How do I define rent increase?

Richard Hoadley asks:
(updated on Wednesday, July 01st 2009)

For a fixed term residential lease with an annual rent review, can you advise wording for the best escalation clause? Ie, as the NZ mean rent % change for all NZ; three bedroom house; as in NZ Property Investor. OR the annual CPI index rate OR some other index that best relates and works for a rental house in the Ruapehu District?

Our Experts Answer:

The Residential Tenancies Act 1986 does not specify an amount (or a base amount) that rent can be increased by. However, if rent is much higher than market rent a tenant can apply to the Tenancy Tribunal to reduce it to market levels. You may wish to include a note in your tenancy agreement that any rent reviews will remain in accordance with market rent for the premises.

Market rent can be based on comparable tenancies in the locality or similar localities. On this basis, a rent amount based on rents for similar properties in the Ruapehu District would be appropriate.

Information on market rent can be viewed on our website at: http://www.dbh.govt.nz/market-rent. This information is intended as a guide only, and may be used with other information relating to median house rental prices for similar properties in similar areas. For more advice and information about market rent, you can contact the Department of Building and Housing on 0800 TENANCY (0800 836 262).

The Department of Building and Housing provides information and guidance on building law and compliance, services including weathertight homes, and advice for tenants and landlords.

 

 

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