Brace yourself: Auckland rents are rising

Tenants in Auckland could face a hike in their rent prices this January. Photo / File

Auckland rents are set to increase this month with landlords blaming housing shortages and an unprecedented interest in their properties.

The Auckland Property Investors Association warns that rent hikes could be more dramatic than in previous years as landlords look to pass on the cost of rising interest rates to their tenants.

The association acknowledged landlords could be the target of scorn if they increase rents.

While increases would give tenants cause "to indulge in landlord bashing", the association said local government bureaucrats were to blame and were moving at a "snail's pace to remedy the chronic housing shortage".

Last June , the Herald reported rents for a two-bedroom Auckland place hit a record high of $467/week and three-bedroom weekly rents set a new $592/week record.

Figures at the time showed rents increased by 6.2 per cent for 2-bedroom houses and 5.3 per cent for 3-bedroom houses from May 2015 to May 2016.

Association president Andrew Bruce said todaythat the influx of 44,000 immigrants coupled with the housing shortage meant people should not point the finger at landlords.

"Rent increases in January is nothing new," said Bruce. "For years the rent increases had largely been driven by a surge in demand. This year, however, higher interest rates will also put pressure on landlords to review existing rents.

"Having to increase rent [especially on existing tenants] is always hard. The Kiwi psyche is often uncomfortable with money, let alone asking for more money. It is very important at this time of the year for investors to look at your financial objectives."

Bruce added that reviewing rent is like treading a fine line.

"You have to consider both your investment goals as well as the relationship you have with your tenant. A small but incremental increase over a year is more likely to help you retain a good tenant than an infrequent but sudden, sharp increase."

Mortgage broker Bruce Patten said last month that with mortgage rates expected to increase this year, rent rises were inevitable as landlords looked to cover higher costs.

Social policy analyst for Salvation Army Alan Johnson said there is little a tenant could do if the landlord decided to raise the rent.

"They can go to the Tenancy Tribunal but the definition of a unreasonable increase is pretty broad and they are unlikely to win," Johnson said.

He added that landlords should understand that longer, stable tenancies are more cost-effective in the long-term than raising rents.

Auckland University Students' Association president Will Matthers said renting had become unaffordable for students in the city.

"In 2014, we found the average rent for a student was $218 which is already a higher amount than what full-time students are entitled to receive. And that figure has certainly increased," Matthers said.

He said students were also faced with increased competition in the rental market with fewer houses available.

"The perception that students should be 'roughing it' while at uni is wrong. It's a serious crisis. Students are deciding whether to buy food or top up their bus cards. They struggle to survive. They can't eat properly."

Matthers said prospective students will start look elsewhere in New Zealand to study if the situation doesn't improve, while those based in Auckland will have to live with their parents and miss out on the flatting experience.

Johnson, on the other hand, said a decrease in incoming international students meant domestic students will fare better with inner-city apartments.