Landlords 'forced' to increase rents

ASHLEIGH STEWART
Last updated 10:22 20/12/2013

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Christchurch landlord Lillian Zhang insists she is not in the rental market to make money.

In fact, for most of the time she has rented out her Hornby property, she has made a "heavy loss".

Landlords across the city have been criticised for escalating rent prices as the housing shortage hits tenants in the pocket.

But many, like Zhang, say they have no choice but to increase rents as their costs rise.

"For the first three or four years we made a heavy loss because the interest rates were high," she said.

"In the last few years the interest rates were lower but the other costs were rising."

Zhang now charges $480 a week for her three-bedroom Hornby property. The rent has risen about $70 in the seven years she has owned it.

But she said the increases were not unjustified. With increases in insurance premiums, rates, labour costs for gardening and maintenance and repair work on the property, she still made a loss on the house last year.

"[This year] I hope we'll break even. We're not making money."

Harcourts Accommodation Centre manager Nigel Bowden said emphasis needed to be placed on median rents in Christchurch, not average rents, as the expensive outliers tended to skew the data.

Rentals over $1000 a week also tended to include additional features or were furnished, which meant "people aren't comparing apples with apples" either.

"Rental data is skewed by anomalies, and we have a lot of anomalies in the market at the moment," he said.

In the six months to November 2011, the median rent in the Merivale/St Albans area for a three-bedroom house was $385. The average was $384. However, in the six months to November 2013, the average had ballooned to $600 and the median still sat at $510.

Bowden said most landlords were not pocketing any extra money as rents increased. Instead, they were paying down debt to have in reserve, and upgrading properties.

"They're improving the rental stock, and because it's improving people will pay more for it."

Christchurch property manager Tony Brazier said investors claiming depreciation on their buildings and a previously unchanged rental market had intensified current rent increases.

"Rents hadn't increased for the five years prior. There was a bit of a catch-up to be had," he said.

"The other part of the equation is that everything has gone up - there was a 11.7 per cent increase in construction costs in the last year alone."

Brazier said there had been at least a 100 per cent rise in landlords' costs, and the notion of the city's "greedy landlords" was an "unfair generalisation".

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- The Press

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