Tauranga rental listings dropped 32 per cent on Trade Me in March and experts say it has put pressure on potential tenants, with landlords likely to favour those with a spotless record.
Rents had also been increasing and were expected to keep climbing.
Figures show 420 rentals were listed in March 2014 but the total plummeted to 287 in March this year, while listings for 2014 were 30 per cent lower than the year before.
It is getting to the point that people have to have a spotless record.
Trade Me's Rental Price Index also revealed the asking price for median weekly rent for a medium-sized home (three to four bedrooms) was $430 in March 2015 compared to $380 in March 2014 - a 13 per cent increase.
In February, the median weekly rent was $420.
Tauranga Rentals owner Dan Lusby told the Bay of Plenty Times some owners were reluctant to increase rents but if a house was vacated it would be reappraised to market value, which could easily mean a $50 hike if it had been with the same tenant for some time.
Landlords could expect returns of up to 7 per cent on investment, he said, and were spoiled for choice with tenants.
"We have got dozens and dozens of applications sitting here. The properties are getting snapped up as soon as they come in because we already have suitable applicants waiting."
People who were marginal due to their credit history could struggle, he said. "It is getting to the point that people have to have a spotless record."
If somebody has got no track record and a dog and four kids, obviously it will be a lot harder for them to find a property than a non-smoking, working couple with no animals and a credit rating.
Tauranga Harcourts managing director Simon Martin said rent arrears were almost non-existent and landlords could choose "cream of the crop" tenants. "So they are over the moon with it," he said.
His firm had a steady stream of applicants and rents were moving upwards. .
Rentals BOP owner Gary Prentice said only a market change would ease the situation.
The average three-bedroom house, about $360 at Mount Maunganui 12 months ago, was heading towards $400, with competition tough, Mr Prentice said.
"If somebody has got no track record and a dog and four kids, obviously it will be a lot harder for them to find a property than a non-smoking, working couple with no animals and a credit rating. While the rentals aren't there, it is just going to get more difficult for those people."
Eves and Bayleys Real Estate chief executive Ross Stanway said demand for rental properties had "significantly increased".
"So it has been pretty much inevitable that the rental prices have tracked upwards."
Tauranga Properties Investors Association president Grant Harris said the New Zealand Property Investors Federation did studies into the costs of owning versus renting and results showed it was $220 a week cheaper to rent the average Kiwi home.
That included factoring in rates, insurances and other related expenses, he said.
Tenant checklist
Ideal tenants would have:
•Good references from past landlords
•Looked after property in the past
•Clean record
•Sufficient income to cover rent
•Good credit record
•Paid rent on time
•No pets
Red-flag tenants:
•People who have not paid rent in the past
•Have damaged the property
•Been taken to Tenancy Tribunal
•Have broken agreements
•No references
•Bad credit history
- local rental companies
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- additional reporting Regan Schoultz