Properties Per Landlord was quoted by Stuff, 26 February 2021

Monopoly board with multiple properties per landlord, and a nice carIf you are one to frequent tenant discussion groups, browse mainstream media, or decypher governmental housing policy, you most likely believe that landlords are by and large an extremely wealthy group. Collectors reaping enormous multiplied capital gains as a result of a high number of properties per landlord.

While some such large landlords absolutely exist, by and large this couldn’t be further from the truth. A 2015 Official Information Act request [externally hosted PDF] based on bond data indicated that nearly 80% of landlords owned just a single rental property, almost 97% owned between 1 and 5 rentals, and in the whole of New Zealand only 1,300 (less than 1%) own more than 20.

Some have suggested that there may be inaccuracies in the data at this upper level where property management companies may be considered a landlord rather than an agent for the landlord – so it’s not clear how many of the landlords with dozens or hundreds of properties are actually property management companies.

I was interested in seeing whether things have changed since 2015. I recently made my own Official Information Act request in December 2020 adjusting parameters slightly but based on the same data source. The updated response reveals a rise in the number of properties per landlord overall, but a drop in the number of landlords on record. The percentage of investors who own a single rental has dropped nearly 2%. But landlording is still a small-players game, with those who own 4 or more rentals making up less than 6% of the bond lodgement data.

The number of landlords with more than 200 rentals increased by 0.07% (a significant 28% jump from 0.22% to 0.29%) and those with 50-200 rose 0.1% (again, a large 25% increase from a base of 0.37% to 0.47%). While increasing, these remain very small percentages. Most of the landlords in the country are very much small time operators, many of whom have the majority of their life savings in that property. This is seen clearly in my own data; more than half of my clients own just a single property.

Interestingly, the 2020 figures show a smaller total number of landlords, a significant decrease of over 10,000; about 8%. Given we continue to hear that homeownership rates are dropping there must be more rental properties, which supports the conclusion that landlords are consolidating their holdings.

New investors are being discouraged from entering the market by increased regulation and tinkering; complex healthy home standards, flip-flops on safe methamphetamine levels, direct and unfair targeting of residential investment in the tax system – and the threat that this may worsen through Bright Line extensions, vacant property taxes, or the removal of tax deductions on interest. Meanwhile, government and reserve bank intervention with responsible lender rules and LVR restrictions (rightly or wrongly) make it harder for new investors to enter the market if they ever decide to do so.

Depending on the quality of the bond data used to supply this request, the drop in landlord numbers could alternatively (or additionally) indicate that more landlords are using a property manager. My request included a breakdown of data by type of landlord, but the granularity provided and lack of 2015 comparatives made meaningful analysis difficult – it will be good to compare this with a future data update in another few years.

Comparison to NZ Herald Investigation of Property Ownership

A recent NZ Herald investigation undertook a big-data analysis with advanced automated data matching in an attempt to get the most accurate possible picture of property ownership in New Zealand. While also concluding that small investors make up the majority of the landlord pool, it shows materially different percentages to those presented above, and describes bond lodgement data as inaccurate.

However their data (and thus their conclusions) was based on all property titles. It included people’s primary residence, commercial property, holiday homes, vacant sections, and likely separately titled property such as individual car parks – possibly counting some apartments as two or three ‘properties’. Their article states (via some simple math) that 31% of property in the country is owned by investors with more than 20 properties – even discounting Kainga Ora / Housing NZ stock this figure simply doesn’t make rational sense. Only a very small proportion of investors I have spoken to or acted for have even 10 properties, let alone 20.

While the underlying data is undoubtedly highly accurate and well matched, the assumptions and filters placed on top don’t have the same validity – accordingly the derived results cannot be conclusively shown as more accurate a view than the bond lodgement data. For example, it appears there was an assumption that everyone who owned just one property was living there – completely dismissing the “rentvestor” who does not own their own home but owns one or more rental properties. This subgroup is considered by bond data – assuming they are following the law and filing the bonds.