The current housing market in New Zealand presents a unique opportunity for tenants: declining rents. As Housing Minister Chris Bishop suggests, now might be the time to discuss a rent reduction with your landlord. But how do you approach such a conversation effectively? We consulted property management expert David Faulkner from Property Brokers and Sarina Gibbon of Tenancy Advisory for their invaluable advice on navigating rent negotiations.
Arm Yourself with Market Data
The most crucial step is to gather comprehensive market information. Don't rely on broad national headlines about average rents. As Sarina Gibbon points out, "No one rents a median or average house." Instead, focus on comparable properties in your specific suburb. Utilise platforms like Trade Me and realestate.co.nz to research similar listings. Pay attention to how long properties remain advertised and whether advertised rents are dropping. Quiet open homes are also a strong indicator of a softening market.
David Faulkner recommends leveraging Tenancy Services data, which provides insights into rent trends and bond lodgements, helping you understand the local rental landscape. Observing the number of available rental listings can also give you an idea of how long it might take a landlord to find a new tenant, which is valuable leverage. Comparing your current property to others available will clearly show its position in the market.
Explore Non-Rent Concessions
Sometimes, a direct rent reduction might not be feasible for a landlord due to their financial commitments. However, there are alternative forms of assistance they might offer. Gibbon suggests proposing options like covering parking costs for a period, providing parking, paying certain utilities, or even allowing a slight increase in occupants if it helps you manage rent. She notes that some landlords might also take on more maintenance tasks, such as lawn mowing. It's about finding mutually beneficial solutions without resorting to an ultimatum.
Understand Your Bargaining Position
Your ability to negotiate effectively largely hinges on your personal circumstances and market dynamics. Sarina Gibbon advises assessing your mobility: how easily could you move to another property? Tenants with more flexibility generally have greater leverage. If the local market is saturated with comparable properties and you are genuinely prepared to move, signaling this to your landlord can be a significant pressure point.
Conversely, if moving is difficult due to work or family ties and there are few alternatives, an empty threat to leave might be perceived as a bluff. A landlord suggesting a fixed-term tenancy renewal could be an excellent opportunity to negotiate, as it indicates their desire for certainty. However, it’s vital not to overplay your hand, especially if you aren't a high-quality tenant. An unsuccessful, aggressive negotiation could damage your relationship with the landlord, making your tenancy awkward. Remember, a reliable tenant is a valuable asset to any landlord.
Know Your Tenant Rights
David Faulkner stresses the importance of understanding your rights under the Residential Tenancies Act (RTA). The RTA defines "market rent" as what a willing landlord would reasonably expect and a willing tenant would reasonably pay for a comparable property, without considering personal circumstances.
While landlords can increase rent annually, don't shy away from negotiating in a tenant-favorable market. Faulkner reassures tenants that landlords cannot issue notice purely in retaliation for a negotiation attempt; such an act is unlawful and could lead to significant exemplary damages through the Tenancy Tribunal (up to $6500).
A landlord is often more likely to accept a rent reduction from a good tenant who consistently fulfills their obligations rather than face the risks and costs associated with finding a new one. If you successfully negotiate a reduction, you might even be eligible for a partial bond refund, as landlords are generally limited to holding four weeks' rent as bond (or six if you have a pet and new agreement allows).
Landlords also have legal responsibilities, including maintaining the property in reasonable condition and complying with Healthy Homes standards, as well as building, health, and safety legislation. Promptly reporting maintenance issues and ensuring they are addressed can reinforce your value as a tenant. Keep thorough records of all discussions regarding rent or other tenancy matters. Even if a landlord serves a rent increase notice, you still have the right to propose a counter-offer.
By equipping yourself with data, exploring flexible options, understanding your personal leverage, and knowing your legal rights, New Zealand tenants are better positioned than ever to successfully negotiate a more favorable rental agreement.