Rent increases in Rotorua 'cripples families'

Love Soup Rotorua founder Gina Peiffer talks about rising rents. Photo/File

A weekly rent rise of nearly $100 in five years "cripples families", an organisation working with the city's most vulnerable people says.

Last month the median rent in Rotorua was $345 a week, according to Trade Me property data. In October 2012, it was $250 a week.

Gina Peiffer from Love Soup Rotorua said she had been monitoring the growing rental prices and the impact they were having on struggling families in Rotorua.

"We're just at the point where families will look at a house and they know they have to take it but they don't know how they're going to be able to pay for their car and find food because they have to pay that amount of rent."

She said her organisation was meeting and talking to people on a daily basis about rent issues.

Peiffer said while the price of food, power and rent had risen, basic benefits had not and so there needed to be an increase in Work and Income payments or some sort of subsidy to balance it out.

She said a lot of the people struggling to find rental homes were also the ones her organisation was helping feed across Rotorua every day.

"If that food wasn't going out, they wouldn't eat."

She knew of three families, totalling 21 people, living in one three-bedroom house.

"So rather than pay that sort of a rent, they're overcrowding homes to be able to cover all the basics," Peiffer said.

"It cripples families. That's it - bottom line. It cripples them and they don't know how to get out of that."

Rotorua Rentals director Richard Evans said he got about 15 inquiries on average for each rental property advertised.

Yesterday he facilitated the seventh viewing of a rental home in just 24 hours.

He said there were houses rented for $280 a week two years ago that were now fetching about $350 a week.

Some people were spending 55-60 per cent of their income on rent, Evans said, which was not sustainable.

He said apart from Rotorua's population increase driving the supply shortage, he had also seen a lot of overseas landlords returning home.

He had counted about 18 properties in his database that had gone back to owners returning to Rotorua from Australia.

"So for the people who are currently renting them, they've got to find somewhere else."

Steve Lovegrove, Professionals McDowell Real Estate co-owner and principal, said as the demand for rental properties had increased in Rotorua, it had enabled landlords to increase their prices.

He said property owners and investors were also looking at the capital value of their property rising and so were wanting the rent to stack up to a reasonable return.

Simon Anderson, chief executive of Realty Services which operates Eves and Bayleys, agreed an increase in property values had resulted in owners wanting to see the yield rise as well, which drove their desire to increase rental prices.

The strong demand for rentals and the "very short supply" of them in Rotorua had also played a role, Anderson said.

"You can't get one without the other. Those two coupled together has seen the increase."

Median weekly rent in Rotorua
October 2012 - $250
October 2017 - $345
Source: Trade Me