The current rental market in Auckland has brought about challenges that impact both tenants and property owners. In this article, we’ll examine some of the pressing issues and potential solutions while striving to maintain a balanced perspective.

Rent Increases and Living Costs

Rising rents and mounting living expenses are posing a significant burden on tenants. Market dynamics dictate that property owners align rental prices with demand. While landlords naturally seek to optimize their investments, it’s crucial to acknowledge the affordability concerns faced by tenants.

Over the past two decades, rents have generally kept pace with wage growth, sometimes even outstripping general inflation. Recent nominal wage increases may not necessarily translate to greater affordability for tenants, especially when considering the broader increase in living costs.

In response to these challenges, the current Labour Government is contemplating proposals for rent control and indexation, as a suggested way in which to strike a balance between the interests of both tenants and property owners.

A survey however, by the NZ Association of Economists last year found that 80% of economists on an expert panel said rent controls had not improved the amount and quality of affordable rental housing in places with rent control. Less than 6% believed rent controls had a positive impact.

Quoted in July 2023, Infometrics chief executive Brad Olsen said he had never met an economist who thought rent controls were a good idea.

“Like any price control… no one looks back at Muldoon and goes ‘that was a fun time, wasn’t it, when we froze prices and wages?’”

He said the reason rents grew was usually due to supply and demand.

“What it often highlights is that demand has been able to increase at a greater rate than supply has been able to respond.”

But he said controls on rents would disincentivise people from providing the right type of rental housing.

One analysis of San Francisco found an expansion of rent control in 1994 led to a 25% decline in available rental units among the newly rent-controlled apartments.

“Rent controls have been seen over time not to produce the right sort of outcome in the market”.

Rather, we would advocate that as landlord’s are justly focused to maximise the value of their investment portfolios, that they are best served to align this purpose with adding value to the properties they are renting.

No Cause’ Termination Notices

Tenants are concerned about potential changes in legislation, particularly regarding ‘no cause’ termination notices. A National-ACT coalition government has indicated an intention to revisit this policy, which allows landlords to terminate periodic tenancies without specifying a reason.

It’s important to note that such notices are relatively rare, with only 3% of tenants receiving them annually, primarily for antisocial behaviour. While this may seem like a significant concern, it affects a minority of renters.

At Goodwins, we strongly advocate for the reinstatement of the right to ‘no-cause’ terminations. This provision, when used judiciously, provides a safe and amicable way to end tenancies that may not serve the best interests of landlords, tenants, or neighbouring communities.

National Party housing spokesperson Chris Bishop has emphasized the unintended consequences of removing ‘no-cause’ terminations, suggesting that it has discouraged landlords from offering their properties for rent and has disproportionately affected vulnerable tenants. 

Healthy Homes Standards

In 2019, the government introduced the Healthy Homes Standards with the aim of enhancing the quality of rental properties. However, a government-commissioned survey indicates that rental homes haven’t become noticeably warmer, and issues like mould and dampness persist, as reported by surveyed tenants.

At Goodwins, adherence to these standards is a top priority. We are committing additional resources to ensure our properties meet these standards well ahead of the mandatory compliance date of July 1, 2025.

Industry-wide, there are also positive signs of progress. A 2022 survey conducted by All Clear Group NZ, assessing over 15,000 properties across Auckland, Northland, Waikato, and Canterbury, revealed that over 60% of rental properties fully complied with the standards. This suggests an overall improvement in the quality of rental housing, signalling a collective commitment to raising the standard of New Zealand’s rental accommodations.

Finding Common Ground

Challenges in the rental market affect both tenants and property owners. It’s essential to maintain open communication and explore solutions that benefit both parties. Property managers can play a pivotal role in mediating such discussions.

In conclusion, the rental market presents challenges for both tenants and property owners, and achieving a balance between their interests is key to a sustainable and equitable housing ecosystem.