
|
41-50 |
120 |
20.34% |
20.44% |
|
51-60 |
200 |
33.90% |
35.88% |
|
61-70 |
138 |
23.39% |
23.87 |
|
Over 70 |
42 |
7.12% |
5.93 |
Regarding employment, we included retired as separate option this year. Last year we asked respondents to state what occupation class they were in before retiring. Nearly 7.5% of respondents said they were retired. This would mean that each of the other classes should drop slightly.
Business owners actually went up this year.
|
Primary employment |
Response |
Percentage |
2014 response |
|
Retired |
42 |
7.43% |
|
|
Working in a trade |
43 |
7.61% |
10.98% |
|
White collar worker |
85 |
15.04% |
14.86% |
|
Professional |
193 |
34.16% |
37.50% |
|
Business owner |
134 |
23.72% |
21.11% |
|
Unemployed |
6 |
1.06% |
0.84% |
|
Other |
0 |
0.00% |
0.34% |
|
Full time property investor |
62 |
10.97% |
14.36% |
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