Source: Radio New Zealand
Rents were at their lowest level in two years in September. RNZ
Housing Minister Chris Bishop might be encouraging tenants to negotiate a cheaper rent deal as prices drop – but how exactly do you do that?
RNZ reported that rents were at their lowest level in two years in September.
Bishop said after a select committee hearing on Wednesday that tenants should take the opportunity to ask for lower rent if they could.
We talked to two tenancy experts about how you might do that.
Arm yourself with data
Both David Faulkner, a property management expert and general manager of property management at Property Brokers, and Sarina Gibbon of Tenancy Advisory, said it would be important to go into a discussion with a lot of information about the market.
“Don’t lean on headlines and radio stories about national median rents or average rents,” Gibbon said. “No one rents a median or average house.”
She said tenants should look at comparable houses in their suburb listed on Trade Me and realestate.co.nz. “If they want leverage, tenants need to walk into that negotiation with the same knowledge the landlord has.”
Gibbon said tenants could get a sense of their local market by watching how long available rental properties were listed for and whether there were drops in advertised rent. “If there are quiet open homes that is an indication the market is quite quiet.”
Faulkner said people could also use Tenancy Services data.
“From seeing what is happening with rents and how many bonds are being lodged each month, this will help you get an understanding as to what is happening with rents.”
He said keeping an eye on the number of rental listings would help tenants understand how long a landlord might take to find new tenants.
“Knowing the market will help you when it comes to negotiating with your landlord or property manager. Compare your property with what is available, you will understand how your property sits compared with other rentals.”
Consider non-rent options
Gibbon said landlords might not always be in a financial position to move on price but they might be able to offer other assistance. “They might pay for parking for a year or provide parking, pay utilities or lift the maximum number of occupants to help pay rent.”
She said she had seen some taking on more maintenance, such as lawn mowing. “Their ability to drop rent is not endless … their ability to stomach lowered rent is sometimes more complicated than tenants would expect … you don’t have to go to the nuclear option of ‘I’m going to terminate if you don’t decrease my rent’.”
Know your position
Auckland Property Investors Association general manager Sarina Gibbon. Supplied
Gibbon said how hard someone could negotiate would come down to their own position. “Understand how mobile or movable you are.”
Someone who could move easily would have more bargaining power than someone who was committed to an area because of a job or family ties.
“If there are not many properties in the area and you can’t really move but signal you could move away the landlord could know you’re bluffing. But if the area is saturated with comparable properties and you’re fairly movable, letting the landlord know could be a real pressure point at this point of the market.”
She said if landlords started suggesting a tenant lock in a fixed-term tenancy that could be a sign that the landlord wanted certainty and a good opportunity to negotiate.
But she said people should not overplay their hands, if they were not in a position to move or were not a particularly good tenant whom the landlord might not mind letting go. “The last thing you want is to come out of a very unserious negotiation and be characterised by a landlord as lacking credibility … you’re stuck in the tenancy with the landlord and it can make interactions quite awkward.”
She said a good tenant was a business asset, but someone who was late with rent or did not look after a property would be less likely to be able to strike a deal.
Understand your rights
Faulkner said it was important for tenants to know their rights.
“Market rent is defined in the RTA as ‘without regard to the personal circumstances of the landlord or the tenant, a willing landlord might reasonably expect to receive and a willing tenant might reasonably expect to pay for the tenancy, taking into consideration the general level of rents of comparable properties’.
“Landlords can increase rents annually but in a market saturated with rental properties being available, do not be afraid to negotiate. I understand that tenants may feel that the landlord has the ultimate power and can issue notice if you try to negotiate with them, but that would likely be viewed as being retaliatory and this is an unlawful act with exemplary damages of up to $6500 being available through the Tribunal.
“If you are a good tenant who fulfills their obligations under the Tenancy Agreement and the RTA, a landlord may accept an rent reduction rather than go through the risk and worry of trying to secure a new tenancy. If you can negotiate a reduction, you can also get a partial refund of your bond as a landlord can only hold four weeks bond (or now six if you want a pet).”
Landlords also had to provide and maintain a property in reasonable condition and comply with Healthy Homes as well as building, health and safety legislation. “Make sure any maintenance issues are reported promptly and dealt with accordingly. A landlord does not want to lose a good tenant. Particularly when there is a lot of choice out there.”
Faulkner said tenants should keep records of their discussions. “Any discussions around rent or any other matters should be documented. If you are served an increase, a landlord does not need your agreement to enforce it. However, there is nothing stopping you from doing a counter offer.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand