Rental rises called obscene
Landlords asking $1000 a week for modest Christchurch houses are being accused of price-gouging, and doubled rents have been labelled obscene.
The investors are trying to cash in on a premium short-term market created by companies housing earthquake rebuild staff and insurers putting up displaced homeowners.
Furnished rentals advertised this week include a Sydenham townhouse for $1120 a week and a four-bedroom Riccarton house for $1150, while some unfurnished houses are listed for about $900.
The average rent in the city is about $350, and real estate agents describe demand as patchy.
A five-bedroom house in Bealey Ave that rented for $420 a year ago was advertised at $960 this week. Its rating valuation is $388,000.
Its former tenant said she was "totally in shock" to see the rent more than double on a house she described as cold, mouldy and damaged, and on a noisy intersection.
"It had liquefaction, it had cracks, the garage sank and it was cold. We moved out," she said.
Another former tenant was "pretty shocked" by the new rent.
The property's manager, Katherine Goodman, said the advertisement had attracted calls, but no-one complained about the rent.
The target market was insurance companies or corporates and they planned to put in furniture, she said.
"A lot of people are taking furnished houses and paying more. When it's furnished, there's a lot more liability for the landlord, and it will be empty more often. It can cost $15,000 to set up," she said.
"For an insurance company, it's only a quarter or a third of the cost of putting people in a motel."
Goodman said the rental was short-term, but the ad requests a one-year lease, which at $960 a week would cost $50,000 a year. After The Press called, the home was relisted at $890.
In Riccarton, a landlord charging $900 for a two-bedroom unit short-term is still without a tenant.
Richard, who did not want to reveal his last name, said his house was a cheaper alternative to a motel during earthquake repairs.
"I was thinking $1200 to start with. I am being kind at $900," he said.
"I've fixed it all up; it's quite nice. I might need it myself at some stage, but people sometimes have to move and I want to be helpful."
Richard left the unit unfurnished so "children could jump up and down on their own furniture", and he did not believe the rent was too high.
Welfare agencies say big rent increases are occurring regularly.
City Missioner Michael Gorman had one of his clients facing a rent rise from $500 to $1000 a week.
Tenants Protection manager Helen Gatonyi was seeing a new strategy where landlords furnished homes and then doubled the rent.
Nigel Bowden, of Harcourts Accommodation, attributed the trend to increased expectations created by news reports, but the urgency had gone out of the market and few tenants would pay more than $800 a week.
"You can't just throw in a few sticks of furniture and double the rent. The furnished rental market is there, and some landlords are doing well out of it, but it's not a big part of the market."
He described $1000 rents for modest homes as "terrible" and big rent rises as "obscene".
"There's no way that is justified," he said.
Property manager Tony Brazier said such landlords were "a bloody nuisance and should be embarrassed".
"To attract tenants like building companies, you need to provide a really good product," he said. "These other landlords are just having a go. They are price-gouging."
Phillipa Shurmer rents a partly furnished house with four ensuite bedrooms and two double garages in Upper Riccarton to an engineering company and has a waiting list for when it falls vacant in a few weeks.
"I don't think we'd get a family in for that amount," she said. "We're not trying to rip people off, but we are getting that from corporates, so we're keeping the rent at that.
"If the market changes, we'll have to put it down again."