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How to avoid the pitfalls of renting

RICHARD MEADOWS
Last updated 05:00 23/01/2013
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AVOID THE PITFALLS: Choosing who you flat with should be based on more than just their prowess with a dishwasher or whether they cook a mean spag bol.

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Every year, the Department of Building and Housing receives about 49,000 applications to the Tenancy Tribunal.
 
Clearly there are throngs of seriously disgruntled landlords and tenants out there. 
 
If you believe the likes of Tenancy Support Services, renters are increasingly getting a bum deal from ruthless landlords.
 
"Powerful market forces in the form of skyrocketing rents and astounding property prices fuel landlord greed," its website reads.
 
Tenants come face-to-face with financial disaster all too often, but it's not always because of rapacious landlords.
 
If you keep on top of your rights and responsibilities, you'll have a better chance of avoiding the pitfalls and staying out of the Tenancy Tribunal. 
 
Bridging the Gap
 
You've carefully created a budget and worked out you can afford to pay $180 a week to rent a cheap and cheerful room.
 
But before you even drag your mattress through the door, you're confronted with a whopping bill for $1280. How can this be?
 
Firstly, landlords will almost always charge a bond when you move in, which is up to four weeks' rent, or $720. There's often a gap between getting your old bond back and paying the new one, which can be a challenge to bridge.
 
Then there's the fact that your landlord can legally ask for two weeks' rent in advance - another $360.
 
Lastly, if they've used an agent to let the house you'll be saddled with a letting fee equivalent to a week's rent plus GST - add $207 to the final tab.
 
"The cost of getting into a tenancy has become really difficult for many people, from all walks of life and all budgets," says Lisa Coulter, education and advocacy worker for the Tenants Protection Association (Christchurch).
 
She says the upfront cost can often run into several thousand dollars, especially for family homes.
 
Coulter recently spoke to one woman who resorted to bumping up the limit on her credit card just to pay the letting fee and get in the door.
 
Make sure you have a decent cash buffer saved up to smooth the transition to a new rental, otherwise you could end drowning in red ink from the start.
 
Paper Trail
 
Choosing who you share your accommodation with should be based on more than just their prowess with a dishwasher or whether they cook a mean spag bol. 
 
The tenants who have signed the tenancy agreement are "jointly and severally" liable for any unpaid bills, rent, or damage to the property.
 
Casual flatmates who's names aren't on the lease are not.
 
Let's say your dodgy flatmate gets behind on his rent and scarpers, leaving behind several holes kicked in his bedroom wall and an unsavoury mess under the bed.
 
As the named tenant, you'll have to pick up the tab for the damage, and hunt him down with private debt collectors if you want to claw your cash back.
 
One solution is to get everyone named on the tenancy agreement, so that you're all in the same boat.
 
Otherwise the Citizens Advice Bureau suggests having a written flat-sharing agreement in place which clearly sets out the obligations of all the flatmates.
 
Double Trouble
 
Horror stories abound of people getting stuck paying rent on two different houses as they desperately try to fill the old one.
 
Tenancies come in two main types; fixed-term, and periodic.
 
If you're on a fixed-term lease, the landlord may allow you to leave early if you fill the house with suitable new tenants.
 
But make sure you don't commit to a new flat until you're absolutely certain you've got someone lined up to take over the old one.
 
If you're on a periodic tenancy with no fixed end date, you have to give the landlord at least three week's notice before vacating the premises.
 
Whatever you do, don't leave it until the last minute - double rent will gobble away your savings.
 
Rip-off Rentals
 
If you're struggling to deal with rising rent, at least make sure your money-grubbing landlord is playing by the rules.
 
Rent can only be hiked once every 180 days - effectively twice per year - and you have to be given 60 days' notice beforehand.
 
And if you're on a fixed lease, the rent can only go up if its specifically written into the agreement.
 
Unfortunately, when it comes to the actual size of the increase, anything goes.
 
"It's a common myth that there's a limit to the percentage increase," says Coulter.
 
Instead, there's a limit on the end result, which must be deemed to be in line with "market rent".
 
Check out the Department of Building and Housing's guide to see if how much you're paying seems reasonable compared to similar properties and locations.
 
Coulter reckons a limit on rent hikes, which exists in other countries, would help keep the whole market from rising in unison.
 
Without that provision, all you can do is complain to the Tenancy Tribunal if you think you're being ripped off - or vote with your feet. 
 
Auckland sound engineer Josh Angel's last landlord upped his flat's rent from $220 per week to $300, a staggering 36 per cent one-off hike.
 
"Every single one of us moved out, and they were left with an empty house."
 
The Blame Game
 
Gym instructor Mason Douglas-Cartright is no stranger to strenuous exercise, but he was a bit put out when his landlord accused him of sweating too much.
 
"I was sleeping on a mattress for while until I got my bed, and I went to move it once and the carpet had rotted all the way through to the concrete.
 
"'He said my sweat had gone through the mattress, through the carpet, through the underlay and into the concrete."
 
Douglas-Cartright got a builder to come over and explain that moisture was coming up from underground, but the landlord refused to listen.
 
Arguments over who's responsible for repairs and replacements are the subject of thousands of complaints to the Tenancy Tribunal each year.
 
As a general rule, if the damage is caused by reasonable wear and tear, your landlord has to fix it at his or her expense.
 
If it was caused by your own actions or negligence, it's your problem.
 
Coulter advises carrying out a careful property inspection when you first move in and noting down any potential problems.
 
Mould is a common cause for dispute, so check behind the curtains and along the windowsills.
 
"Look for telltale signs of dampness and mould right at the beginning," says Coulter. "A freshly painted flat can be a bit of a giveaway."
 
Covering Up
 
"One lesson from Canterbury is knowing exactly what your insurance covers and doesn't cover," says Coulter.
 
If you take out contents insurance or renter's insurance, make sure it has some liability cover included in case of accidental damage to the property.

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The classic cautionary tale comes from a bunch of unfortunate scarfies flatting together in Dunedin, circa 1999.

One of the lads was cooking bacon for lunch and popped next door. Meanwhile, the house burnt down, causing $150,000 worth of damage.

The landlord's insurer sued all six flatmates and held them jointly liable, despite the fact that five weren't even home.

Eventually it let the others off, but the lesson is clear. If you're not insured, you probably should be.
 
Take it Further
 
If everything turns to custard, you can always join the legions of other disgruntled tenants and make an application to the Tenancy Tribunal.
 
It only costs $20 and is easy enough to do here.
 
Just be aware that decisions are published online and often used for background checks by landlords, who may be reluctant to take on trouble-making tenants.
 
If you take sensible precautions and don't let your landlord walk all over you, hopefully you can avoid the blacklist and live happily in rental harmony.

- BusinessDay.co.nz

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