Freeze on rent rises introduced - temporarily

Monday 23 March 2020

The Government has introduced a freeze on rent increases on residential rental properties as part of the economic measures announced in the fight against Covid-19 and its impacts.

By Miriam Bell

New Zealand today moved to Level 3 of the Covid-19 Alert system and over the next 48 hours the country will move to Level 4 – which means a national lockdown will be in place.

This is expected to lead to widespread job loss and so, in a bid to provide further support for the economy, workers and businesses the Government has also announced further economic measures.

As part of this, Finance Minister Grant Robertson says there will be a temporary freeze on all rent increases and they will be looking to extend no-cause terminations to protect people during this difficult time.

As yet no further details on this announcement are available, but Robertson says they will be releasing more details over the coming days.

Investor Andrew King, who was until recently the NZ Property Investors Federation executive officer, says he can’t see the rent increase freeze being a problem for landlords.

“As a landlord, I increased my rents in January but I’ve already informed my tenants that we won’t be enforcing that. I imagine lots of other landlords will be doing something similar.”

He says that, given the amount of potential job losses, it will be important for landlords to try and help tenants so that they can keep living in their rental properties.

“It would be good if Government can provide some support to rental property owners by ensuring that the existing mechanisms around WINZ payments can be processed quickly. Speed will be crucial.

“We’ll also be putting a message out to our members that they need to prepare and they should make sure that they can cover the rent, if need be, for a couple of weeks while tenants who need to work out their situation with WINZ can do so.".”

But King was disappointed with the Government’s move to extend no-cause terminations for people.

He says it looks as though the Government is trying to push through its controversial tenancy law reforms without going through the Select Committee process.

“Given the level of opposition to the removing the ability for landlords to issue 90-day notices, it doesn’t seem fair to do that.”

REINZ chief executive Bindi Norwell agrees with King on both fronts. She says that in the current environment, implementing a freeze on rental increases is a sensible and moral step to take.

“The strict Alert Level 4 measure means that in the coming months a number of people are likely to lose their jobs. To have to deal with a potential rent increase at this time could be incredibly stressful for a tenant to have to deal with, so we welcome the Government’s announcement around this particular measure.”

For landlords who have already spoken to tenants around a rental increase in the previous few weeks, we believe this will be unable to go ahead, she says.

“But we will work through what this means for these situations as the finer details of the announcement become available.

“In the interim, we would encourage landlords, tenants and property managers to keep the lines of communication open – as some rent may be better than no rent in the current environment.”

However, they are disappointed with the announcement on the removal of the 90-day notice, given the property industry has made its views on it very clear over the past few months, Norwell says.

“We do understand they are trying to do their best by tenants in these trying circumstances and we will be looking for further clarification in the coming days from the Government as to what this means for landlords and tenants who have already issued/been issued with a 90-day notice.”

Read more:

How to address tenant job loss in the age of coronavirus

Comments from our readers

On 23 March 2020 at 5:51 pm kune31 said:
How about tenants that are scheduled to move (or house buyers) during level 4 restrictions ? Will they be able to physically move in to the next property, or will it be a non essential activity.
On 24 March 2020 at 9:12 am robdacol said:
@kune31, that is a good question. I have a similar situation with a break-lease. There will also need to be a final and first inspection as part of the process. There are no level 4 guidelines for landlording given - just rent freeze.
On 24 March 2020 at 5:33 pm Propjourno said:
According to new guidelines from REINZ: Settlements: In lockdown, vendors and purchasers will NOT be able to move in and out of their houses. For this reason, Auckland District Law Society is recommending that settlements be deferred until after the Alert Level 4 restriction is lifted. The party's lawyers will make appropriate amendments to the contract to facilitate this. Moving if a property settles during lockdown: Travel will be restricted to essential travel only e.g. pharmacy/supermarket trip, so settlements and moving house should be deferred until after the Alert Level 4 restriction is lifted. The parties’ lawyers will make appropriate amendments to the contract to facilitate this. But re: tenancies due to end or commence during lockdown - MBIE is confirming the situation and REINZ will issue an update when they have further information.
On 25 March 2020 at 7:35 am joejames said:
Mortgage holidays are being discussed. Will this be extended to investment properties? I ask because: My landlord pays his mortgage with my rent. If he gets a mortgage holiday, why am I not getting a rent holiday?
On 26 March 2020 at 11:15 pm Nabla said:
With the 6 month rent freeze, does it mean we need to wait 6 months before advising of a rent increase then wait a further 60 days?
On 27 March 2020 at 1:47 pm shorty said:
plesse clarify the rent freeze, as there is confusion online, tenants are saying they dont have to pay rent for six months? I understood the announcment made was a six month freeze on rent increases, not rent itself? Landlords still have to pay rates and insurance premiums too. Doesnt help with news headlines click bait says 'Rent freeze'. Thank you

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