Tauranga Property Investors Association spokeswoman Juli Anne Tolley. Photo / Andrew Warner
Tauranga landlords are being “bombarded” with applications from prospective tenants - despite the median rent rising to $650 a week.
Property Investors Association spokeswoman Juli Anne Tolley said a rental advertised in the city attracted more than 50 applicants in two days after being listed - and that was the case with most properties.
Tauranga’s median weekly rent had climbed 5 per cent - or $30 - since January last year, according to Trade Me’s latest figures.
The figures also show the rental supply increasing by 3 per cent year-on-year in January and demand falling by 13 per cent.
However, Tolley said, in her experience, the supply of rentals was low and demand remained “really high”.
“Private landlords’ listings on social media often get bombarded by applicants, and it’s a mixed bag of results.”
She also expected the median rent to keep rising because, as tenants moved on, properties would be re-listed at the current market rate.
Some landlords were keeping rent low for longstanding tenants.
One client was renting “well over” $100 below market rent specifically because he had been there for many years and took care of the property, Tolley said.
If they moved that price would shift to the market rate.
“There are many of these stories.”
Tolley said they had recently placed several people who had been searching for a long time and had finally found a rental.
“It is always a good feeling to make that offer and hear the happy response on the other end of the line.”
Her advice to tenants was to use personal networks.
“It is hard out there at the moment to find the right situation and choices are few.”
Tauranga Rentals principal officer Dan Lusby said demand for rental property was still “huge” and supply was diminishing.
Tauranga Rentals only had a couple of rentals on their books as anything that became available was getting snapped up, he said.
Many people were arriving at the offices to hand in their applications to make sure they had been received, he said.
Lusby said rising interest rates had placed more pressure on landlords and there was no extra cash to make improvements to their rentals to meet the new requirements.
“They are not fighting it, they just can’t afford to keep those houses,” he said. “With interest rates going up that is what is pushing some over the brink.”
Landlords were also feeling the effects of the Government removing the ability to deduct interest as a business expense and he was seeing them “quite regularly” selling up, he said.
“That is making it harder as well.”
Bay of Plenty landlord Lindsay Richards said he and his wife had just rented one of their homes to a “lovely lady” with three children, and who had excellent credentials.
Richards said they had turned down several other applicants that had “minor blemishes” in their rental track record.
“In the past we used to consider such tenants, giving them the opportunity to re-establish their history.
“We usually would put them on a six-month fixed term in case they were unable to change their spots. About half of them turned out to be model tenants, and many are still with us years later.”
Part of the new tenancy regulations the Government has introduced has removed the “no cause” 90-day notice option, and a “fixed term” now allowed a tenant the right to stay on indefinitely, he said.
“It does not give any end date for the landlord,” he said.
“Sadly, we can’t afford to take the risk of taking on such tenants anymore, which is hard for those starting out renting for the first time with no track record, or who had a bad credit period in the past.”
Bay Financial Mentors manager Shirley McCombe said clients often were unable to pay their rent, getting into arrears and being evicted as a result.
“Rent is an enormous chunk of the income into a home and people are already struggling to make ends meet.”
McCombe said some of the changes implemented to create a more level playing field for investors or improve the quality of homes for tenants had negatively impacted the rental sector.
“We have had several tenants lose their rental as the landlord is exiting the rental market,” she said.
“Not everyone can purchase a home, not everyone is eligible for social housing so there is a real need for good landlords and warm, dry, safe and sustainable rentals to meet the need of our growing city.”