Rent Rises Outpacing Wage Growth in Wellington and Relationship with Insulation
This week as we look to the rental market, we can see that rents are continuing to rise in such a manner that they are beginning to outweigh the average wage in Wellington. Compare that to Canterbury and Auckland, it’s evident that Auckland is following the same trend. Yet, unbelievably, Canterbury is inversely true. If you’re interested in scanning through the latest weekly rent incomes from around the country.
Using the data seen on Interest.co.nz, it’s emphasising the fact that the first quarter of our fiscal year has displayed rent amount averages which amount to $446 per week. This is a staggering $23 more than what the average was the following year. That’s a 5.4% increase! In comparison, the average wage only rose 3.3%
This is of concern, as the rental market is forever in limbo, it’s difficult to know when to buy into the rental market or get out. Luckily enough, if you’re covering your maintenance costs and have happy, respectful tenants, you are in the top 20% of landlords. Consequently, you’re earning income from your investment! Economically, this has a dramatic presence, the implications that this poses ultimately causes the household budget to go towards rent, leaving tenants with less money for household items that a lot of us will take for granted.
As discussed earlier, this is subjective to each region. If we analyse the table below, it’s clear to see that there is a clear distinction between Auckland and Wellington.
In Auckland, the rental and income figures both follow the national trend very closely. The average rent in Auckland increased by $23 a week (+4.4%) between the first quarters of last year and this year, while average net pay was up $33.63 (+3.4%) over the same period.
But in the Wellington region, rent rises have far outstripped pay increases. Between the first quarters of last year and this year, the average rent in Wellington increased from $470 a week to $506, up $36 (+7.7%).
But over the same period average after tax pay increased from $1014.73 to $1045.62, up $30.89 a week (+3%). That means rents in Wellington increased by more than average take home pay in both percentage and actual dollar terms and that appears to be part of a longer term trend.
Insulation has proven to be a distinct difference between properties that are rented and those that are left on the market – what you may classify as a lemon. Insulated homes are warmer and offer the tenants a feeling of comfort, ultimately, they will want to reside in the property longer and respect it.
As we know, ceiling and underfloor insulation must be installed in all rental properties by July 2019. It may feel like there is plenty of time, but it’s important to start assessing your rentals insulation requirements now so you know what work needs to be done.
A landlord who fails to comply with the regulations is committing an unlawful act and may be liable for a penalty of up to $4000! Here at Quinovic Wellington Regional Property Specialists, we would like to assist you to avoid any penalties!
The Insulation Association of New Zealand is a good place to start as well as checking the Energy Efficiency Conservation Authority (EECA) website which has a handy tool to help you locate an installer in your region.
Alternatively, contact us to arrange a direct quote today. We’ve paired with local Wellington insulation installers who are happy to help!
Usually, the average cost of paying a professional installer to put in both ceiling and floor insulation is approximately $3,400 excluding GST for a 96m2 property. One thing that makes a considerable difference is the cost per square metre – higher thermal resistance or R-value. The prices of lower and higher-performing insulation products are often similar.
Luckily, the EECA is currently offering grants that provide 50 percent of the cost of the ceiling and underfloor insulation in rentals with low-income tenants. The grants are only available until the end of June 2018 so you must get in quickly!
Sustainability Trust Chief Executive Philip Squire has written a comment piece to explain what this and the new Warmer Kiwi Homes subsidies mean, in the run up to the 2019 insulation deadlines. He has included a re-cap of the eligibility criteria and tips for getting your rental properties upgraded quickly. This means that from July 01, 2018 onwards, there is no more funding to help pay for insulation in rental properties.
Here’s a recap of the criteria:
Was the property built before 2000? If yes, then:
– Does a named tenant have an adult Community Services Card?
– Is a named tenant on a low-middle income level (up to $20,000 above their CSC category), and does someone in the home has a respiratory health condition?
If yes then the property is probably eligible for a 50% subsidy until June 30, 2018.
The Budget also included an announcement of the new Warmer Kiwi Homes government programme which will support low-income homeowners to insulate their homes.
This new programme will be launched on July 01, 2018 and will offer grants covering at least two-thirds of the cost of ceiling and underfloor insulation, as well as ground vapour barriers. Properties must be assessed and jobs confirmed by June 30, 2018 to get the subsidy, with no exceptions.
It may be the busiest time of year but we’ll do our best to get your upgrades through in time if you act quick enough. Just don’t leave it too late! Despite the end of this subsidy, landlords will still be able to reduce upfront costs by using a repayment plan such as the GWRC rates loan scheme or a bank loan e.g. the new ANZ interest free mortgages which you can apply for through Quinovic Wellington Regional Property Specialists.
We know that demand for installs and repayment plans will skyrocket as we get closer to the insulation deadlines on the horizon. Landlords that delay checking or upgrading insulation risk lack of availability from professional insulation companies, or inconvenient and slow lead times.
We can’t stress enough, if you haven’t thought about your insulation just yet that you give us a call today to discuss the possibility of obtaining this grant! It could seriously save you in the long run as well as make your property more appealing to tenants.
Due to the design or construction constraints of some properties, it is sometimes not physically possible to insulate or it would require major renovations to do so.
Whether, this is the case or you have any doubt, consult us today to find out the options for these situations. We’ll immediately pass on your problem to an experienced professional who’ll be able to provide information on the practicalities of insulating underfloor or ceilings.