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Landlord: I won't increase rent just because I can
Dunedin landlord Penny Hayes knows it's common for tenants to be hit with a rent increase at least annually. But the rent on the house
she lets out is still exactly the same as it was eight years ago.
The home is a sunny three-bedroom 1930s bungalow in South Dunedin, a part of the city she describes as a low-income suburb.
It's rented now for $220 a week. According to rental bond data, the market median rent for that part of the city is $350. Trade Me indicates
asking rents in the city are up more than 4 per cent, year-on-year.
Hayes never intended to be a property investor but when she and her partner moved to Auckland and then Australia, they decided to rent their home rather than sell it.
During the time she's been a landlord, she's been renting herself and has seen what life is like for tenants.
The house has been rented for 10 years and the same tenants have lived in it for eight.
Friends who rent houses in Dunedin have told them they should put the rent up as rates and the cost of insurance rose. "We don't think those things are the tenants' problem."
She said the idea of creating instability in a tenant's life made her uncomfortable. If she were to decide a rent increase was needed, it would be done between tenants.
"When they moved in I vaguely remember having a conversation where we said it's a bit under market and we could probably get $250 but we were happy with
that as a starting point. It's enough to cover costs."
There are some downsides to the tenants from lower rent. Hayes says, if they charged more rent, they would be able to afford to do more substantial maintenance to the
home. At one point, they painted half of it but have not been able to get the money together to do the rest.
They have kept on top of more urgent maintenance – the hot water cylinder has had to be fixed a couple of times. "That's not the tenant's issue. We scrabble around to
find the money and do it."
At one point the tenants fell behind on the rent but Hayes said, rather than kick them out, she let them catch up by paying a bit extra once they got back on their feet.
In that way, she ended up being paid what she was owed – something she was not convinced would have happened if she had evicted them and left them to find a bond
and other costs associated with moving somewhere new.
Hayes said she would need to look at the requirements introduced by the Healthy Homes Act to determine whether work would be required on the house. If it was, she
would look around and budget to find the money.
"It wouldn't be the first thing to do, pass on those costs to the tenants. If it was more substantial than we thought we might have to."
A rent rise in future isn't completely out of the question.
"When we said we wouldn't change the rent we weren't anticipating they would stay there that long. But I wouldn't want to change it just because."
Hayes teaches economics to international students at Monash University in Melbourne. Previously, she taught for six years at the AUT Business School.
She said she was not naive about investment.
"Our approach to renting is about a set of views that rejects the notion that housing should be just about profit. It is pretty clearly thought-out. We are also privileged
that we own a cheaper house in which case this is a bit more achievable."