Rent hikes blamed on Govt steps

Renters are blaming a new $50 boost for students for a spike in rents but landlords say the market is simply tight.

The price hike is particularly acute in Wellington, where tens of thousands of students compete with highly-paid young professionals and families increasingly priced off the property ladder.

The average rent for new leases of an entire property in Wellington increased $42 between November and December 2017 to $482.

The Ministry of Business Innovation and Employment (MBIE) said that rents in Wellington traditionally rise over summer when many tenancies change hands.

Between November and December 2016, mean rents increased by $32. Averaged out over the past three months of each year rents rose a more modest $26 between 2016 and 2017.

The new Government increased all student allowances and the living costs portion of loans by $50 a week from January 1, 2018.

Several students say that in anticipation of the boost, their rent has been hiked by landlords specifically citing the extra cash.

Wellington student Teri O’Niell, 19, lives in a four-bedroom flat near the central city and was paying a combined $185 for her room and expenses.

‘‘Two weeks after Winston [Peters] decided the Government, the landlord said from the first of January, because some of you are on living costs and allowances, we are looking to increase the rent to $230.’’

This per-room figure includes roughly $15 for expenses. The rent rise applied to all rooms despite O’Niell living with two young professionals.

O’Niell said she supported the boost to student allowances, saying the previous figure of about $175 was not enough for people to live on, but she was shocked by her landlord’s behaviour.

‘‘Especially because I don’t take a benefit myself. It felt a bit like we were all being punished.

‘‘The policy that was put in place was for students who can’t afford rent as it is. I work 25 hours a week but that barely coves the cost of rent and food.’’

Housing crisis

New Zealand Union of Students’ Association president Jonathan Gee said he had heard several stories similar to O’Niell’s.

‘‘We support that $50 increase to meet basic needs. But there is that fear that because there is a housing crisis we know rents will increase,’’ Gee said.

‘‘At the moment students are competing with potential first home buyers who can’t afford their first home, families who can’t buy homes, and young professionals.’’

Trade Me’s head of rentals, Aaron Clancy, said many landlords would see the boost as an opportunity to increase rents.

‘‘But this is across the board – we are at all-time highs for rent and demand in Wellington. It’s perfect timing for a landlord to lift rents knowing this is going on.’’

He said Wellington was ‘‘ripe’’ for higher rents as there were plenty of high-paying jobs and little new residential development.

‘‘Labour’s first year free will increase student registration. Even if it is just a small amount, we still need to find a home for these students,’’ Clancy said.

The Government estimates the tertiary fees-free policy will draw in an extra 2000 students nationwide this year.

Market rent

But head of the Property Investor Federation Andrew King doubts more than a handful of landlords would raise rents solely because they knew students had more money in their pockets.

‘‘I cannot imagine that people have just said: well there’s a student in this house they’ve got another $50 I’ll put it up $50. And if they did that there is a very good chance that would be against the law.’’

Any landlord who charges significantly above ‘‘market rent’’ can be taken to the tenancy tribunal. Market rent is calculated monthly by MBIE and is based on bond data for similar properties in the area.

However, King said some landlords may have been reminded by the increase in allowances to check their rents were in line with market rates.

He also said many landlords would be looking to get more from rental yields as the Government increased rental standards and stopped a tax break allowing investors to claim losses against other taxable income.

‘‘The cost of providing a rental property has gone up tremendously.’’