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New Zealand Investment property

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Rental returns

Rental property in New Zealand is booming.

It’s easy for South African property purchasers to take advantage of this to achieve capital gains and solid returns.

There are two easy options for achieving returns from your property – long term and short term management.

Long-term management

If the property is a pure investment then long term tenants can be put in place. These tenancy agreements are normally for a minimum period of 3 to 12 months and provide a stable rental income. Under New Zealand law landlords and tenants are protected and as a landlord you have extensive rights including the right to review rents. We can provide advice as to which type of tenancy agreement to use. Income varies with the property and specific advice will be provided on any potential purchase but a three bedroom family home in Queenstown will rent in the $400NZD to $600NZD (R2,200 to R3,300) a week range. Contact us for more information on long term rental property – we have a team of specialists happy to take your call.

Short-term management

Alternatively you can use your property for your own personal accommodation when visiting New Zealand on holiday and still obtain a return by letting it out on a short term basis. This is a viable option in a high tourist and holiday destination such as Queenstown, Nelson and parts of Auckland. These short term tenants are usually for 3 to 7 nights and pay a higher nightly rate. Generally a high quality property in the right location will provide strong bookings and solid income –plus of course the flexibility to use the property when you want it.

Professional management

Both types of tenancy can be managed by local agents who provide comprehensive property management services ideal for owners based out of the area. Their services include:

  • Visiting properties to establish a rental value

  • Preparing properties for rent

  • Creating targeted and compelling marketing to generate enquiry

  • Showing prospective tenants through a property

  • Assessing applications on individual merit and suitability

  • Credit and reference checking to get the best tenants

  • Completion of all legal and company documentation in accordance with the  Residential Tenancies Act 1986

  • Receipt of rent and bond money and subsequent lodging of bond with the Department of Building and Housing

  • Entry inspection with tenants, plus chattels list if required

  • Ongoing rental administration and immediate attention to any rent arrears

  • Organisation of repairs as necessary

  • Pro-active maintenance as agreed by landlord

  • Provision of monthly payments and account statements

  • Payment of accounts as authorised

  • Regular routine inspections and comprehensive report to owner

  • End of tenancy inspection with follow-up of any issues and subsequent organisation of bond refund after expenses

  • Personal service and regular communication

These professional services are normally charged as a percentage of the rental stream, approximately 10% for long-term management and 25% for short-term rentals.

For long-term management, provided rates are market appropriate, occupancy in excess of 90% would be a realistic expectation. For short-term tenancy, occupancy is more seasonal with higher room rates and occupancy in peak booking times such as the ski season (Queenstown) and school holidays. Advice can be given as to anticipated levels of returns on individual properties and locations. 

Home ownership in New Zealand has been declining since 1991. More and more people are choosing to rent, meaning the rental market in the country is extremely competitive, often with multiple applicants for a rental property.

 

 

 

 

 

 

 

 

 

 

 

 

Rental income also varies around the country – Auckland, Nelson and Queenstown (part of Otago) offer strong rental incomes, and house pricing in the Invercargill/Southland region ensures a solid return on investment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Click here to select an area of New Zealand to compare market rents

Click here for a market rent analysis in New Zealand 

For further information on NZ housing statistics, the government-compiled 2006 Census Quick Stats About Housing report is available for download here.