Rents shot up around the country when last year’s rent freeze was lifted, including the largest monthly rent increase in recorded history.
Renters have been knocking on the door of advocacy organisations and taking cases to the Tenancy Tribunal in an attempt to fight increases of nearly 40 per cent in some cases after the COVID-19 rent restrictions were lifted.
Across the country, average rents rose 11 per cent between when rents were unfrozen on September 25 and the end of 2020.
The average rent rose three per cent in the month immediately after restrictions were lifted, according to Ministry of Business Innovation and Employment (MBIE) rental bond data.
Even Tenancy Tribunal adjudicators have expressed surprise at the increases some landlords have levied.
“The tenant questions the landlord’s notice of rent increase by which the rent would increase from $250 per week to $350 per week [an increase of 40 per cent],” an adjudicator wrote in one decision published in December.
“On its face that appears a more than market level of increase.”
However, Murdoch Stephens, the author of last year’s surprise literary hit Rat King Landlord – which imagines a renter revolution in Wellington over issues like these – is sceptical the crisis will ever lead to the kind of uprising he imagined in his book.
“People are both scared and angry. They’re angry about the situation, but they’re also scared to voice it publicly because they’re worried they won’t get the next flat.”
The government froze rents in response to the COVID-19 pandemic for six months from March 26 but didn’t extend it into this year the way several states in Australia did.
Associate Minister of Housing Poto Williams says the government never considered extending it, and argued via written statement rents had risen in lockstep with incomes.
“Rents have generally been rising in line with wages, although there is variation across locations, and for people on low and fixed incomes rents have grown faster than incomes.”
But MBIE and economic data shows a divergence between the two overall, at least when it comes to how most economists interpret the information. And in the period after the rent freeze ended rents have soared.
Wellington has been one of the worst hit by the increases, with MBIE recording median rent there as having overtaken Auckland.
Geometric mean rents (a type of average which is a good way to measure percentage changes in rents) show Wellington’s rents have surpassed Auckland’s.
Tenants Protection Association Auckland co-ordinator Angela Maynard says increasing numbers of renters were coming through their doors seeking advice on how they could fight these increases.
Where landlords chose to give tenants a reason for these increases most pointed to new laws around Healthy Homes as the cause.
“They actually should have been doing this all of the time,” Angela says.
“So if they have to bring their houses up to scratch then it’s basically their own fault.”
A rent increase of $50 per week reported by some would mean almost the entire estimated average cost of complying with the legislation ($3000) was being passed on.
Infometrics economist Brad Olsen says the ability of landlords to pass the cost of these upgrades on to renters was evidence of how much market power they had because of a major imbalance between supply and demand.
Often suppliers in competitive markets would absorb rising costs because consumers could shop around for different options, but this wasn’t the case here.
“The feeling from landlords is that they can continue to make money because there’s a captive market out there.”
Rents had also been increasing for a long time. If they were increasing to pay for more habitable homes then at least renters were getting something for their money, he says.