Diane Maxwell on protecting retirees vulnerable due to renting, isolation, and not being able to recoup investment losses

The Retirement Commissioner wants to see New Zealand’s tenancy laws beefed up to better protect our increasing number of renting retirees.

Speaking to interest.co.nz in a Double Shot Interview, Diane Maxwell says those who reach retirement without owning a home are more vulnerable than those who reach retirement as home owners, so tweaking our tenancy laws to give renters more certainty is a “no brainer”.

“We’re seeing a larger group of renters in their 50s, moving through to their 60s, and that is going to be an issue,” she says.

As a renter you’re at the mercy of your landlord, who could decide to sell their property at a whim.

Commission for Financial Capability (CFFC) survey respondents have raised their concerns over the toll moving house has on an elderly person. It’s tiring, expensive and emotionally draining.

Furthermore, without knowing how long you may be able to stay in your rental for, do you get to know your neighbours? What do you invest in the surrounding community?

“We need to be looking at those tenancy laws, saying, ‘Do they protect the tenant enough? Do they protect the landlord in the right way?’” Maxwell says.

“We’ve got to change our mind set over renting. Renting can be a choice you make and then you need some protection around that choice.

“So I think there should be options in the market for people to say, ‘I’m looking for a long-term tenancy', and a landlord to say, ‘I’m looking for a long-term tenant’…

“To some extent that’s available today, but I think it could do with a bit of a tweak.”

Looking to Germany

Economists Shamubeel and Selena Eaqub, in their 2015 publication ‘Generation Rent’, say more than half of tenancies in New Zealand last only 10 months, whereas owner-occupiers spend an average of seven years in their homes.

The Eaqubs look to Germany, where 57% of the population rents, for solutions to improving renters' rights. For example landlords have been barred from increasing rents in Berlin by more than 10% above the local average rate.

Maxwell is cautious about advocating for these sorts of measures to be introduced to New Zealand.

She says capping rents could put landlords, affected by fluctuating interest rates and other market forces, at risk.

For example, a landlord will be put under a lot of pressure if interest rates rise aggressively and they can’t change the rent they charge.

“I don’t think it’s easy. I’m sure there are some great examples from around the world that we could steal,” Maxwell says.

Super rates need to reflect the fact living on your own is more costly

As well as renters, Maxwell says single people are also more vulnerable than those in relationships, when in/approaching retirement.

She agrees there is an increasing number of single person households in New Zealand, as divorce becomes socially acceptable and more people choose to live on their own.

She says the CFFC has received “heart-breaking” responses from single parents, who having spent 20 years raising their children, only to look up and realise they’re in financial trouble.

“[Having a single person household] does make for more expensive living, in that you still have to heat the house no matter how many people are in it, you have to have the lights on, you still have to pay for your insurances… and if you’re dividing it by one, that is certainly more expensive.

“We’re finding people living alone are telling us they feel more financially vulnerable and if you look at the numbers, they probably are.”

Single retirees living alone currently receive New Zealand Superannuation of $770 a fortnight after tax, whereas retirees in relationships receive $592 (assuming they receive no other income).

“Certainly [through Super] we need to reflect the fact there are increased costs in living alone. The question is, to what degree you do that?” Maxwell says.

“You might have couples watching this saying, ‘Well actually we’ve got costs too’. They might have medical costs that are high. There might be all sorts of things going on that elevate the costs for them and that’s the difficulty with some of these issues.”

Single or not, Maxwell recognise those approaching retirement may be put under additional financial pressure, supporting their elderly parents or adult children with costly education or home ownership pursuits.

They’re “getting pulled in lots of different directions financially” and that’s “causing them some grief”.

Affordable housing key to curbing isolation

Recognising the fact globalisation has also seen families separated and dispersed around the world, Maxwell is wary of our elderly feeling isolated, and this impacting their physical and mental health.

“We all look for connectedness and we all look for meaning. A number of the people who keep working through their 60s and sometimes 70s tell us it’s because they’re physically fit enough to want to do that, but also, they love the connectedness...”

“I’m conscious of the way our neighbourhoods are developing too. We’re far more likely to have big fences to wall ourselves off… Some of those impulsive conversations and connections across the garden and across the street, may not happen in the same way.

“Having said that, as people stay physically fitter longer, there are still lots of opportunities to get out and be involved with different groups.”

She says technology, like Skype, has also helped people stay connected.

“I don’t think we’re heading to complete disaster…

“But I think isolation really is a challenge as people move into that later stage of retirement, where they can’t jump in the car and go see a friend for a cup of tea.”

While retirement villages and rest homes are solutions for some, Maxwell recognises not everyone can afford these: “Which is where low cost, dry, clean, affordable housing for older New Zealanders who need to rent is a critical thing.”

Tougher rules around disclosure and more ‘feisty’ retirees needed to improve financial advice

Taking a broader view of the issue of vulnerability, the CFFC recognises anyone in, or approaching, retirement is vulnerable in the sense they have less time to recoup any investment losses.

Maxwell says it is vital retirees protect their hard-earned cash.

“You can’t take risk out of a market, because that’s how a market works - risk and reward.”

Yet you should try to reduce the level of risk you expose yourself to. Maxwell urges people to take the time to do their due diligence before making investment decisions.

“Never think your mate down at the rugby club is a financial adviser, unless he is a financial adviser.”

Maxwell recognises those who use financial advisers may not be aware of the fact the financial advice they’re receiving may be skewed by the commission payments their advisers receive from various financial service providers.

While the Government has indicated it won’t follow the UK in banning or capping commissions in its review of the Financial Advisers Act, it has said it will require advisers to be more open in what they disclose to their clients.

People hate paying for advice

Maxwell acknowledges: “Where things get murky is where you have a trail commission where an adviser might be tempted to churn you into another policy to reactivate another commission stream.”

Yet she recognises “people hate paying for advice”, so doing away with commissions could see advisers recoup these losses by putting their prices up and thus prevent people from using their services.

What we need is: “More disclosure and more feisty retirees/near retirees going, ‘You gotta explain this to me’.”

Maxwell suggests people be assertive in asking their advisers how they’re paid, and making sure they understand the benefits of changing insurance policies, KiwiSaver providers, etc.

“It’s up to us to ask the hard questions, but also as we go through the Financial Advisers Act review, I hope that [issues around commissions] keep being challenged and challenged, so we get to a good place with people understanding truly what they’re being charged.”

As for investor education around KiwiSaver, the CFFC has been calling for it to be made mandatory for KiwiSaver providers to disclose fees in dollar terms, not just percentages, on their members’ statements.

Maxwell says: “The nirvana for us is that that information is loud and clear on the statement. That’s where we’re heading and I hope that’s where we get to.”

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129 Comments

If we could pass through expenses such as council rates, make tenants liable for paying into a maintenance fund ( so that any maintenance needs to be paid off by the tenant within 2 years of the work being done and is the responsibility of the tenant should they move out), maybe even pass through interest rate fluctuations, then I'm certain that the base rental amount could be lowered.
If most key expenses can be passed through I'd be happy to only be allowed to review rent every second year.
An added benefit of this method would be that tenants would be encouraged to vote sensibly in relation to rates as opposed to simply assuming that voting for the council to spend more is always better.

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Ah, OK, so the tenant should take all the risk, and you should take all the reward? I don't think so. The expected inflation-adjusted return on an investment with zero risk should be ~0%.

Landlords would still be exposed to capital risk. The value of the property may decrease, tenants would in effect simply be avoiding committing their own capital towards a property that they wish to live in.

There wouldn't be any capital risk, if your tenants are paying for everything.

The equity that you have in the house would still rise and fall with the market independent of the expenses such as rates and maintenance. For example the "bubble" bursting could make you lose half your equity.

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You cannot be serious expecting tenants to pay for all maintenance directly. Many landlords already ignore their legal obligation to maintain their properties in a reasonable state. They clearly only care about themselves. If they cannot afford to maintain a rental at an affordable rate and meet their legal obligations then they should not be in the business of renting. Many properties I have seen are in terrible shape. They have clearly been neglected for years, and thus any maintenance cost they could incur becomes more and more severe. Expecting tenants to pay these costs directly is perverse.

My neighbour deals with window frames that are literally rotting away in large clumps from the outside, allowing moisture to seep into the house. Some of the windows look as though they could fall out at any moment. This kind of damage does not happen overnight. It is the result of years of neglect from the landlord. Of course he complains to the property manager about this, but nothing is done. "Oh, I'll have another talk to the landlord and see what they think" says the property manager before disappearing for another month. He will have to pursue the landlord through the tribunal to force them into taking on their legal obligations. So typical. I suspect the owners of these rentals are the type that complain bitterly about "entitled" FHB seeking decent homes for less than 500k.

What I see just in my general travels is roofs in terrible repair

I was under the impression that the left in these comments were quite keen on the German model, where tenants are required to undertake all maintenance. If we adopted this model maintenance items would need to be itemized and landlords would be responsible for ensuring that they are up to spec when the tenant moves in, thereafter it would be the responsibility of the tenants to ensure that it is in the same state when they move out.

You might find this odd, but I don't necessarily see this as a negative

These comments by landlords who refuse to consider the affordability of their rents just go to prove that they are nothing more than parasites. Bleeding vulnerable people with no other options. The core of this article is correct and I have said it before regulate to cap rents at an affordable level that does not require a tax payer top up.

Landlords made a business decision to get into this business, they need to accept the risks that go with it without exploiting a vulnerable market.

Dont worry, JK has made it abundantly clear he is fully committed to protecting your equity.

Perhaps we could protect their meager savings in Term Deposits too.
Keeping the wolf from the door, at Banks and at home, is becoming more and more of a concern, especially when voracious rentiers are so concerned, they would kick their own Mother out for another leveraged rort and a Bankers Bonus ploy.
Perhaps we could take away their increased burden of ever increasing rates, Politicians salaries and Bankers fees and ever decreasing returns on scrimped and saved money.
Even in my day, not everyone could/can afford a house of their own, with exponential free returns to borrow against, should the knee and the need arise, or a sale to by a Licencentious to Occupy from a greedy Retirement Community Fraud Squad, that gives a little, takes a lot, today. The biggest Business fraud of the New Era.
Stealing from the Elderly is getting to be a regular habit and big Business..
Even their poor spouses are raided up to a decimal point.
As is their KiwiSaver by another fraudster bunch, with their hand in their funds..
I will add that a lot of elderly lost a packet in the Finance Frauds of the Century....A knighthood for participants, but a loss for those who paid heavily. Seems a fair trade...eh. How soon some forget....

People are choosing retirement villages for good reason. Although they are very expensive and not available to many (seen the cashflow profits of the operators ? - huge). But people take the hit and do it because it provides a lot of other things they need in terms of security and predictability.
We should take notice of that success and try to find ways those operation them so that's it's less expensive, provides the same solutions, and available to more.

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Another great interview from Jenee. Maxwell has a steady line of patter, but I always get the feeling that her "concern" comes across as contrived (an attitude that is quite prevalent in our "I'm alright Jack" society). These people are paid to promote financial independence, but they also seem fixated on promoting the status quo. If the issue about industry fees is such a big deal, why is Maxwell not promoting ETFs as an investment vehicle? It's an obvious departure point and she doesn't bother to address it.

Renters always face the retirement income cliff. Nationwide promotion of home ownership is a better solution, rather than some bureaucratic rules on landlords, who are mostly struggling anyway. e.g. There is a nationwide unfunded timebomb of delayed maintenance looming.

Who are these poor struggling landlords you speak of? And why are they struggling? And if they are struggling, why don't they sell their properties?

these landlords exactly the same age bracket as the upcoming retirees mentioned -- but they made far better choices - they saved harder, bought a property to live in , saved hard again and bought more property to rent and generate an income for their retirement - both groups operated in the same economic environment.

Its about personal choice and responsibility - sure those renters really enjoyed the extra cash and freedom to go out on the town, have nice shiny new things, holidays and leisure time whilst the homeowners worked second jobs, saved hard, and invested for their future -

Don't begrudge smart people who took responsibility for their retirement the benefits of their earlier sacrifices

If they made such good choices, why are they struggling?

they are not! maybe the odd one or two - but for the rest its been fairly easy for a longtime - only struggle is how to extend their portfolios!

So why did KH say they're 'mostly struggling'?

You guys are being a bit tough. Not everyone is born with the same grey matter. Many retirees have been on very minimum wages throughout their whole working life and have struggled to pay for basics let alone save for a house. They lived through the depression and the second world war and somehow fed and clothed and educated their boomer children who in turn are generally far better off than their parents. My mother left school at the age of 15, was paid a pittance for her work endeavours and gave it to her widowed mother who certainly did not get a DPB.
Maybe houses will get cheaper. More people will be able to buy and landlords will have to drop their rents to compete for good tenants. Time will tell.

yep many did it tough - - but if you listen to the rhetoric here - this is the generation everyone is blaming for the inflated prices - the generation people are saying had it so much easier that today to buy their first houses and have ruined the world for the millennial!

people cant have it both ways if it was so easy then why did so many people not buy their own home ? choice maybe - cheap state housing - not looking to the future expecting the state to pay - at best naive

just the same as today - there are still some young people who are working two jobs - saving hard buying flats, do ups, property in less desirable areas - and making long term financial choices -

I believe that if a landlord is struggling in NZ at the moment then they have not invested very wisely.
Half the problem is that when our kids are leaving school they are not equipped to face the world.
Most blow their income on consumables etc.
Many have kids when they shouldn't be and that sets them back hugely.

Lots of struggling landlords Grego. Just drive around and see the delayed maintenance timebomb that is building up. It's there in front of your eyes. The landlords, especially those who have leveraged up, can't keep up with what they need to do. You can see houses where the maintenance need is probably the next five years rent. It's a burgeoning mess.

But kpnuts says they're not struggling. And I repeat: if they are struggling, why don't they sell?

Maybe they don''t think like you grego,

A pity that, isn't it? Oh well, guess they'll just have to keep on struggling...

Struggling, or too busy putting whatever money they have into more rotting rentals

Good point about the maintenance issue KH. And if you think there's a housing crises now just imagine what the imposition of rent controls would do.

OK, I'm imagining:

  • cheaper rents
  • fewer landlords paying unsustainable amounts for 'investment' properties
  • more afforable houses available to owner-occupiers

Have I missed anything?

Greg, one of the few to see through the real estate and land lords BS. No you haven't missed anything. Been saying that for quite a while now.

I'm sure your badge is in the mail, in the meantime, give yourself a pat on the head.

Ant and grasshopper all over again. The ant, having worked hard and amassed enough food to last the winter, should be required to subsidise the grasshopper for bad life choices and effectively give a portion of his wealth to the drop kick grasshopper (through landlord subsidised below market rent).

When is the revolution happening so that we can institute these communist policies?

You should look up the filial responsibility laws some countries have. My wife is from such a country and my mother in law is one of these grass hoppers (or a town mouse) and we fear she may get hungry one day. The concept of personal responsibility is lost of the left.

I also happen to think that overweight people shouldn't be entitled to endless healthcare caused by their poor diet and exercise habits.

The concept of personal responsibility is NOT lost on the left, what is missing on the right is the basic fellow feeling for those who do not have the chances or perhaps took chances and failed. It is called empathy. To hear the likes of the right wanting to lump all those who have not had such a great run at life for a myriad of reasons in with the admitted lot who never actually even tried is sickening, that layer of society is there, that layer of society does not account for all who do not end up rolling in money in their lives.

I'm all for welfare when it's helping to create equal opportunity; a hand up. That includes mental health services, budgeting help, education etc.

However - if someone has a diet of coke and KFC all their life and does no exercise or spends up big on overseas holidays you cannot seriously tell me they are a victim. These people have had 40+ years to sort their life out.

I might also point out the concept of responsibility is lost on the right who will socialise losses and gift out gains to parasitic speculators.

The rot goes much further than just the coke and KFC brigade now, I do wish people would cease using them as the justification for what is going on. They are but a part of what is wrong today, just a part.

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Well, I too am an ant,in that I worked for 40 years,mostly self-employed and retired at 57. I derive most of my income from dividends and some from rent. 14 years into retirement,it would seem that I am worth more now.

However,I take a more charitable view of those you call grasshoppers. There are those who make bad choices across all sectors of society,but unlike you,I know beyond doubt that many simply struggle to get by,day by day. for some years,I was a volunteer language teacher,helping Kiwis who were functionally illiterate through no fault of their own. It takes great courage to admit to being illiterate,but these people wanted to better themselves.
My advice to you and others whose posts I read here,is to acquire a little knowledge of those less fortunate in life. Right now,you come across as a right wing shit.

The ones less fortunate are easy to spot, they're the ones with their hand out who have never worked a day in their life. Social welfare should be a safety net not a life style choice. I love it how the left already squeezes the right but wants more and more e.g. state houses for everyone.

You should acquire a little knowledge on what is really going on because you sound like a naive left wing voter who will be in for a fourth term on the sidelines.

I really want to say something to you, but I fear I will sink to your level in order to do it, so I won't, except to say, you have no idea.

whilst I agree Social welfare should be a safety net etc and we should be looking at better mechanisms to deliver, paying people from one government department whilst another taxes them and yet another makes them pay rent is inefficient and drives up overhead cost.
they should be looking at cards to purchase the basics, food, clothes, power,kids supplies set to certain limits per week and if they want sky or anything else they need to get out and earn.
as for state houses don't get me started on the 2 billion + the government spends each year (and growing) on subsidies to landlords which a great proportion flows out of NZ as bank interest another dumb policy.
we would be far better off using that to employ locals to build houses to sell at cost to NZ citizens with a chunk to be kept for social housing

Isn't Diane Maxwell on the other hand advocating stopping universal super? Which would take money out of some of these retirees pockets.

That's a plus for her in my books. My inlaws own several kiwifruit orchards and rental properties and must be worth $20m plus. Last time we met they bragged about how they save their NZ Super each year to pay for their holiday to France.

Getting a payment from the Government just becasue you reach a certain age and irrespective of your need is corruption.

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I would argue tougher tenancy laws are required to protect ALL renters, not just the retired ones.....

With the home ownership rate trending downwards as it is, it's only a matter of time before renters' rights will start to feature prominently in political discourse. And with New Zealand's MMP electoral system, it's not hard to imagine a single-issue renters' rights party holding the balance of power in parliament.

once home ownership drops below 50% it will happen especially in Auckland which holds the most votes.
parties will start to put forth policies to favour the tenant, and the landlord will get painted as a blight.
there are many good landlords mostly mum and pops that own 1 or 2 houses that will get out at this point as the red tape will be too much

The land lord is already a blight. they don't need to get painted as one.

I thought the whole point was they needed the paint, lack of maintainence and all that.

I think the reason renters' rights are starting to feature in politics, is because it is affecting a section of the BB generation.
Nothing seems to get done about anything if it doesn't affect this particular generation.
I think we'll see quite a bit of focus on retirement villages, pensions, hospitals, and age care, popping up.
.
Home ownership is trending downwards for young people. the BBs who are now starting to hit retirement, and are renting, have quite probably been renting for quite some time.

If the single Super is $770 per fortnight or 385 per week how the heck are the retired thAt don't own their own home going to afford to live?.
We personally don't have any retired tenants in our rentals and I can see why!
Average rent for a 2 bedroom unit is around 385 per week so nothing left for anything else.
So how much accommodation allowance do retirees get?
Don't see how anyone not owning can ever retire!

Well as long as there are people ( and there are plenty, you by your own accounts are one) who have a vested interest in preventing many, many people from not owning in order to support your own lifestyle, owning for the bulk of society will be but a distant memory before long.

Who says they should be able to afford their own place if they are at retirement stage of life and they haven't stored any acorns for the winter.

Don't see how anyone not owning can ever retire!

By saving the difference between what it costs to buy and what it costs to rent, and investing those savings wisely?

Do you really beleive that they have saved?
Curently with the interest rates the way they are you can own for less in Chch if you have the nouse!

'Nouse' has nothing to do with it, it's just simple arithmetic. But don't take my word for it, interest.co.nz has already done the calculations.

I have posted about this before.

Retirement isn't just about saving. It is also about reducing costs. Given housing takes up approximately 30% of the average persons budget it just doesn't make sense to rent for ever.

The smartest thing you can do for your retirement is buy a house and pay it off as quick as you can. The sooner you are Rent/Mortgage free the more you can save, and the lower your retirement costs will be.

E.g.
Say rent is $250pw that is $13k pa. $260k across 20 years. But lets face it, When I retire in 30 years rent will be significantly more.

So, rent @$500pw = $520k across 20 years. Retiring when you are 65 and living to 85 is 1/2 a mil, just in rent. Heaven help the poor bugger that lives until 100.

Reality is that $400pw is normal now, so in 30 years my realistic rent could be $800-$1000pw.

In the 20+ years you are retired, it is entirely feasible rent will go up a further 50-100%. Good luck with saving that sort of cash during your working life.

Alternatively
Buy a house at 30, pay it off by 50 and you have 15 years rent free before you even retire. Pocket that saving into your retirement fund and that is another $200k (@$250pw) the renter wont have available.

PS, nothing is funnier than the pro life renters investing money into managed funds that own/part own property as a means to diversify. "Wow, my portfolio went up 20%. Oh, so did my rent"

I've read quite a bit of research about safe withdrawal rates i.e. the amount of income & capital drawdown you can take from a portfolio and still have it last indefinitely in most historical cases. The most frequently quoted number is 4%. This means if you have half a million built up, you can safely pay ~$380 a week before you start to degrade your capital. If you intend to die at some point, you can increase that.

There is more than one way to skin a cat. I certainly intend to own a house outright before I retire (I could do next month if I desperately wanted to and cashed everything in), but it's perfectly clear that there are alternatives and you are being shortsighted if you can't see them. Buying a house is just enforced saving for those who are otherwise incapable of doing so.

Two problems with your PS, firstly of course I'd add property exposure to my equity portfolio if I didn't have it elsewhere, as diversifying across asset classes is a no-brainer, often forgotten by those with all their eggs in the property basket. Secondly, you're describing an effective hedge as if it's a bad thing. For example, I also own utility shares, if their margins rise I pay more but hopefully my dividends increase to compensate, and vica versa.

Shortsighted? Quite the opposite. The whole point of money is to buy the things you need and to a lesser extent want. If you can get those things earlier you
a) Benefit from them for longer
b) generally get them cheaper, and
c) don't have to worry about trying to source them in the future when they may potentially be scarcer.

Of course you should diversify your investments. I am not advocating just buying a house and doing nothing else. But people in this country need to stop looking at their primary residence as a financial investment. That is not the point of the house you live in. The point is to provide shelter for you (and your family).

The most effective hedge is to have the house. Then no matter what happens in the rest of your portfolio (even if property crashes) you still have somewhere to live.

That is a stupid argument on the basis of a confusion between real and nominal costs/value.
Again.

It's what I am doing, and have to say I am pretty happy with my situation now and in the future.

Mid 30s own my house mortgage free, great family, and touch wood have good health. I have money in the bank, plus a few other investments as well. I am by no means rich or wealthy I just prioritized some things differently and had a bit more dedication to my financial plan. As a result I am not a slave to my job like many of my peers, as my critical expenses are 50%+ less than what theirs are. Turns out not having a mortgage or paying rent leaves me with a lot more disposable income I can put towards my family and my future.

So yeah, call it stupid all you want. You have your opinions. But forgive me if I don't care about them.

I don't think anyone is saying buying a house is a terrible idea, just that it's not a necessary component to a happy life and retirement. I'm currently 30, renting, and save about 40-50% of my income. You really think that I couldn't retire without owning a house if I decided I wanted to keep the optionality and freedom of being able to move easily? Buying and owning a house is just one option from a whole smorgasbord of ways to have a great life.

One small counter-argument, if you're property rich and cash poor in retirement, major renovation/repair becomes quite a significant threat, whereas a renter just has to pick up the phone or move.

It will obviously be different for different people. But you will always need a house, so why not buy it.

The amount of rent spent over a lifetime would buy a house easily with change. So why not do that and get the combined financial/non financial gains.

Like I said, you don't think of the property as an assett. i.e. Property rich. That is not the function of your primary residence.

But if by owning a property you can save more money its win/win. I have zero rent/mortgage so can therefore save more before retirement, and spend less once retired.

I will always need food but I'm not going to buy a farm, I'll always need power but am not going to buy a generator. I will always need shelter, and at the moment I find it better to rent that too. The maths of home ownership are more complicated than you are presenting them.

You can live without power (Electricity/gas) - although you may be interested in the fact that the biggest residential take up of solar tends to be people approaching retirement. I wonder why?

You don't need a farm to grow food. I have enough room on my 800m2 suburban block to grow food. I once had a neighbour who was entirely self sufficient with excess to give away on a 400m2 block (he was very much an exception to the rule though)

Anyway, I am not talking about becoming 100% self sufficient. At a guess I would say your rent is more than your food and power combined (You could probably throw in your phone bill as well). I am simply talking about removing the single biggest cost that everyone has. If you have the ability to do that, then why wouldn't you.

"I will always need shelter, and at the moment I find it better to rent that too."
"At the moment" is the key in the argument. At any specific period in time, renting is often better.

But across the whole of life, the sooner you own a house the better off you will be.

Should also add, there are such things as non-financial benefits (I know that may be heresy to mention on a financial website though :-)

e.g.
Security, both Mental and Physical.

Health/comfort, I can change my house if required to meet any changes in my physical/mental capacity.

A landlord may not be so open, to widening doors, installing ramps, banks of medical equipment, ride in showers, etc.... which brings up Stability

Do you really want to potentially move house every year when you are 75/80 because the landlord kicks you out for whatever reason?

Yes Noncents. The non financial benefits of owning are major and crucial. Add to that the ability to control or do your own maintenance.
I suggest folk take a drive around some of the Zombie suburbs of South Auckland. Some areas are nearly all 'investor owned'. The catch up maintenance cost on many houses would be five years full time rent. Add to that the non financial cost of actually living there.

Where are you renting a house for $250 per week? Only in the regions is that rent available now. Despite what this article says, I'm firmly for capping rents at an affordable level that doesn't require taxpayer top ups. The rentiers need to accept the risks they have chosen to take, not pass them on to the first poor sucker with out a reasonable choice to make. Saving up to buy requires surplus cash, an aspect that simply does not exist for most these days as greedy landlords bleed them dry.

I used that as a best case scenario example to show that it still doesn't work for renters. At actual market (Average) rents the figures make for very bad reading if you are a renter.

And meanwhile, in the real world... Matrimonial Property Act. Start again son.

Indeed, cleaned out at 50,=work until i drop dead.

$769.52 per fortnight for single superannuitant includes a "living alone"allowance. The rate if you are single but sharing with another person (non partner non de facto) is $710.32 Per fortnight each, in other words best have a flat mate if you are a retiree renting. These figures are after tax. Married couple both qualifying $591.94 each per fortnight, so better off staying married!

Just on old people renting, I remember my grandparents who went through the depression and lost their house to the banks in 1930's, they never owned their own home after that because they didn't trust the banks. Bad news when they were in their late 70's and their long term landlord of around 40 years kicked them out because he wanted to split the house into more tenancies. My grandfather never recovered from that and dementia came on very quickly. They were saved by being housed with a state house until they both died around 5 years later. Who will save the pensioners in coming years who don't own their own homes?

Who will save them?

New Zealand as a nation is going flat-out building houses and apartments in insufficient volumes to even accommodate new arrivals in-country

So, in answer to your question, who will save them?

1. No one
2. Can't even house our own homeless, now
3. It is doubtful any consideration was ever given to this situation we now find ourselves in
4. It is doubtful the govt ever thought it thru

The mantra is, open the doors, they will come and GDP will grow and the market will take care of itself

"Don't see how anyone not owning can ever retire!"

This betrays a great lack of imagination which may explain your blinkered approach to investing, diversification means more than owning more than 1 property in the same earthquake prone city.

Forget what interest.co. Calculations are!
You can buy a 2 bedroom unit in Chch for 250k, recently bought an as is property 3 beds for under 140k.
Another lovely 2 large bedroom unit in good area just over 300k 2 months ago.
So say 300k at 4 percent interest only is 12k per year plus rates and insurance say another 3000 so 15k per year divided by 52 weeks is $288 per week and currently rented for 365.
We have better returns than this easily as well.
You only need to tap into experienced investors to do well.

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Might be more honest to buy a advertising slot here for property spruiking than using the comments section? Give it a break, its getting too repetitive.,

Jimmy you are dead right.
Moaners on here going on all the time saying that they can't afford to get on the property ladder, when they can!
If they got off their butts and got away from Auckland they would be able to!

..ditto to that jimmy. I thought it was just me. Where's the humour gone from the site? Where's Wolly got to? He was the Man...not this new pretender.

Maybe things are getting serious

Forgive me if I don't take the advice of an 'experienced investor' who doesn't include principal repayment or opportunity cost in his calculations.

There is a difference of nearly $80 in there if you can subtract.
There are just too many people on here that think the country owes them a living.
Waste of time being on here, so enjoy your moaning!

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Put your money where your mouth is and stay off. You are totally heartless and probably a bit thick really as you cannot see that not everyone is born with the same ability to work, save and get ahead. If we were all the same everyone would own one house and there would be no need for rental homes. You rubbish the poor people who pay you rent. Some of them have mental health issues, some have addiction issues, some have had the worst parenting possible and some just do not have mental or physical capacity to earn more than the minimum wage. You are lucky you live in a country where the government is probably paying you most of your rents by way of accomodation grants.

Gordon, you will be pleased after this, I am off because waste of time as most on here are not willing to help themselves.
Finally, I don't rubbish renters whatsoever. Just stating that they can own property if they want to!
None of our tenants as far as I know have mental health issues and none of them are unemployed, as we are very selective and do not rely on them getting accommodation supplements.

...hallelujah! This clown has really put me off my daily read of late.

Your tenants are so lucky to have you. I wish I was one of them. By the way how does someone on a minimum wage save a 20 per cent deposit. This person is not the sharpest knife in the drawer and will always be at the bottom of the heap. It gets worse if he is married to someone who is equally disadvantaged and they have children to care for..

And let's not forget inheritance. A nice fat handout of risk free cash.

Unearned capital is the worst, recipients believe they work hard for it. They are no better than the sentiment they cast on welfare beneficiaries

And then they buy a rental. 'I worked hard', bah, have a good look in the mirror.

Work for wealth is dead. Dead. You're up against lazy windfall, the devil will find work for idle hands to do. Idle hands with windfalls

So what's this about risk free cash?
Nothing wrong in giving it to the kids as an inheritance.
It's not a handout.
It has already been earned, and thus free to be distributed as the earners desire.

It's still a hand out from someone who has earned it, to someone who hasn't. It's just that the distribution is by family rather than by government, and by luck of birth rather than by need. What we need is a nice, chunky inheritance tax to level the playing field. Kids from rich families already have so many benefits in terms of education, good examples, their parents networks, giving them cash as well is a little crass.

How does inheritance tax work when for example all assets are held in a family trust? Wouldn't such a tax simply separate those who can afford lawyers & accountants from those who can't?

Quite possibly yes, the UK tax is full of loopholes and I think has a ~1 million pound threshold with exemptions for the family home, and people are still complaining about the 'death tax'. I can't think of a better time to be taxed than after I'm dead.

NZ has free, good quality education.
It is paid for from Income Tax, GST, and a multitude of other taxes.
That is a level playing field.
The tax has been paid.
An exit tax is an abomination.

All things being equal, the tax has to be paid at some point. I'd much prefer to pay when I'm dead rather than when I'm alive.

Gordon.
Take a running jump!!!!!

You do not insult my family!

I am sorry you feel insulted. After all you are " the Man." You seem to be such a wonderful landlord as you select your tenants so well. They are very lucky people. I am certain they think you are the best thing that has happened in their lives. Your generosity and drive to make their lives extremely comfortable is admirable. I will miss your comments on this site. I really mean this.

Did Gordon touch a raw nerve with his precise description of the situation of the hard working poor.? Diddums. Pick up the spat out dummy.

Your ignorance of the budget restraints of the working poor, is outstanding.

Gordon you are completely out of touch. In New Zealand there are NO HOMELESS. If you don't have a house, don't worry the government will give you a motel to stay in. The only homeless are the drop kick addicts that live in parks in the Auckland domain. If you want to see proper homeless then go to New York or London. NZ is the luckiest country in the world where the government gives you a house! With regards to minimum wage. Many of them will live in State housing....can you believe it, the government gives them a state house. When I was a Uni student and earned $130 a week (my own money I worked for as did not get student allowance) I actually had to pay for my accommodation and did not get a state house. This website honestly defies any logic when it comes to accountability.

Are you trying to tell us you consider a motel room a home.
And as for state housing, what do you suggest an 80 year old woman who for the last 40+ years has cared for her Down Syndrome daughter, then?

100% should be in a State House...what's your point?

Who's moaning? You asked a question: how is it possible to retire without owning a house? And I gave you an answer: by saving and investing.

Seems like you're the one who throws a tantrum every time anyone questions your investment strategies.

$4,000 per year as a nominal yield on $300k?
Sure, you have the capital appreciation but you can't bank on that to outpace inflation by a radical amount in Christchurch.
Plus, you can't put up your rents when you have interest rate exposure.

To be quite honest, you would almost be better off just going for a term deposit.

I need to call out Shamubeel....once again he is peddling nonsense. I live in Germany. After 2 years I got kicked out of my apartment by my landlord (they wanted to move back in), in the next apartment my rent up 10% last year. In Germany you also pay about 10% additional on top of your rent for rates and general upkeep of the property - every year. And once you leave you need to pay for the maintenance to get the place back up to spec where as in NZ you just walk out and dont need to paint the walls and polish the toilets. The grass is not GREENER in Germany and is the same as any other place in the world. In NZ you can agree longer term tenancies. Nothing says you need to sign just for 1 year, that is just what NZ'rs tend to do, but you could sign for 3 or more years with CPI adjusted rent etc

This website for expats renting in Germany says landlords must give 3 months or more notice before eviction and the tenant can contest it in court. So the Landlord must have a good reason. http://www.expatica.com/de/housing/Renting-a-German-property_103803.html

You have fixed tenancies in Germany too...that's my point...yes you could get an evergreen contract in Germany and you could do the same in New Zealand. What I am trying to tell you is please don't believe that everything is so much better overseas for the poor old tenant vs. the nasty NZ slumlord. As a German landlord your tenant pays for everything including the properties rates, insurance and maintenance! (all you don't pay for is the mortgage!)

It is more like a commercial leasing arrangement, I am pretty certain you will not be expected to hand over the best part of your income as well do the maintenance. You can onsell your lease, I believe. You, as a tenant can also be part of a co-operative that owns the building. I am actually an advocate for this sort of arrangement. It would suit a certain sector of society, who would rather invest in other things than have their money tied up in bricks and mortar. It could be a good thing for productivity.
It probably would not suit landlords of NZ today, as it would stabilize housing prices. There would still be room for property being rented on a month to month basis, just not so much. Govt would need still to be heavily involved in the bottom-most of society. Tenancies such as in Germany might actually give people at the bottom something to strive for that they could see as attainable, house prices at the moment count them out entirely, creating hopelessness among them, exacerbating the situation and worsening society in general.
You are barking up the wrong tree if you are trying to discourage this country from looking at Germany and leasing, we should.

yes a correction: you don't pay for repairs (unless you broke it) but you do pay for the condition for when you leave and as you live there, e.g. paint walls, fix the flooring, general wear and tear, you are accountable (not to mention you need to mostly install your kitchen including the sink!) I cant on-sell my lease, and perhaps you can in other jurisdictions, I have never heard of this with any of my colleagues. the point is the German tenancy is the same as NZ, and in fact harsher on the tenant...tenant pays for everything where as in NZ as a tenant you swan in and swan out...in Germany any issues and you go to court....sounds like fun right and would rather be a NZ tenant with the cushy Tenancy Tribunal any day of the week...rents and property prices are not going up in Germany as nobody wants to live here and there is plenty of space....vs. NZ is a nice place to live (having said that some international cities have seen property in Germany pop up about 20% in the last 2 years) however the rental conditions have nothing to do with property prices, NZ has fairer rental agreements than Germany....I actually have a lot of angst for when I leave at the end of the year as assume I will be hit with up to $5-8k NZD in costs for repair and maintenance...on a rental?!

Of course we do not have to follow Germany's laws word for word, that is the beauty of writing new rules, you can make them to suit whatever outcome it is you wish to achieve.

Oh and of course, you will not be able to go and buy some run down property and expect a tenant to sign a German style lease for it, properties will need to be new or near new, well built and low maintenance. Landlord, as in commercial arrangements would still be responsible for the roof and exterior structural repairs. Of course in the case of weather events or other accidental damage it should be covered by insurance.
Best suited to this sorted of arrangement are the attached types of housing we are seeing built today.
Society would improve vastly with more people having more control over their living arrangements, permenancy and people with a stake in the ground, albeit leased space, will not be keen P cooks, of that I am sure.

This website is completely out of touch. Where I live now which is a mid-sized city/town a 3 bedder can cost over 2,000 EU a month plus annual fees upwards of 2,000 a year. I can see why those in NZ that see the article saying two bed apartments going for 400 EU a month - what a joke. I can assure you a 2 bedder going for 100 EU a week will be a complete hole.

It is going to be a real issue, and already is a significant issue. How to ensure security of tenure and tenancy for the renting retired. No point in being sanctimonious about this one. Its simply happening and will only increase in number, that there are and will be more and more retirees who need stable long term rental leases. There is a definite market there. It is also an area for council housing and Other social housing providers to look to. Security of tenure for as long as the rent is paid, and tge property is not degraded by the tenant,

Many retired don't want to home owners......they opt opt out for Rymans. It is a pity this large scale quality accomodation is not replicated for the younger citizen. Surely it could be adapted?

Yeah but you aint getting anywhere near Rymans unless you've got plenty of where-with-all they can separate you from, which means you probably have a freehold house to sell, but yes, perhaps some ideas can be drawn from the model.

...house,shares, a business or whatever to sell ... It don't matter. But it goes to show that at the end of the day, if the model is right, we are happy to not be home owners.

Within 10 years, renting 65+ year olds without their own home will be an extinct species in Auckland

They will cease to exist

They will have fled to cheaper places. Won't be able to exist in Auckland
Statistics have been published here on interest.,co.nz that the "average" tenancy for any given property is about 2 years. The elderly are not going to get tipped out and move every 2 years. They will need stability

All far too complicated.
If you don't want to get tied down with the old, sick and maimed as tenants, then don't rent to them.
Just as now you can pick and choose tenants without saying why, so you can you choose to leave the frail to tend for themselves.
Are there no work houses, or hostels for the deserved poor?
The plight of the aged is first and foremost the responsibility of their family and friends or as a last resort, the State.
It is not the responsibility of those who have worked their way up the ladder. Being an investor/landlord is not a charity.

You won't have em as tenants, but you not allowed to shoot them Big Daddy. Problem.

Jesus wept, we have these people supplying houses, houses which need to be homes, the sooner this madness is over, the better.

House can be homes but they have to be paid for and paid for in full.
There are no exceptions. Houses/homes do not materialise out of thin air.
There is too much "gimme" gimme" in the minds of the tree hugging muesli chewing bunch of snail lovers who want everyone to be happy, well fed and well housed at somebody else's expense so long it's not theirs.
It's easy to be generous with other peoples money.
Let's see what happens when the "gimme" brigade comes knocking on their door.

I rest my case

You mean you give up before the steely logic of my arguments.
If not, prove it by buying a house anywhere, letting to anyone, accepting 20% of market rent and come back in 12 months time and see if you still feel the same.
Accept the challenge or hold your silence forever.

I have let a property out at less than market rate, it suited me at the time. I am not sure how you plucked 20% out of the air or why, but my aim is to see to it that this rentier culture in NZ is turned around, and that we again become a nation of home owners or if that is not possible, then open possibilities for people to able to lease a house in such a manner they can call it a home.
The way houses are rented in this country has contributed in no small way to the breakdown of our society, the way the rentier class has shut out not just people at the bottom, but those much further up the food chain, and as long as things continue as they do, it will keep creeping up.
I was around when this business was in its infancy, in fact I was in real estate. I knew then what was going on was wrong, I have seen nothing to change that view. I got out of real estate fairly quickly as I could not reconcile my view with what was happening. There was one guy, used to think it was ok for him to walk into the office and start riffling through files, demanding to know what sort of levels of stress vendors were in, (expletive) disgusting, and other salespeople would fall all over themselves for him, no-one ever pulled him up for it, one even had agreement signed by a vendor in a state that it was actually illegal to do so, the sale proceeded. I doubt ours was the only office he did it in, in fact I know it wasn't, and he wasn't the only one. Those days started my revulsion for what you do. I don't know, maybe you were one of those people, back then.
Houses need to return to what they were intended for, and it was not for the likes of you to get filthy rich while denying others the ability just to have a home.
Trust me, you are coming into the political cross hairs.

Wasting your breath on the likes of bigdaddy. Too far indoctrinated into existing dogma and ideology. He can't even own the "gimme, gimme" attitude that he bemoans others for having. His type of thinking is what Einstein was referring to: the issues we face today cannot be solved by the same thinking that created them.

Yep, I understand that, but I am not prepared to let some of that stuff go unanswered

PA, there is no breakdown in society as you say, NZ is still the same country with the same problems, people make their own decisions, if P, babies and broken relationships are your thing, then probably you will have a state house, if you are handicapped then of course you should have a state house...NZ has free everything including accommodation, 50% of NZ's don't pay any net income tax, how much more is there to give mate?

You don't suppose if people were paid adequately and housing was more reasonably priced they would be in a position to pay taxes. You should not remove the ability to pay tax then decry those who cannot.
All of those problems you mention are true but there is far, far more of it than when I was in my youth, in my youth even the guy driving the rubbish truck could own a house, he probably owned the business that contracted to the council to do the job, now that is all corporatized, the profit being aggregated to fewer and fewer.
Do you honestly think that more than just a few people want to have everything handed to them, that they don't is the reason many have found themselves sleeping in cars. They actually do NOT want charity, but would like to think their hard work could put them in a position of being able to house, feed and clothe themselves and partake in general society. Being on the bones of your arse makes that very difficult, and on from that society is broken down. It is happening, perhaps you need to return, get some she leather dirty and go take a look for yourself.

What a long boring diatribe.
You would be better off joining the clergy and givings Sunday sermons to the ever diminishing bunch of aging
parishioners.
It's great being wealthy.
Too much of a good thing is wonderful.

K, then this one is for you https://www.youtube.com/watch?v=EqDv86WGWTU

I'm assuming these cliches of a 'heartless landlord' are a comedy attempt? At the moment maybe not too many are laughing.

Gee, BigDaddy, you used to be pretty harsh with your views on this site, but in the last year or so you were more reasonable, to the point that I even found myself agreeing with a few of your statements.

Are we seeing your 'reversion to mean' again? :)