Rotorua's median weekly rent was now $450, new data shows. Photo / Getty Images
Tenants are feeling the rental pinch as demand for property soars amid a dwindling supply of homes, experts say.
Ex-pat Kiwis returning home are thought to be contributing to a shortage of rentals as they move into homes previously rented out while overseas.
Existing tenants are having to move out amid an increasingly hot rental market which has seen the region's median weekly rents reach record levels.
A budget advice manager says those who can not afford to pay higher rents are finding somewhere cheaper to live with more people in order to share the costs and put a roof over their heads.
McDowell Property Management Ltd business development manager Rhiannon Greenwood said tenants were feeling the pinch.
"There are more tenants looking than ever and just simply not enough homes for them all.
"The turn out numbers at viewings are very high, which is creating a competitive atmosphere."
Greenwood said a prospective tenant's past rental history was more important than ever, with any record of arrears and damages hindering their chances of securing a home.
Since lockdown, Greenwood said many tenants were having to leave their rentals due to overseas owners returning home.
"This has in turn increased the number of tenants looking for rental properties.
"If you couple this with the increase in rent, it has made it really quite difficult for some people searching for homes."
However, Greenwood said there was a large pool of tenants applying for homes, which meant more people were missing out.
"The rent realistically is only going to continue to climb, which will make it harder for families who are already finding finances tight."
Since August, Greenwood said there had been a slow rise in investors bringing multiple properties to the rental market, meaning more portfolios and homes available to rent.
She had also noticed a significant increase in rents due to the change in legislation from rent increases being allowed once every six months or 180 days, to once annually.
"This has seen landlords really striving to bring their properties in line with the current market rent and thus, we have seen some quite substantial jumps."
Managing director of Realty Group Ltd, which operates Eves and Bayleys, Simon Anderson said there was strong demand for Rotorua rentals but a shortage of stock.
"There are not as many properties coming into the rental pool," he said.
"If people do have properties that are tenanted, they are holding on to them."
Rotorua Rentals director Pauline Evans said the rental market had seen many Airbnb-type properties becoming residential rentals.
"Most are for a short term only and are fully furnished including power and internet, usually asking much higher than average rents.
"One aspect of the impact of median prices, it will not make it any easier for tenants."
Evans said owners were wanting to increase rents but were nervous about the pending changes to the Residential Tenancies Act.
"We have had a few owners who have made the decision to sell, with other landlords adopting a wait-and-see attitude to rent increases and changes to legislation, believing it is better to have a tenant in their property paying rent, especially if they look after the property, too.
"For some of my landlords, the one or two rental properties they own are their superannuation plan for their retirement, knowing they cannot depend on the Government."
Meanwhile, she said tenants were frustrated about the little choice in rentals and stricter tenant selection causing delays in placing tenants into properties.
"Rotorua has a high beneficiary tenant base. When increases do occur, Work and Income tenants apply for an increase to their accommodation supplement.
"Some of our employed tenants are living day-to-day with the fear of losing their jobs and having no way to pay rent moving forward.
"Until we see the full picture once government subsidies have been removed, we will not know the extent of this issue."
Rotorua Property Investors Federation president Debbie van den Broek said she had no properties available but a queue of people lining up wanting help.
"There are quite a few good tenants around but you have to wade through a lot of people with no references or bad history."
Most of the prospective tenants were looking because their landlords had decided to sell up, she said.
OneRoof editor Owen Vaughan said for a certain group of people, low-interest rates were making a more compelling reason to take the plunge from renting to buying.
"Obviously a lack of listings in the market is going to put pressure on rentals because you're going to have a pool of people who are going to have to rent who have sold their houses and are needing somewhere to live."
Rotorua Budget Advisory Services manager Pakanui Tuhura said while the vast majority of clients were able to pay rent, the few who could not had moved to cheaper accommodation.
"Many people will trade off the quality of accommodation for lower cost and the numbers of rent-paying people in each rental property tends to grow as the cost goes up.
"More people in a house isn't a bad thing until it starts impacting on all tenants' health and wellbeing."
Tuhura said rental prices rose steeply years ago and if people were struggling to pay rent prior to lockdown "then this will only continue".
Trade Me's latest Rental Price Index for August showed the Bay's median weekly rent reached a new record climbing 9.5 per cent to $525 from August last year.
Tauranga was the most expensive in the region in August, with a median weekly rent of $550 - an 11 per cent increase compared to August 2019.
Rotorua's median weekly rent for August was $450 - a 5 per cent increase when compared with the same month last year.
Trade Me property spokesman Aaron Clancy said the Bay's rent prices had not shown any sign of slowing down since lockdown and with demand outstripping supply he did not expect to see that change any time soon.
Clancy said supply in the Bay dropped 12 per cent in August compared with the same month last year, while demand increased by 3 per cent year-on-year in August.
Clancy said Rotorua's 5 per cent rise in rents was "relatively small" compared with the consistent double-digit rent growth the city had experienced in the past 12 months.
In Rotorua, demand for rentals was up by 2 per cent in August compared with the same month last year, and market supply was also up by 14 per cent year-on-year in August.
"Those who had previously relied on the tourism industry for work may have been forced to re-evaluate their living situation and move elsewhere in search of work," he said.
"We are not surprised to see Rotorua's rental market fluctuate as it tries to find its feet after lockdown."
August 2019 vs August 2020
Median weekly rent - Tauranga
August 2019: $495
August 2020: $550 (up 11%)
Median weekly rent - Rotorua
August 2019: $430
August 2020: $450 (up 5%)
Median weekly rent - Bay of Plenty
August 2019: $480
August 2020: $525* (up 9.5%)
*Record
The financier wants $28.2m; unsecured creditors are listed as being owed another $167,000.