Covid-19 has certainly thrown us a curveball in the last month, and our team transitioned to their home offices once again during lockdown. What was different compared to last time, particularly on the real estate side of Lodge, was that buying and selling continued through the lockdown, and we held successful online auctions where all 17 properties sold.
With the move to level 2, our team are back in the office with physical distancing (of 2m), mask-wearing and contact tracing measures firmly in place, according to our Covid-19 safety plan. As part of this we are ensuring our hygiene and cleaning standards are high.
Rental viewings are able to move forward in-person provided they are conducted safely (2m distancing and record-keeping are crucial), along with rental inspections and maintenance. As a people-focused business, while we plan to reduce face-to-face contact in some areas, we are focusing on safety when this not practicable.
For the blog this month, we’re looking forward at the trends we see developing in the property management and rental industry, both now and into the future.
You can’t look at a news site without seeing a story about how house prices continue to rise and home ownership is heading further out of reach for many. One outcome of this is that more people are entering the rental tenant sector who will be lifelong tenants, and we’ll discuss this phenomenon in more detail.
Another trend yet to hit Hamilton but could be on the horizon is build-to-rent properties. Interest.co.nz have a handy definition for this: they are multi-unit property developments where the units are built for the purpose of long-term residential renting through a single ownership structure.
This type of development also fits in with the Government’s directive that Hamilton (and other major NZ cities) needs to grow up, not just out. The Hamilton City Council is currently looking to update the District Plan to support this, allowing smaller section sizes and more apartments and townhouses. Certainly a reason to invest in Hamilton.
Whenever we talk about the future, many people’s minds flick to what technology we might see hit the market. While the Back to the Future films showed how technology predictions can go awry – we’re certainly not all riding around on hoverboards – there are some interesting innovations we’ve heard that we’ll let you in on.
Renting as a choice – home ownership isn’t for everyone
In New Zealand we have quite strong attitudes towards home ownership and renting, seeing home ownership as a right and life goalpost. In comparison, many other countries around the world don’t have such strong views, with inter-generational lifetime tenants seen in a more positive light.
While we certainly can’t change societal perceptions in a year, or even ten years, we believe being a lifelong tenant is a very valid choice; we deal with many great tenants every day, who look after their landlord’s properties as if they were their own. Being a tenant doesn’t mean they are necessarily transient, and often tenants would love to stay in a property for years and have that security.
What this trend could mean is that the tenant pool will continue to grow, particularly as the capital value of properties heads in the same direction. While the Reserve Bank have indicated that interest rates will increase over the next year and they will introduce new debt-to-income lending ratios, the easing of prices won’t happen overnight.
More tenants, especially great tenants, is good news for landlords especially if they are looking to settle. At Lodge, as the largest property management company in Hamilton receiving over 850 enquiries per week, we’re best placed to ensure you can take advantage and find the best tenants.
Once tenants find a good, clean, warm property, turnover decreases which we are already starting to see. People are staying in properties for longer, and this is one benefit that could be credited to the Healthy Homes legislation; more homes are warm and dry, so tenants are keen to stay. A recent Stuff article even showed that tenants stand to save more money by staying put.
Is build-to-rent on the up and up?
While we haven’t seen a build-to-rent (BTR) complex in Hamilton yet, I can certainly see some coming in the future, with developers around town already starting to talk about the idea.
In the US, more than a third of renters live in BTR properties which is more than 10% of the population. In Australia, where they have similar views on home ownership to NZ, some state governments are actively promoting the concept, and it is experiencing rapid growth.
In Auckland, there have been a couple of BTR developments including at Hobsonville Point and it is on the government’s radar, but you couldn’t say it has taken off just yet. It’s also on the radar of Opposition parties like Act, who have said they would remove financial barriers for BTR schemes.
From our point of view, these schemes can provide security of tenure for tenants which is the number one priority for most. These schemes would certainly also benefit from the change in perspective around renting that I just discussed.
What’s on the technology horizon
In the last five years we’ve seen the technology in our industry change rapidly, including our online booking system, online applications and inspections.
We’ve also heard about some interesting tech in the market in terms of home environment monitoring, with sensors able to collect information around concerns like dampness and moisture.
An example of this is NZ company Tether, who have developed a system that monitors and manages indoor air quality across thousands of properties simultaneously without any dependencies such as electricity or network connectivity.
While actually instigating this tech on a wide scale might be a while away, it does give a glimpse into what is possible.
A last note: industry regulation?
I’d be remiss if I didn’t mention the possibility of regulatory change for the property management industry when talking about the future.
Off the back of the legislative changes over the last few years, and the professional service and expertise that property managers like Lodge offers, I believe the percentage of rental properties in New Zealand that are managed will increase, along with the increase in tenants. With this increase, I think we will see the reinstatement of licensing and regulation within the next five years.
While we focus on upskilling, qualifications and choose to run an audited trust account to drive the industry back to a professional level, making those steps mandatory across the industry would help with reputation and protection for both landlords and tenants.