September 2018 showed New Zealand rent prices continue to soar. The Trade Me Rental Price Index calculated another 6.7 percent increase in NZ’s median rent, with Trade Me saying there were no signs of it slowing down.
The current national rent median in New Zealand is $480, with places like Wellington reaching a whopping $565.
Unfortunately, this doesn’t seem set to change with new compliances and laws making landlords feel justified in asking for more.
Why could my rent be increasing?
In 2016, the Government set new insulation laws under the RTA. These laws require landlords to install insulation under the floors and above the ceilings in their homes by July 2019. The average cost of insulating a home is $1,405. While this covers more than the ceiling and underfloor requirements, landlords will need to cover the cost of insulation by July if they haven’t already. This could be a factor in rent increases as the July date approaches.
From December 12, 2018, landlords were banned from charging tenants letting fees. Usually, the equivalent of one week’s rent, letting fees covered costs for:
- advertising homes, and
- vetting tenants.
Many people already think the ban on letting fees has increased rent prices. Some agencies have even sent letters to encourage this.
Although Housing Minister Phil Twyford says it is “supply and demand” which causes rent to rise, there are other opinions which imply letting fees could be a cause.
Healthy Homes Act
In 2017, the Healthy Homes Guarantee Act was passed. This marked the beginning of the healthy homes standards which will set the minimum requirements for NZ rentals including for heating, ventilation, insulation, and more.
On February 24, 2019, Phil Twyford announced new standards. One requires landlords to put a fixed heating device in living rooms capable of heating them to 18ºc. Another said both bathrooms and kitchens are to have extractor fans.
Private landlords have until 1 July 2021, to meet these new standards. Although this is two years from now the costs associated with reaching them could cause landlords to increase rent.
At the start of March IAG released changes to its insurance policies for homes. These are related to increasing meth contamination claims, with the company addressing meth as a “growing problem throughout New Zealand.” The new changes also saw new obligations made for landlords to ensure cover. This includes background and credit checking tenants and conducting quarterly inspections.
As some of these obligations will cost landlords, they could increase rent to make up for insurance efforts. More information on these changes can be found here.
What does a landlord need to do to increase rent?
Although there are laws and compliances that could be seen as increasing your rent in the future, there are still restrictions around increasing rent and how a landlord must do this.
Firstly, rent can only be increased every 180 days. Landlords are also required to give tenants written notice of no less than 60 days before the increase. This notice must state:
- how much rent is increasing.
- the date that the increased rent will take effect from.
For more information on rent increases and how this must be done, click here.
Featured image from Unsplash