Don’t blame the landlords for increased rents. Property owners are investors not charities. They need and expect a return on their investment that helps pay their outgoings and reflects the substantial risks often involved in renting out a property. These include tenants who trash properties- chattels as well as the fabric of the building; leave without paying their rent; sub-let the property without the owner’s consent and a variety of other costs that make owning a rental property a risky investment. Landlords can’t continually absorb higher costs so higher rates mean higher rents.
Anecdotal evidence suggests, as I predicted, that some Waiheke rents have already risen to such a level that they are now forcing lower income families off the island.
The other group being forced off is those on fixed incomes. These people are usually pensioners, who have seen their properties rise in capital value but, being on fixed incomes, do not have the means to afford either their mortgage or their Council rates bill. With Waiheke rates now averaging $3000p.a. they consume 20% of the annual disposable income of a single person living alone who relies solely on a pension for income.
Younger families will increasingly be unable to afford the mortgages and rates that go with home ownership. Their place on the island will be taken by those who are financially better off or rich investors who are not prepared to take the risk of renting out their holiday homes and can afford to keep their second homes for their own and their family’s use. This shortage of rental properties will force rents up even further and accelerate the gentrification of Waiheke.
Hence it’s both ratepayers and renters who should be concerned about higher rates and how this money is going to be spent. Is it necessary or is there profligate and irresponsible waste of money going on in the new Auckland Council?
Look no further than the politicians. Mayor Len Brown is busy bankrupting the city to pay for his train set (the inner city rail loop), abetted by his stalwart supporter, the financially illiterate Waiheke Councillor Mike Lee who has failed to acknowledge the reality, let alone the impact, of the biggest rates rises landing on his turf. The Waiheke Local Board has gone along for the ride and their inexperience and lack of nous leaves them lurching from plan to plan without any tangible results. Their sheer wastage of money on hare-brained schemes (harbour rides, still awaited consultants’ reports, unaccountable slush funds and duplicated projects) in the first few months of their term has been alarming. And it will get worse as their only method of paying the ongoing costs of their promised swimming pool project will be a Waiheke ‘targeted’ rate that will squeeze our already hard pressed ratepayers and renters for many years to come.
Well done Mayor Len, Mike Lee and Paul Walden, your substantial salaries will ensure you can afford to pay your rates and own property. However, your support base of Waiheke renters might not be so lucky. The law of unintended consequences could well come into play in the future, but then, like the Greens say, they’re for the rich of New Zealand.