Regulations blamed for rent rises

Nationwide rents have hit a national record, and property investors say new rental rules are to blame.

According to Ministry of Business, Innovation and Employment data, the average New Zealand weekly rent is now $480. That is up from $460 in 2019. In Dunedin, rents were up 12.9 per cent over the year to February. In Palmerston North, the increase was 10.7 per cent and in Invercargill, 9.9 per cent. Nationwide, rents were up 3.9 per cent in 12 months.

Only Christchurch recorded a year-on-year fall.

‘‘Unfortunately, these rental price increases are nothing new,’’ said New Zealand Property Investors’ Federation executive officer Sharon Cullwick.

‘‘While we supported rental improvements, such as compulsory insulation and smoke alarms, it was always obvious that the extra costs of these and other new regulations would see rental prices increase.

‘‘We were accused of scaremongering when pointing this out a few years ago, but the facts show that we were right.’’

She said decisions needed to be made that encouraged the provision of more rental properties, rather than introducing planned changes, which would raise the cost of providing rentals.

A bill making amendments to the Residential Tenancies Act is working through Parliament at the moment. It gives tenants more rights over the properties they rent, removes landlords’ ability to evict tenants with 90 days’ notice and introduces higher potential penalties when rules are broken.

Landlords are also required to insulate the properties they rent and provide heating.

But Infometrics economist Brad Olsen said rule changes were not the only reason rents rose.

‘‘A shortage of rental houses is the key driver of higher rents, and so the increase in construction over recent years is positive as it will increase supply over the medium term.’’

He said the rate of rent increase had slowed slightly compared to the increases recorded in 2019.

The regulations would result in a higher standard of living and possibly lower maintenance costs.

‘‘With higher building activity at present, and lower net migration, we expect more supply to come on to the market over the next few years, at the same time as the regulations require landlords to pay more to bring their dwelling up to standard.

‘‘All of these changes together indicate that rents are likely to still rise generally, but at a slower pace than in previous years.’’