I have had a lot of questions about this subject and also seen and heard some varied views from industry professionals about this subject recently, so I thought it was opportune to share my personal views.

In the past quarter (90 days), I have been involved with over 11 rent roll sales around New Zealand, with several currently under offer and under contract also. In each instance, the outcome or result has not been lower as a result of industry changes that have or are occurring ie; various legislation changes, of which the most recent being letting fees. Demand is still very strong and both multiple and competitive offers are being received in the high majority of these sales occurring. Demand for rent rolls if anything has actually increased in my view.

I would suggest that with books of scale ($1mil or more) I have received similar/same interest levels that I am used to seeing say 12-18 months ago. With these ones, certainly less formal offers are being received than what was being experienced 18 months ago. In fact, 3 of the 11 rent rolls in the past 90 days have achieved record multiplier levels for their given region or location. This may or may not be different with rent rolls being privately sold.

I suspect in 2019 there will be an increase in smaller independent operators wanting to sell simply due to the impact of resources required to cope with the regular change over a relatively short time period. The industry as a whole has been slow to get ahead of letting fee changes, but now there is a line in the sand, change is occurring. Of the say 10 principals I have talked to in the past 2 weeks, all but 1 are actively making changes and seem pretty comfortable with their direction going forward regarding letting fee changes.

The reality is that in 6 months time, the high majority of agencies will have transitioned tenant clients to owner clients paying letting fees or indeed increased revenue elsewhere be it administration fees or increasing management fees. Rent increases are likely to follow broadly speaking. In 6 months time with changes implemented rent rolls will actually be taking higher revenue as a result of letting fee legislation changes occurring. Ironically the capital value of these rent rolls will be marginally higher also!