A single mum whose ultimate goal is to buy a home says rent rises make saving a deposit near impossible.
Her comments follow a raft of housing changes introduced by the Government on March 23 in a bid to help first-home buyers. From October, the ability for landlords to claim tax deductions for mortgage interest payments on rental properties will be phased out. Property investors have warned they'll increase rents to absorb the extra cost and economists say rent hikes aren't an empty threat. People are "more likely than not to see rents going up faster than what they already have been," ASB chief economist Nick Tuffley said.
For tenant and single mum-of-two Shannon Rees, the housing changes aren't likely to get her out of the rent trap any faster.
While waiting for her landlord to carry out maintenance to bring the 3-bedroom house she rents in Hamilton suburb of Enderley "up to standard for winter", she's been told her rent's going up by $20 per week, to $470 from May.
"We all just want to have the stability of being in our own home for our children and saving for it with the rent increase make it near impossible for us," Rees said.
Her "ultimate goal" is to save a deposit for a house so her children have a place they call "home" - not just a house they live in. But despite the minimum wage rising to $20 per hour from April 1, her rent - and food costs - are increasing, putting her no further ahead.
"The rent increase has stalled my progress of trying to save for a deposit on a house and even if we move to another area, we're still looking at paying more rent elsewhere," Rees explained.
If more landlords hike rents in response to investment property cost increases, she suspects many renters, particularly single mothers like herself, will struggle to put food on the table, let alone save.
"That extra money we would've had in our pockets would [mean] an extra meal on the table for the family," Rees added.
In response to how long it took them to save a first home deposit, members of a New Zealand Facebook group from a range of backgrounds said anywhere from one to ten years, with the majority saying they'd saved for at least three years.
"Three years of KiwiSaver plus one year saving enough for a 10 percent deposit for a $1m house to us," said one.
"In Auckland buying on [my] own while flatting. Took about three-and-a-half to four years of serious saving for 20 percent deposit. In Kiwisaver from the beginning," said another.
"Four-to-five years give or take, no KiwiSaver, lived extremely frugally, a year at home and a few years in an unhealthy-home low-rent situation...that deposit lasted me about one-to-two years of searching for a home before house prices surpassed what I have for a deposit and now I am back to trying to build up the deposit amount again," another said.
A NZ Property Investors Federation March/April survey of 1719 property investors showed 70.3 percent weren't charging tenants what they considered to be full market rent. But to cope with the increase in tax, over three-quarters (76.8 percent) would either "increase" or "probably increase" rent prices.
Referring to threats to increase rent prices as "disingenuous", Simon Angelo, an investor and CEO of Wealth Morning, told Newshub rents were already at the maximum level many tenants could afford to pay. Landlords were usually better off keeping rent contained to keep good tenants, he said, adding there's likely to be few cases where owners could hike rents $120 per week to cover the average expected shorffall when zero tax deductibility hits in 2025.