New Zealand Property Investors' Federation

The NZPIF is the umbrella body for 17 local Property Investors' Associations throughout New Zealand.

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Rents rising but landlords need to be careful

Rents are on the rise nationally, says auction site TradeMe, as the supply of rental properties continues to decline and residential property investors chase cash flow rather than capital gains.

TradeMe Property's Brendon Skipper said that over the three months to September, rental listings on the auction website were down 12% against the same period a year ago, and followed an 18% drop in the June quarter.

On the rents front, "the average national rent was up 5% compared to the same period last year, and on a par with the rent increase observed in the June quarter," he said.

"Auckland stood out as the only city to see rents increase by double figures: up 11%."

Bucking the trend were Rotorua and Tauranga, where rental supply via TradeMe listings rose strongly, by 11% and 18% respectively, over the third quarter of 2009.

However, Waikato PIA president Nancy Caiger says vacancies remain high and landlords need to be careful when putting up rents.

"It's slow getting tenants at the moment. In many cases, landlords are having to hold or even drop rents to get places tenanted," she says.

In terms of compensating for GST hikes, she herself put rents up a couple of months ago - anywhere from $15 to $25 - but says it depends on tenants' circumstances and she urges landlords to communicate with tenants about their situation.

"We're telling members to talk to their tenants, as they understand the situation [landlords are in]."

She says rents were due to rise again in April as depreciation changes come into force, so she asked tenants if they were happy with one increase, or a split increase now and again in six months' time. Most chose to have only one.

"At the end of the day [tenants] our customers and if we don't treat them right, they'll walk and then you have to go through the process of trying to find another tenant.

"They're like gold dust at the moment."