Changes to rental laws to make properties warm and dry have driven up rents, which are now at record highs, according to a survey commissioned by the Government.
The survey, commissioned by the Ministry of Housing and Urban Development, found that a quarter of landlords put up rents in the six months before May 2022, and one of the most popular reasons for this was increased costs lumped on by the Government.
Housing Minister Megan Woods said the survey reflected “the advice I have that there is not enough evidence to suggest regulatory changes are the main cause for rent increases”.
But National says the survey provides evidence about what it has been saying regarding the law changes since they were originally legislated in Labour’s first term.
Housing spokesman Chris Bishop said, “rents are up $150 per week under Labour and are a big driver of our cost-of-living crisis. The data is clear that Labour’s war on landlords is harming the very people they’re trying to help - tenants”.
But Infometrics economist and chief executive Brad Olsen said rents might have gone up anyway, and the survey simply records landlords looking for something to blame.
The survey dates back to May 2022 and was released to the Herald under the Official Information Act.
It found that 26 per cent of landlords had increased rents in the previous six months, up on the 19 per cent who increased rents in the six months before the prior survey in October 2021, which was slightly below the 23 per cent who increased rents in the six months before April 2021.
Landlords who used a property manager were more likely to put up rents - nearly a third (31 per cent) put them up in those six months, compared with 23 per cent of landlords who managed properties themselves.
The landlords were then asked why they put up rent. Each respondent was allowed to cite multiple reasons.
The most common reason, cited by 57 per cent, was that they had not put up rent for over a year - under new laws, rent cannot be hiked more than once a year.
The next most common reason, cited by 51 per cent, was to bring rent closer to “market rent”.
The next most common reasons for putting up rent were all related to government policy changes: 32 per cent cited the costs of the Government’s healthy homes regulations, which enforce minimum quality standards around heating, insulation, ventilation, and dryness; and 26 per cent cited tenancy law changes enacted in 2020 that prohibited ending a periodic tenancy without reason and things like rental bidding.
A further 25 per cent cited “other costs” and 14 per cent cited property tax law changes banning landlords from deducting interest costs from their tax bills.
A small number of landlords - 4 per cent - hiked rents simply to improve their own financial situation.
The survey showed 30 per cent of landlords were thinking about hiking rents in the next three months.
Sixty per cent of these cited increased property costs, while 27 per cent cited property tax law changes.
Woods defended the Government’s tax changes, noting they were cited as less of a reason to put up rents than things like “increased property costs”, although increased property costs include other government policy changes like healthy homes.
“About a quarter of landlords in the survey cite property tax law changes as a reason why they are considering raising rents, but at least twice that [60 per cent] cite increased property costs, half cite to bring rents into line with the market, and a further 46 per cent cite that they hadn’t increased rents in the last year,” Woods said.
She said it was “important to remember why the property tax changes were brought in: to dampen demand in property speculation, shift the balance back to first home buyers and encourage new builds” (which were excluded from the changes).
National has pledged to scrap the Government’s rental law tax changes. Bishop said Labour needed to “stop attacking landlords and realise they’re part of the solution to our housing crisis, not the enemy”.
Olsen said that just because landlords had cited these policy changes in the survey, it did not mean they were driving increased costs.
“There has been quite a large number of changes that have been coming through in the rental space in the last few years from Government. I’m not surprised that you are seeing more of those options being selected by landlords in terms of why they are raising rents.
“The question needs to be then, if you look at the rental increases that happened before these changes: why did they happen?” Olsen said.
“I still feel like some of the time these changes are being used for cover for why rents are increasing.”
Olsen said it is established that the costs of rental accommodation were “not purely driven by what it costs to deliver that rental, if they were they would have fallen during Covid when interest rates were low”.
“It’s still a supply and demand question when it comes to rentals,” Olsen said.
The national median rent reached $595 in January 2023, according to Trade Me property data, up significantly on pre-pandemic levels - the median rent was $520 in December 2019.
The poll was commissioned by the Ministry for Housing and Urban Development to “help inform its understanding of recent legislative changes on the residential rental market”.
It surveyed 700 landlords and has a maximum margin of error on the total sample of 3.7 per cent at the 95 per cent confidence level. The margin of error increases when the sample size is reduced by looking at specific slices of the data.