Demand for rentals is outstripping supply in Tauranga as rents continue to rise. Photo / File
Demand for rentals is outstripping supply in Tauranga as rents continue to rise. Photo / File
A growing number of tenants are struggling to make ends meet as rents continue to spiral and demand for homes soars, according to Tauranga Budget Advisory Service.
One property manager has had half of his overseas landlords move back to Tauranga into their own homes amid the Covid-19 pandemic andbudget advisers say their clients clocked up $220,000 in rent arrears last month and were struggling with other household bills
Phones and electricity were being disconnected, people were taking on houses they could not afford and some parents had resorted to living in tents while others looked after their children.
Tauranga Budget Advisory Service manager Shirley McCombe. Photo / File
Tauranga Budget Advisory Service manager Shirley McCombe said in the past month its clients owed landlords $220,000.00.
She said the rental situation was hugely difficult for low-income families.
''Many commit to homes they cannot afford, just to have a roof over the heads. Often, because of their financial struggles, they also have poor credit scores and this adds to the challenge of securing a home for their whanau.''
''Utility bills don't get paid so phones and electricity were disconnected.''
People were also struggling to pay down credit and store card debt, she said.
''To try to address these shortfalls, people borrow from the only place that will lend them money – high-cost lenders, and so the problem grows and grows.''
Tauranga Salvation Army community ministries director Davina Plummer. Photo / File
Tauranga Salvation Army community ministries director Davina Plummer said some people were feeling an increasing sense of hopelessness about their housing situation.
The Army knew of a couple of families who were sleeping in a tent in a park and had sent some of their children to live with others until they could find safe, suitable accommodation.
''Some families are having to move into unsuitable boarding accommodation, or into unhealthy situations living with whānau. Many have applied for a large number of houses, but have been declined due to the demand.''
''As summer approaches and fewer motels are available for emergency accommodation, we predict this will become more of an issue.''
Tauranga Rentals owner Dan Lusby. Photo / File
Tauranga Rentals owner Dan Lusby said about half of the overseas owners who had rented out their homes through his company had returned to live in their own houses, reducing the supply of rentals.
Demand for properties was the strongest he had ever seen.
''It's getting worse and worse. We have overseas expats coming home and other expats who have nowhere to go who are looking for houses as well.''
''The city is an attractive place to live and there is a lot of job creation happening at the moment.''
Lusby said just last week he had forwarded 40 applications to one of its property owners and most of them were ''great tenants''.
In the end, it would come down to references, Lusby said, and other factors including credit ratings and employment.
On the pricing front, the market would continue to dictate but landlords needed to be realistic when it came to prices.
He cited the example of a property being listed for $580 and not attracting much attention from prospective tenants.
''Lots of people were looking at it but we dropped it to $560 and rented it straight away so tenants won't pay silly prices.''
Harcourts Tauranga managing director and business owner Nigel Martin said rentals were in short supply.
Harcourts Tauranga managing director and business owner Nigel Martin. Photo / File
''There are plenty of people moving to Tauranga from Auckland and we've had a number of inquiries from expats heading back to New Zealand.''
Plenty of first-home buyers had also purchased properties in recent months.
''I don't see any reason for the market conditions to change dramatically in the short term.''
It was important for tenants to provide references when applying for properties as there were a lot of good quality tenants looking for rental properties.
That made it harder for people who did not have good references, he said.
''Tauranga is an attractive place for buyers to invest in. Our property prices are lower than Auckland, and we have a strong rental market. The shortage of housing continues to drive up the rents.''
Simon Anderson, managing director of Realty Group Ltd, which operates Eves and Bayleys. Photo / File
Simon Anderson, managing director of Realty Group Ltd - which operates Eves and Bayleys, said landlords were being responsible when it came to increasing rents.
''They are listening to our property managers about keeping your tenant versus hiking the rent and losing them but there had also been new demand from investors and first-home buyers wanting to buy properties due to the historically low-interest rates.''
Add in the expats and all those factors added to a highly contested property market.
''it's almost like a perfect storm really.''
Tauranga Property Investors Association president Juli Anne Tolley said landlords had faced myriad compliance and law changes.
Those costs which were increasing had to be covered by the rent.
She said a six per cent return on investment was deemed to be reasonable and anything above that "good". But a property valued at $725,000 earning $520 weekly rent was achieving four per cent return.
Tauranga Property Investors Association president Juli Anne Tolley. Photo / File
However, Tauranga still offered long term investment opportunities as landlords had a better chance of securing a good long-term tenant than in a smaller town where jobs were scarce.
Trade Me Property spokesperson Logan Mudge said there appears to be ''no end in sight for rising rents'' as January and February typically saw the highest demands for rentals.
The average median rent in Tauranga was $550 a week in October, an increase of four per cent.
''As we have seen over the past wee while, supply is simply not keeping up with demand in Tauranga. As a result, we are seeing rental prices increase across the board which is making it tough for tenants.
''As we head into summer, we expect to see even more pressure on the rental market in Tauranga, and that means prices will continue to rise.''
