Rent crunch: Tenants ask whether hikes really fair

Friday, 16 February 2024

• Rents are rising much faster than normal.

• The increase is probably due to a lift in demand from record numbers of migrants.

• Some renters are questioning whether what they are being asked to pay is fair.

Tenants are worried some of the rent hikes they are facing are not fair, a renters’ rights group says, as rents increase at a rapid rate around the country.

Stats NZ said this week that rents for new tenancies rose 2.5% month-on-month in January.

Corelogic chief property economist Kelvin Davidson said the 7.7% national increase in rents recorded over October to December compared to the same time in 2022 was roughly double the average. In Auckland, the increase was 9.2%.

Have you been affected by rising rents? Email susan.edmunds@stuff.co.nz

Geordie Rogers, spokesperson for Renters United, said tenants were feeling the crunch.

“It’s a time of the year when a lot of people’s tenancies are coming up for renewal if they are on a fixed term, and it can be incredibly hard to come to terms with the fact that the rent you’re going to have to be paying is so much larger than what you were paying the year before, for a very similar quality property.”

He said renters felt the cost of their homes was going up much faster than they were seeing any improvement in the quality of the property.

He said there should be mechanisms in place to ensure that tenants were not being exploited.

Many tenants had questions about whether the increases they were facing were fair, he said.

“There is currently a way to contest a rent increase but it’s incredibly inaccessible. It requires proving something which is quite arbitrary – the rental price being significantly higher than market rent. It’s good for people trying to stop a landlord kicking them out by massively increasing the rent but it doesn’t actually address paying 10% or 15% more for a property that has had no significant improvement.”

He said investors talked about their costs having increased but rents did not drop during periods when holding costs declined.

“It speaks to the fact that ultimately there isn’t enough housing.”

Property investor and coach Steve Goodey said he was not seeing rents increase everywhere. “When they do, it seems to be investors trying to lose less money. Investors are seeing higher interest rates and inflation on everything else but they can really only increase rent when the market will bear it. So when we can we do?”

Davidson said it was a question of supply and demand.

“Migration has driven up our population and hence demand for property very strongly, while the reduced purchasing activity by investors lately has meant the stock of rentals probably hasn’t been replenished as much as it otherwise would have been.”

Rents currently absorb 21.6% of gross average household income, back to past highs seen in the first half of 2022.