One in five tenancies could fall into arrears

PHOTO: Property management consultancy Real-iQ

The Covid-19 crisis will result in greater falls in rents and higher default rates in regions, or suburbs, with higher rents, according to property management companies.

A new survey, conducted by property management consultancy Real-iQ, attempts to gauge what might happen with rents around New Zealand – in terms of prices and also defaults – going forward.

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The survey will be run fortnightly during the Covid-19 crisis and the results of the first survey, which was completed by 32 property management companies, are laid out in the consultancy’s latest newsletter.

It’s the rent default results which stand out, with the general expectation being that regions with higher are more likely to have a higher default rate.

Real-iQ director David Faulkner says property management companies in Auckland and Wellington are predicting default rates in excess of 20%.

“This is concerning and if they are correct, one in five tenancies will fall into arrears.”

After the first week of the lockdown, companies who completed the survey highlighted a rise in arrears from 3.23% at the beginning of the crisis to 6.57%, he says.