Who knew that freezing rents then loading costs onto landlords would lead to increased rents? Clearly the Government didn’t know that would be the result of their war on landlords.
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 Government’s 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 3 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.
Stuff
Who knew?
Well, we know. Here’s the thing, if you move the onus on paying letting fees from the tenant to the landlord, then the landlord will simply increase the rent.
Using MBIE’s figure of average rents in Auckland, then a $600 weekly rental means a letting fee of $600 charged to the landlord. The landlord simply divides that number by 52 and the rent goes up by $12 a week. The best thing is that the rent is now set at that level and if the tenant stays longer than a year, then they keep on paying that $12 a week more until they leave. If they leave then the new rent level sets the next letting fee and that goes on the rent. Trust me, the landlords may be the people paying the bill but it is the tenants who ultimately pay.
The Government has delivered a double whammy on tenants too as a result of their rent freeze. As we know from when Muldoon gave us a wage/price/rent freeze in the 80s, all it does is delay the inevitable.
The Government froze rents, and at the same time made wholesale changes to the law, foisting even more costs onto landlords.
Take the requirement for well ventilated and warm homes. That necessitated the installation of AC units in average sized homes which would cost about $3300. Again, landlords simply recover their costs by dividing that by 52, meaning the potentially warm and dry home (you can’t make them actually use the systems) now needs a rent increase of $65 per week, on top of the $12 a week to recover the costs of the letting fee.
Well done Labour, you’ve actually made life harder for the tenants, as they are now paying for things they never were going to use in the first place. Rents are now at a minimum $77 per week dear, but hey let’s round that up to $100 per week to cover incidentals.
Buggered if I know why the fools in the Government are surprised by this. Landlords are in business, the Government has increased the costs on that business and therefore they need to recover those costs and make a profit because they aren’t in business for charitable reasons. The net result of “saving” tenants from those evil landlords is they’ve actually cost the tenants even more.
Well done Labour, what other industries are you planning on “fixing”.