Meth is landlords' big worry

Methamphetamine contamination is the biggest concern facing New Zealand’s residential property investors, a new survey shows.

Friday, October 14th 2016, 4:00PM

by The Landlord

In the 2016 ANZ Property Investment Survey, 38% of investors said they were worried about the prospect of contamination from the production or use of meth in their properties.

Meth damage, which is associated with health concerns, can require costly remediation.

Concerns are at their highest in the Waikato where nearly two-thirds (63%) of investors cite this as a risk.

ANZ head of mortgages Glenn Stevenson said: “While the exact scale of the meth problem isn’t known, the risk of contamination is top of mind for many investors. The consequences for a property owner can be huge, with the bill to fix the problem potentially running into tens of thousands of dollars.”

The top three areas of concern were damage to property, government regulations (particularly loan-to-value and potential loan-to-income ratios) and tenants defaulting on payments.

Nearly a third of investors said limits on high loan-to-value ratio lending had significantly impacted on their strategy over the past year, with nearly half of these (14% of all investors) saying they had not bought a property they would otherwise have bought.

“Despite their concerns, and through changes in regulations which have had a significant impact on investors’ strategies, a major theme of recent years remains: investors continue to see property as a long-term investment. They are holding on to properties and seeing significant reductions in their LVR levels, primarily through capital gain,” Stevenson said.

Almost 85% expect values to increase by 2.5% or more and 53% expect the same increase in rents over the next year. Waikato investors were the most optimistic about values. Almost all of those surveyed expected increases in the next year.

Canterbury investors were least optimistic. More than half expected rental income to stay steady or to fall over the next year. But two-thirds of investors plant to buy again. Aucklanders were the most likely to buy again soon and 11% of them said the majority of their investments were in the Waikato region.

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