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Fighting your landlord's plans to raise the rent

cashflow_smallFiona Snijder​ helps Aucklanders balance their budgets, which is tough in a city with sky-high rents.

A woman of faith, Snijder​, from the West Auckland Budget Service, is not given to despair in the face of hardship.

But the arrival of a letter from the landlord announcing a rent rise can leave some even the most optimistic of her clients despairing for their futures.
Fiona Snijder from the West Auckland Budget Service, says it can be hard to make please for lower rent rises directly to ...
SHELLEY GRECO/FAIRFAX NZ
Fiona Snijder from the West Auckland Budget Service, says it can be hard to make please for lower rent rises directly to landlords.

One man Snijder​ helps balance the books is a poorly superannuitant living alone. He keeps his head above water thanks to fortnightly additional benefits payments (accommodation supplement, special benefit and disability allowance).

But when notice came through that his rent was to rise by $70, he just couldn't see a way to manage.

"He spends $55-$60 maximum on food after he has paid the rent, power, water and petrol to go to the doctor. The food budget comes out of whatever is left. Where is he supposed to get $70 from?" Snijder​ said.

Wringing much more from the benefits system seems unlikely, so Snijder​ faces trying to negotiate on his behalf over the rise of nearly 20 per cent. If the negotiation fails, the man may be forced to move.

Renters are generally price-takers tied onto a cycle of semi-annual rent rises.

The law allows landlords to raise rents every 180 days to get the best return they can from the market. If they can't pay, the law presumes a tenant will move on and someone who can afford the rent will move in.

Can a tenant resist a rent rise?

Snijder​ tries, and sometimes gets rises reduced.

She begins by working out what the market rent is for a similar property in the area. If the rise offered is unreasonable, looking at other properties should reveal it, though there can be a blurring of lines with a landlord claiming their "town house" is closer to being a real house, than an apartment.

The Tenancy Services website has an up-to-date searchable market rent database.

Armed with that a direct plea to a landlord is the best hope.

Rent for a sitting tenant is effectively set by negotiation, and if a good tenant is genuinely up against it, a landlord may listen, and reduce their demands.

It's not always easy to get through to property owners and often rentals are run by property managers, who sometimes prevent pleas for mercy getting though, Snijder​ said.

Property managers are often paid a proportion of the rent they collect on behalf of landlords, which incentivises them to raise rents as high as they can.

Kevin Reilly from the Manawatu Tenants' Union said sometimes landlords do listen to pleas and limit rent rises, but in his experience it is rare.

"They are not really compassionate people. It's just a business arrangement they are involved in," he said.

A tenant might use a rent-rise as an opportunity. If there are things that need fixing, it does not hurt to say you only agree to a rent rise, if that cracked window, that dodgy old dishwasher, or that tumbledown fence are fixed, or replaced.

At the back of the landlord's mind will be the possibility of having to justify the state of the property should the tenant decide to go to the Tenancy Tribunal to resist the proposed rent rise. The tribunal can issue orders limiting unreasonable rent rises.

On some cases, making demands on the landlord may result in them deciding against a rent rise.

Tenants' advocates, like Angela Maynard from the Tenants Protection Association in Auckland, believe it's rarely done as most individual rent rises are relatively small, though even small rises can be devastating to family budgets.

"The rent increases aren't that huge, but the rent were unaffordable when they started," Maynard said.

Reilly said the tribunal will try to get things sorted out through mediation first in a bid to avoid the application leading to a full hearing.

Landlord Andrew King from the Property Investors Federation suggests there may be things a tenant can do, including bartering.

"If the landlord is perhaps paying someone to mow the lawns, you could offer to do that. That might be enough to keep the rent rise down," King said.

Good tenants have an advantage when negotiating with landlords.

"If they are good tenants, landlords will probably keep the rent below market rent."

Rent-rise shock can be particularly awful, if landlords hold off too long in responding to market rent rises.

"Landlords should do it every year or so, so they are small steps so the tenant can actually budget for them," King said.

King argues that life has become more costly for landlords with the costs of insurance, rates and maintenance rising.

Rising costs does not necessarily result in landlords being able to lift rents. That requires more demand than supply of homes.

As a result, rent rises fall unevenly depending on supply and demand for certain types of property.

Property management company Crockers​ reports rents for two bedroom flats in Auckland rose nearly 9 per cent during 2015, while three bedroom rental prices remained flat.

Rental prices remained stable in Wellington while Christchurch and Dunedin saw modest declines, but overall rents have risen faster than inflation since 2009.

Some, unable to negotiate, take actions that effectively reduce their rent, for example, packing more people into homes and not telling the landlord, or moving whole families into boarding houses.

"People are living in third world conditions," Maynard said.

Peter King, a volunteer in Auckland, blames high rents and rent increases on property-owning politicians, under whose policies house-building failed to keep pace with demand.

"We have been finding people are paying up to 70 per cent of their incomes on rent," he said.

THE LAW OF RENT RISES

Landlords can raise the rent after the first 180 days of the tenancy, but not do it again for another 180 days.
For a fixed-term tenancy, landlords can only increase rent if the tenancy agreement says they can.
Landlords must give 60 days' written notice of a rent increase.
A rent rise can lead to a bigger bond. If your rent goes up by $10 per week, and the bond is three weeks' rent, another $30 needs to be deposited.
If a landlord has improved a property, and the tenant agrees, a rent increase can happen outside of the usual 180-day cycle. If the tenant doesn't agree, the Tenancy Tribunal has to authorise the rent rise.
A landlord can also apply to the tribunal to lift the rent, if they have had unforeseen expenses since the rent was last increased.

 

Real Estate Investar Editor
Real Estate Investar Editor
Real Estate Investar provides intelligent software, tools and data to help you save time and make money in the residential property investment market.

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