Rotorua rents higher than last year as demand for houses jumps

The Rotorua rental market is facing changing times. Photo / Getty Images

Landlords are getting more selective about prospective tenants as proposed tenancy law reforms loom on the horizon, the Rotorua Property Investors Association says.

Association president Debbie van den Broek said landlords fear the removal of the 90-day 'no cause' notice for tenants to vacate a property could mean they could end up stuck with troublesome tenants for ''forever and a day''.

Rotorua Property Investors Association president Debbie van den Broek. Photo / File

''So if you have a bad tenant, like over Covid they can be months and months in arrears before you can get a court hearing. It's not worth owning a rental property if you have those sorts of people that aren't going to pay, or be abusive or do drugs.''

There were a lot of applicants in Rotorua and ''a lot of them you wouldn't touch with a barge pole'', she said.

"Landlords could have spent $400,000 on a property and you have the bank on your back and insurance companies, who may not pay for claims if due diligence had not been carried out on the tenant," she said.

''That is why we are so particular in who we put in because it is scary, really, really scary.''

But Van Den Broek said despite the challenges there had been an increase in investors looking ''for a bargain'' in Rotorua.

Professionals McDowell co-owner Steve Lovegrove said it also had a lot of applicants who ''did not fulfil the prerequisite requirements of a good reference and a good track record''.

''And there are plenty of those.''

''But among the 30 or 40 applicants we may have for a property to let, however, we have absolute confidence within that group of people, we are successfully finding good and well-represented tenants for those properties.''

Professionals McDowell co-owner Steve Lovegrove. Photo / File

Lovegrove acknowledged there was a homeless problem in Rotorua and the responsibility had increased for landlords to provide well-insulated, neat and tidy homes.

''Landlords are now more protective about their investment ... therefore it is critical that tenants must demonstrate their ability to look after and appreciate the property. So we have to be careful we have tenants who take that responsibility seriously.''

At the moment Lovegrove said the agency did not have enough properties in the city to let.

Insurance Council of New Zealand chief executive Tim Grafton. Photo / File

Insurance Council of NZ chief executive Tim Grafton said landlords' insurance-related responsibilities were to take care in selecting tenants, collect rent in advance, collect bond, monitor rent in arrears and inspect the rental property regularly.

''Insurance companies are asking landlords to ensure they have people in their property with a good track record of being responsible tenants and having systems in place to keep checking so that any problems are picked up quickly. These requirements are things the property owner would no doubt be doing anyway as it is just good risk management for one of their biggest assets.''

Associate Minister of Housing Kris Faafoi said the Government aimed to have the Residential Tenancies Amendment Bill passed before August 6.

Associate Minister of Housing Kris Faafoi. Photo / File

There are now more than 600,000 New Zealand households living in rental accommodation and people were living in rental accommodation for longer, and later in life, he said.

''Under those sort of circumstances, the Government feels tenants have a right to a level of security that allows them to know why their tenancy is being terminated.''

Meanwhile, Rotorua Salvation Army lieutenant Kylie Overbye said finding affordable accommodation remained a challenge for many beneficiaries and low-income earners in the Bay of Plenty.

''We see people living in overcrowded homes – often more than one family is forced to share a small house or unit. Some people resort to living in garages, and we have seen people living in cars.''

Rotorua Salvation Army lieutenant Kylie Overbye. Photo / File

With rents increasing, food was often the first cost to be cut, she said.

The news comes hard on the heels of data from Trade Me which shows the median weekly rent in May in Rotorua was $450 up from $410 last year while listings had jumped 45 per cent in the same timeframe.

Property spokesman Aaron Clancy said regions with economies that relied heavily on tourism, like Rotorua, saw the biggest change in rental supply in May.

Catherine Smith, from OneRoof, said right now there had not been a flood of distressed sales, so investors hoping for bargain-basement buys have been disappointed.

"We expect that as short-term rentals such as properties that were Airbnb or part of hotel rental pools become long-term rentals, there will be more supply, which should moderate rental increases. But even with shifts in population and employment levels, as workers switch industries and towns to find work, we expect demand for rental property will hold up."

A spokesman from the Ministry of Social Development said it could help with rent arrears, even if someone was not on a benefit but the money needed to be paid back and criteria applied.

The ministry could also offer "tenancy costs cover", which meant it would help pay costs with a tenancy that ended within one year that a bond would not cover.

This could include up to four weeks of rent to help with costs like rent arrears or property damage and needed to be paid back.

When can landlords evict?
* The reforms still retain provisions for landlords to terminate tenancies under justifiable reasons.
* This includes extreme cases of anti-social behaviour; for example, illegal drug activity or displaying threatening or violent behaviour. Landlords can also terminate tenancies if rent is more than 21 days in arrears.
* These provisions will remain in place and will mean landlords can still go to the Tenancy Tribunal to seek an eviction after just one incident.
* The bill also sets out new prescribed reasons that a landlord can use to end a tenancy, such as if the landlord intends to carry out extensive alternations or redevelopment at the property. - Source Ministry of Housing