Tenants brace for economic pain as ban on rent hikes comes to an end

A renters group is calling for it to be illegal for landlords to raise the rent beyond inflation, even if they've had to make changes to meet new minimum standards.

It comes as landlords get ready to raise rents once the ban on hikes lifts later this month.

Wellington-based Renters United on Friday launched its 'Fair Rent Now!' campaign, calling for "urgent action" from the Government to stop landlords raising rents without a good reason.

"Unaffordable rents affect all renters. For those on low incomes, it forces impossible choices between paying the bills, feeding themselves and their family, and losing their home," said Renters United president Robert Whitaker.

"For aspiring homeowners, it diverts income away from saving for a deposit. With the looming recession caused by COVID-19, renters face even greater hardship."

Data from the Ministry of Business, Innovation and Employment shows rents have gone up about 5 percent a year on average since the end of the global financial crisis in 2011, rising from $300 a week to $470. Inflation has averaged about 1.2 percent over that same time period, according to Reserve Bank data.

Renters United has penned an open letter outlining its solution to the crisis.

In the short-term, the group wants rent increases limited to no more than inflation - so a median weekly rent of $470 instead of going up $25 - as it would based on recent trends - could only be increased about $5. 

At present, landlords can raise the rent by whatever they like - if tenants think it's unfair, they have to prove it at a Tenancy Tribunal hearing. 

Whitaker told Newshub not only can it be difficult for tenants to prove, if the landlord can find a single other property in the area with a similar rent to what they've proposed, the tribunal usually allows the hike to go through - no matter how large it is. 

Renters United also wants rents for new tenancies to have to be set "within a reasonable range of the median rent of comparable houses in the area".

"Together, these actions will keep rents in check while our supply deficits are addressed," said Whitaker.

In the long-term, Renters United wants tens of thousands of new "state, council and community" homes built, and tens of thousands of new homes for purchase, with limits on the ability to on-sell "so that these schemes are not windfalls for the first purchaser".

The latter sounds remarkably like what Labour promised with KiwiBuild - 100,000 new homes for first-home buyers over 10 years. It's been a year to the day since the Government - well behind - canned the 100,000 target, but Whitaker says that many homes are needed to create an "oversupply" of homes and bring prices down. 

Renters United also wants "economic incentives and sanctions that together will force the replacement of the worst of the private rental stock".

"A small but significant number of private rental homes are so poorly maintained they are uneconomic to bring up to standard but they are often tenanted nonetheless," the letter says.

"These homes need to be replaced or they will remain in the market and continue to harm their tenants, who are frequently without any other options."

Whitaker said Renters United has anecdotal reports of landlords preparing to raise rents as soon as soon as they can, with letters already going out to tenants advising them of increases. 

Asked if any potential future Government could possibly meet Renters United's demands, Whitaker said he's yet to hear from Labour, and while the Greens' housing policy comes close, it's not quite there. 

The Government recently passed the The Residential Tenancies Amendment Act, which improved renters' rights. National MP Alfred Ngaro dismissed it as the "I hate landlords Bill". 

Renters United will deliver the open letter and the "thousands of signatures" they're expecting to politicians before election day on October 17.