Some landlords are selling up their rental portfolios as the Government looks to introduce tougher regulations that will beef up tenants' rights.

The Government has a raft of proposals including heating homes, taking away a landlord's right to say no to pets and axing letting fees but industry experts say it was a knee-jerk reaction and ''catered to a segment of tenants who have had bad experiences''.

Gary Prentice from Rentals BOP said the agency had lost more than 20 properties in the past 12 months as clients sold their rental properties.

He said implementing changes when there was a shortage of rentals was ''crazy''.

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''It's the same deal with most of the landlords, they are saying it's getting into the too hard basket, and it's not worth owning rental properties any more, so let the government do it.''

Ultimately, the tenants would foot any costs, Prentice said.

His experience follows that of an Auckland landlord facing a $42,000 bill to repair a damaged rental property - who has questioned whether it's worth being a property investor under new tenant-friendly Government laws.

Tauranga Rentals owner Dan Lusby said he had advised landlords that his company could not manage properties if they failed to meet new insulation rules which would kick in on July 1.

''It's forcing them to do it because we won't be lumped with a $4000 fine if it's not done.''

Housing conditions needed to improve, he said, but landlords were in for a further shock as heat pumps could be required in main living areas, panel heaters in every bedroom and extractor fans in the bathroom and kitchen, he said.

Spending up to $5000 to cover those expenses would wallop some landlords, he said.

Tauranga Property Investors Association president Juli Anne Tolley said she was concerned about a new clause in which landlords had to give a reason when giving a tenant a 90-day notice to vacate a property.

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''If you have a tenant situation that is threatening or uncomfortable for neighbours, what do you do?''

Property investors were looking at other investment options like commercial properties, she said.

Lindsay Richards has rental properties in Tauranga, Te Puke and Rotorua and he knew ''of a number of landlords who have sold up''.

He said the talk from the government was potentially scary and he had decided not to buy or sell.

''I am going to hang in there and hope some common sense comes out at the end of the day.''

Meanwhile in the Coromandel Peninsula, Whangamatā Ray White property manager Trish Morisson said landlords needed to be aware the law was coming down heavily on the side of the tenants and if people do the wrong thing, they can be forced to pay all their rent back or be fined.

Ray White Whangamata property managers Christine Fletcher and Trish Morrison say landlords need to be aware the law is coming down heavily on the side of the tenants. Photo / Alison Smith
Ray White Whangamata property managers Christine Fletcher and Trish Morrison say landlords need to be aware the law is coming down heavily on the side of the tenants. Photo / Alison Smith

The average rent has doubled in 12 years, and Whitianga was more expensive than Whangamatā, she said.

Danny Boeglin, a former Tairua resident who owns 14 flats, units and rental houses was selling them all when the leases end, after 25 years in the business.

"We've always looked after people but what the government is doing now is taking the financial freedom away over what we want to do with our money. It's scary.

"If I drove a $200,000 Lamborghini, I would be nervous letting someone take it, but we are expected to hand our keys over to a tenant, and say 'I hope it ends on a good note'."

Housing and Urban Development Minister Phil Twyford said a third of all New Zealanders rented and insecure tenure could force families to move house continually.

The number of rental bonds held by MBIE had increased by 2.3 per cent over the past year and it was building 275 state houses in the Bay of Plenty in the next four years.

He acknowledged it was a time of uncertainty in the market but urged landlords to have their say on the proposed changes. - Additional Reporting Alison Smith

Rising Tauranga rents

Figures from Trade Me for August showed the median rental price in Tauranga was $490 and had jumped by 6.5 per cent.

Head of Rentals Aaron Clancy said the 'halo effect' continues to have an impact on the regions around Auckland and tenants in the Bay of Plenty are bearing the brunt of this with a substantial 8.2 per cent annual increase in median weekly rent.

OneRoof editor Owen Vaughan said demand for quality rental properties in Tauranga was strong and had grown in tandem with the city's property market.


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For more property news and listings go to oneroof.co.nz

"Contrary to popular opinion, landlords have not always profited from increased demand for rentals. The data shows that the costs of running a rental property have risen slightly faster than rents and that rents have generally run below income growth levels."

Government proposal

• Is open for comment until October 21. Any changes are likely to come into force in 2020. Some proposals are:

• Demanding specific and justifiable criteria for a landlord to terminate tenancies.

• Setting the amount of notice a landlord needs to give to terminate a tenancy to 90 days under all circumstances.

• If a tenant considers their rent substantially exceeds market rates they can apply to the Tenancy Tribunal for an order reducing the rent.

• Taking away a landlord's right to say no to pets.

• Healthy homes standards will set minimum requirements for heating.

• More info www.mbie.govt.nz/rta-reform