NZPIF executive officer Sharon Cullwick
When New Zealand went alert level four lockdown back in March, the Government introduced a temporary freeze on rent increases in a bid to support people through the uncertainty.
This meant that landlords could not increase the rent on sitting tenants – although the rent freeze did not apply to new tenancies.
Six months on, the rent increase freeze is due to end (on September 26) and that’s likely to see rent rises for many tenants.
NZ Property Investors Federation executive officer Sharon Cullwick says it’s effectively been eight months since landlords have been able to activate rent increases and some catch-up was inevitable.
“When the Government instituted the rent increase freeze, it wasn’t just the subsequent six months that it applied to.
“Any rent rise given by a landlord in the 42 days before the freeze also couldn’t be put into place.
“In total, that’s quite a long time to go without any increase in rent. So it won’t be surprising to see may landlords activating rent rises after the 26th.”
It’s worth noting that the Government’s recent changes to tenancy law mean that a 12-monthly limit on rent increases is now in place.
So should a landlord increase the rent on their rental property immediately following the expiry of the freeze on rent rises, they will not then be able to increase it again for a year.
This part of the tenancy law reforms came into effect earlier than the other reforms in a bid to help tenants who are struggling financially as a result of Covid-19.
However, tenant advocates are not happy about the state of affairs when it comes to rents with Renters United now calling for rent caps to be introduced.
As one of the demands in their newly launched Fair Rent Now! campaign, Renters United want current and future MPs to commit to limiting rent increases to no more than inflation.
The only exception to this would be where significant improvements have been made to the quality or facilities of the home – beyond ordinary maintenance or changes required to meet minimum standards.
Renters United spokesperson Anna Mooney says this is the only way to stop rents from becoming more unaffordable.
At a recent election forum in Wellington, Green Party candidate Ricardo Menendez March and The Opportunities Party (TOP) leader Geoff Simmons committed to introducing such rent caps.
Labour’s Andrew Little, National’s Nicola Willis and NZ First’s Taylor Arneil did not, instead pointing to increasing supply as the answer to housing issues.
Cullwick thinks the introduction of rent caps is unlikely – especially because when they have been attempted in the past they haven’t worked.
“Essentially, rents ended up going up just as much as they would have because as soon as the caps were eased landlords increased them to the point they would have been at anyway.”
However, she does sound a note of caution to landlords considering huge rent increases.
“Remember, as a landlord, you do want to keep good tenants. They are your customers after all so you don’t want to lose them, or bankrupt them. It’s worth thinking about that going forward.”
The latest Trade Me Property rental price data shows the national median rent was unchanged year-on-year in July. It is currently at $500 per week.
Auckland and Wellington are the regions with the highest rents. In Auckland, the median weekly rent also remained flat, at $560, in July. But in Wellington the median weekly rent was up by 4% year-on-year to $550 in July.
Meanwhile, Stats NZ’s rental price index stock measure (which captures rental price changes across the board, including existing tenancies) shows that August’s rents were up by 0.2% on July and by 3.2% year-on-year.
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