Landlords will have to hand on home improvement costs to tenants, says property investor

"When you buy a commodity you have to pay for the cost of that commodity," says Sharon Cullwick.
"When you buy a commodity you have to pay for the cost of that commodity," says Sharon Cullwick. Photo credit: Getty

Landlords will have no choice but to hand on costs for home improvements, says the chief executive of the Property Investors Federation.

Sharon Cullwick says renting is a business, and as such, costs must be passed on.

In an interview on Magic Talk, Cullwick said new legislation asking rental properties to be heated and free of draughts will inevitably result in rent hikes.

"When you buy a commodity you have to pay for the cost of that commodity and the same goes for rent - it's the cost of business," she said on Wednesday. 

She also defended predictions landlords will raise rents when the Government's rent freeze comes to an end next week, saying it was only a matter of time. In March Finance Minister Grant Robertson announced tenants could not be evicted and rents could not be raised as the country battled the economic fallout from COVID-19.

But Cullwick says when this lifts on September 26, pre-planned rent hikes will, of course, take place. 

"What's really happened is back in March, the rent freeze came on so any tenants who had been given notice about a rent increase had to put those on hold," she said.

She denies landlords are planning with one another to raise rents in what the Commerce Commission labelled "cartel-like behaviour" but admits that higher rent is on the horizon for many tenants.

"We know the price of holding a rental property has increased with The Healthy Homes Standard coming through - so we know there are a lot of costs coming through at the moment.

It's the cost of business."

Magic Talk host Leah Panapa questioned why these costs "had" to be passed on, saying surely any additions would improve the resale value of the house.

"We have a rental property, we added two heat pumps, insulation and we never raised the rent - sometimes I wonder if that's a bit of an excuse from landlords," 

"I wouldn't call it an excuse - as the costs go up for different things you have to hand those on - no one can be a charity," replied Cullwick.

She said landlords with multiple properties will often have one house which they "really help the tenants out" - but if everyone did this, there would be no more private landlords. 

"We need private landlords because they're the ones who house the mums and dads who need somewhere to stay so we can't keep penalising landlords."

Prime Minister Jacinda Ardern has pleaded with landlords to "have a level of fair-mindedness" when it comes to rent increases.

"My message would be we are still needing to look after our team of five million. We do still want our landlords to be making sure that they have long-term tenants that are able to sustain their rents in a really difficult environment. So I would ask that there be a level of fair-mindedness."