When it comes time for a rent review, many renters ask, "How much can rent increase?" In New Zealand, the government has established regulations that protect tenants from sudden or unreasonable rent hikes. These rules are designed to ensure fairness, promote stability, and give tenants peace of mind. However, understanding the nuances of these regulations is essential for both tenants and landlords to maintain a healthy rental relationship. Below, we explore what you need to know about rent increases in New Zealand and your rights as a tenant.
How Often Can Rent Go Up?
As of August 12, 2020, the rules governing rent increases in New Zealand have changed. Under the current regulations, landlords are only permitted to raise rent once every 12 months. This change from the previous rule—allowing increases every six months—provides more stability for tenants, giving them a better sense of predictability when budgeting for housing costs. The 12-month rule applies to both periodic and fixed-term tenancies unless otherwise agreed upon under specific conditions, ensuring that both parties have clear expectations regarding rent adjustments.
Giving Notice
When a landlord intends to raise the rent, they are required to give tenants a written notice at least 60 days in advance. In the case of boarding houses, the notice period is shorter, at 28 days. The notice must clearly state the new rent amount and the date on which the increase will take effect. It’s also highly recommended for landlords to keep a copy of this notice for their own records. Tenants should note that any rent increase is not immediate and must follow this legally required notice period, giving them time to adjust or challenge the increase if necessary.
Fair Market Rate
A key component of rent increase regulations is that any hike in rent must be in line with the fair market rate. Landlords cannot simply impose unreasonable increases far above what similar properties in the area are charging. If tenants feel that the proposed rent is excessive, they have the right to dispute it by applying to the Tenancy Tribunal within 21 days of receiving the notice. The Tribunal will then assess whether the rent increase is fair and justified based on the current market conditions and comparable properties in the vicinity.
Conditions for Raising Rent
In general, rent can only be increased 12 months after the start of a lease or 12 months after the last increase—whichever is later. For fixed-term tenancies, rent can only be raised if the lease specifically includes provisions allowing for increases during the term. Landlords and tenants should carefully review the lease agreement to ensure that any rent increases are compliant with the conditions set out within the contract.
Exceptional Cases
In some cases, landlords and tenants may agree to a rent increase within the 12-month period, but this is typically only allowed under special circumstances. For example, if a landlord has made significant improvements to the property that directly benefit the tenant, such as upgrading the heating system or renovating key areas of the home, a rent increase might be agreed upon. Additionally, landlords can apply to the Tenancy Tribunal to request a rent increase if they face unforeseen costs, such as large repairs or upgrades required by local regulations, that arise after the last rent increase.
Lowering Rent and Adjusting Bonds
Lowering Rent
While rent increases are common, there are also situations where rent can be reduced. If a portion of the property becomes unusable—perhaps due to essential repairs or natural damage—the rent may be temporarily reduced until the issue is resolved. Tenants also have the right to request a rent reduction if their rent is significantly higher than that of similar properties in the same area. They can do this by applying to the Tenancy Tribunal, which will assess the situation and determine whether a reduction is justified based on market conditions.
Adjusting Bonds
When rent increases, landlords are also allowed to request an additional bond payment proportional to the new rent. For instance, if a tenant is paying an increased rent, the landlord can ask for extra bond money to cover the higher rent. However, this additional bond must be lodged with Tenancy Bond Services within 23 working days, just like the initial bond at the start of the tenancy. Landlords who fail to lodge the bond within this timeframe may face penalties under the Residential Tenancies Act.
Follow the Rules!
It's crucial for landlords to follow the rules when it comes to rent increases. Failure to comply with the laws outlined in the Residential Tenancies Act can result in financial penalties and may render the rent increase unenforceable. The Act sets out a fair and balanced framework for both landlords and tenants, ensuring that rent adjustments are carried out transparently and legally. For tenants, understanding their rights under this law can prevent unexpected financial strain, while landlords can avoid disputes by adhering to these regulations.
For More Information Navigating rent increases can sometimes feel complex, especially with changing regulations and market conditions. To ensure that you're following the latest rules and best practices for managing rental properties or understanding your rights as a tenant, it's always a good idea to consult with professionals or seek up-to-date information.
For the most current advice and guidance on rent increases, property management, or any other tenancy-related issues, visit Oxygen.co.nz, a trusted source for property management services in New Zealand.
