Wellington landlords fuel tenancy bidding wars as rental crisis bites

"It's crook, they're exploiting desperate people in the middle of a housing crisis," veteran renter Ted Greensmith-West.
FAIRFAX NZ

"It's crook, they're exploiting desperate people in the middle of a housing crisis," veteran renter Ted Greensmith-West.

Greedy Wellington landlords are fuelling bidding wars among potential tenants by exploiting the capital's desperate rental squeeze - and there's nothing in the law stopping them.

Veteran student renter Ted Greensmith-West said although the practice was not widespread - and many landlords were good - rogues were becoming increasingly common, and often targeted first- and second-year tertiary students.

"It's crook, they're exploiting desperate people in the middle of a housing crisis," Greensmith-West said.

Wellington Renters United spokeswoman Kayla Healey says bidding wars will only deepen the crisis.
FAIRFAX NZ

Wellington Renters United spokeswoman Kayla Healey says bidding wars will only deepen the crisis.

Trade Me figures show average rents in the capital rose from $440 a week in 2010 to $520 in 2017.

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As the national crisis deepens, the capital has been hit hardest. The number of rentals on the market plummeted 65 per cent while rent prices and viewings jumped 11 per cent, according to Trade Me's year-on-year figures from April.

Rentberry is basically an auction site for renters but tenant groups in Australia have been critical of the idea, saying ...
SCREENGRAB/RENTBERRY.COM

Rentberry is basically an auction site for renters but tenant groups in Australia have been critical of the idea, saying bidding wars are only designed to push prices up

Wellington Renters United spokeswoman Kayla Healey said supply was the real issue and despite the efforts of Wellington City Council to redress the shortage,central government needed to step in with a widespread push for better supply.

"If renters had more choice they wouldn't have to engage with landlords who do this," Healey said.

For some the choice was between paying an inflated rent or facing the prospect of homelessness, she said. 

Some landlords are pushing prices up by sparking bidding wars - but the practice could backfire on them.
MAARTEN HOLL/FAIRFAX NZ

Some landlords are pushing prices up by sparking bidding wars - but the practice could backfire on them.

The advent of a new rental platform, Rentberry - an app that's launching in Australia and will come over to New Zealand in the next few months - would only drive rents up, Healey said.

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Dubbed the "eBay of renting", the start-up allows tenants to bid against each other for a property, after which landlords choose the best offer. Tenant groups in Australia have been critical of the idea, saying bidding wars are only designed to push up prices. 

Trade Me's head of property, Nigel Jeffries, said anecdotally it was was only a minority of landlords creating a rent bidding scenario.

Economist and Generation Rent author Shamubeel Eaqub has warned New Zealand is in danger of becoming divided on class ...
FAIRFAX NZ

Economist and Generation Rent author Shamubeel Eaqub has warned New Zealand is in danger of becoming divided on class lines between landlord and tenant.

Also, driven by an absolute need to secure a rental property, some tenants offered landlords more than the asking price.

"Generally, landlords are reasonably well versed in tenant selection and are aware that the highest rent does not necessarily equal the best outcome for the landlord. 

"Most landlords are seeking a fair and market level of rent with a stable tenant who cares about the property they are renting," Jeffries said. 

When 40 people turned up to a scheduled viewing of a flat in the Wellington suburb of Mt Cook in March it prompted PM ...
SUPPLIED

When 40 people turned up to a scheduled viewing of a flat in the Wellington suburb of Mt Cook in March it prompted PM Bill English to call the rental squeeze a symptom of the city's success.

Wellington Central MP Grant Robertson knew of two cases of renting tenders in Wellington - both from around the start of the year when students were returning to the capital.

"I think it is barely legal," he said.

At one, would-be renters turned up to view a flat with an advertised price. "When they got to the property they were asked, 'how much are you prepared to pay?'"

At the other there was no advertised price and would-be renters were simply asked how much they were prepared to pay.

"I think it is abhorrent. It is exploiting the fact we have a real shortage of rental homes in Wellington at the moment - exploiting people in vulnerable positions."

Labour had a package of measures to be announced soon to strengthen renters' rights, he said.

Ministry of Business, Innovation and Employment national manager tenancy compliance and investigation Steve Watson said the practice was allowable under the Residential Tenancies Act.

"Any party who feels that they are being asked to pay rent that exceeds 'market rent' has the ability to apply to the Tenancy Tribunal who can review and determine the appropriate amount of rent for a residential property," Watson said. 

"While it is normally the landlord offering a premises to rent and setting the weekly rent to be paid, while the tenant decides if they are prepared to accept the terms of the agreement offered, there is nothing in the Act that precludes the tenant indicating what they would be willing to pay for the rental property," he said.

 - Stuff

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