Landlords expected to act quickly after rent freeze ends

The rental freeze that came into effect during lockdown is now coming to an end - and it has tenants worried. Photo / 123RF

By Eva Corlett of RNZ

Tenants are bracing themselves for a hike in living costs when a freeze on rent increases comes to an end next week.

This is after the Commerce Commission had to warn property investors they could be at risk of cartel-like behaviour after discussing raising rents, en masse, the day after the freeze ends.

The government announced a six-month freeze of rent increases on 26 March, it was a measure put in place to protect tenants during the Covid-19 pandemic.

However, some tenants have been served early notices, in anticipation of the freeze ending.

Zoe*, who rents a one-bedroom studio in Wellington, is one of them.

She recently lost her job through Covid-19 and is also partially sighted.

Her disability benefit, which is her entire weekly income, is $500.

With the renewal of her lease in August, a notice also came that her rent would jump by $40 a week, starting from the day the rent freeze ends - 25 September.

That brings her rent up to $370 a week - 75 percent of her total income.

"I was devastated, obviously, because $330 is already a lot, and it was on the precipice of me not being able to pay even that."

She responded to the notice, asking that the landlord reconsider, given her personal situation as well as the state of the unit, which is damp and mouldy.

No work has been done on the property, during the time she's lived there, she said.

The property management company replied, saying they were sorry to hear about her circumstances, but that the landlord needed a better return on his property.

They then asked whether she had tried running a dehumidifier "constantly".

Because of her disability, Zoe needs housing that is appropriate for her needs and can accommodate her guide dog.

She looked for other places in Wellington, but nothing was suitable.

So, she's been forced to accept the increase.

"It's kind of evil, honestly and it's very cynical that they've done it as soon as they possibly could."

Commerce Commission sends alert

Last month, the Commerce Commission fired a warning shot at property investors found discussing plans to increase rents, en masse, in online forums.

There were discussions about the whole industry upping rents the day after the rent freeze ends, on 26 September.

The Commission's chair Anna Rawlings said the investors were at risk of breaching the Commerce Act, and advisory letters were sent to representatives in the industry.

"Landlords need to be aware that they can be in competition with one another for the supply of rental properties and they can be carrying out a business in supply for properties.

"As a result, they are subject to the provisions of competition law and consumer protection laws. They should make sure they're aware of their obligations and ensure they comply with them," she said.

'A general discussion' among landlords

Sharon Cullwick, who is the executive officer of the Property Investors Federation, received one of those letters.

Investors were discussing the possibilities on Facebook, she said, and she's urging them to heed the letters.

"I think it was a general discussion that the Commerce Commission picked up on. I don't think it was anything specific. But it really is a warning to us that they are looking at what property investors are doing."

She guessed as well that the Commission doesn't want rents going up in the Covid-19 climate.

Tenants could expect to see rent notices appearing in the next couple of months, Cullwick said.

"What we've heard is there are quite a few landlords giving rent increases but some of these are because when the legislation came in, we couldn't raise the rents at that time, and it put a delay on that."

Helen O'Sullivan is the chief executive from Crockers Property Management, which manages a large portfolio properties, including many central Auckland apartments.

She isn't seeing many rent increase notices and doesn't expect to.

"Landlords are recognising that having a quality tenant that can pay the bills at the moment is very much the best way to maximise your income stream."

It takes quite a few weeks of an extra $20 or $30 a week to make up for three weeks, if you're place is left empty, O'Sullivan said.

"Maintaining your tenants is really the best way to maintain income for landlords at the moment."

She's urging landlords to keep good tenants on if they can.

*Name has been changed for privacy reasons.