When Should You Increase Rent

Usually, landlords are allowed to increase the rent if the tenancy agreement allows it. However, this requires that they adhere to certain conditions and give their tenants notice. They also have to consider factors like market rents, the length of the notice as well as the type of tenancy. In addition to rent, landlords are allowed to increase the bond simultaneously up to a maximum amount equal to 4 weeks rent.

 

Landlords can only increase rent under the following circumstances:

The increase isn’t within 6 months (180 days) of the previous increase
The increase is not within the first 180 days of tenancy

 

In the case of fixed-term tenancy, the rent can only be increased if the fixed-term tenancy agreement allows it and lays down the provisions for it.

 

If a landlord wishes to increase the rent, they are required to give a written notice of at least sixty days. The only exceptions are boarding house landlords who are required to give a notice of at least 28 days. The written notice should indicate the date by which the increased amount is due and by how much the rent is increasing. Should the landlord fail the notice as required, they can do the following to correct the situation:

If the tenant doesn’t allow the landlord to increase the rent, the landlord can have the notice extended by applying to the tenant Tribunal
Request tenants to allow extension of the notice time
Serve the increase notice again correctly

 

The law of New Zealand doesn’t limit the amount by which landlords can increase rent and as such, this is entirely in the hands of the landlord. However, it does outline how the rent should be increased and the repercussions for not adhering to such conditions.

 

For starters, the Tenancy Tribunal can order the rent be reduced if the landlord increases it by more than other similar properties. Evidence that indicates this should be submitted.

 

The increase doesn’t have to be limited to the notice period of 180 days if both the landlord and tenant agree to it and provided that the landlord:

Improves the amenities provided to the tenants
Improves the property and ultimately its value
Changes the tenancy agreement for the benefit of the tenant

 

A review by the Tenancy Tribunal can be applied for by the tenant or landlord under the following circumstances:

The landlord experiences unforeseen circumstances after the last increase
The tenant opposes the increase in the event that the tenancy agreement is changed for the tenant’s benefit or improvement of the property

 

Another area to bear in mind for landlords is that not every suburb in a city increases or decreases in rent at the same time.  Some suburbs go up while others go down, just because housing prices are going up in the city doesn’t mean rents are going up for the whole city as well.

 

Below are some statistics (source QV.co.nz) from around the country. This is based on annual percentage rent change:

 

Auckland
Western Springs/Morningside      +21%
Meadowbank                                   +20.9%
Mt Eden                                             +5%
Ponsonby/Freemans Bay               -2.5%
Mission Bay/Orakei                         -4.7%

 

Hamilton
Fairfield/Fairview Downs               +16.1%
Hamilton East/University               +10.9%
Hamilton Central/Maeroa              -1.8%
Claudelands                                      -2.1%

 

Tauranga
Papamoa                                           +11.1%
Welcome Bay                                   +5.6%

 

Rotorua
Pleasant Heights/Ngongotaha     +7.8%
Rural Rotoura                                   -8.6%

 

Christchurch
Richmond/Avonside                        +10.6%
Avon Loop/Christchurch East        +7.7%
Halswell/Wigram                             -15.5%
Addington                                         -18.9%

 

I hope you found this blog helpful.  For any more information or help please contact us at Inspire Property Management.

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