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Landlord: I won't increase rent just because I can

Penny Hayes says she charges enough rent to cover the costs of owning the property.
SUPPLIED

Penny Hayes says she charges enough rent to cover the costs of owning the property.

 

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.

Dunedin's average asking rent is 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.

"In Auckland in particular I had colleagues who would have the rent put up on them every time it was possible, 10 per cent or 5 per cent. It really upset us
– sometimes it was a small amount and sometimes big but it makes a difference whether you can live there or not. It happens all the time and it makes us feel quite uncomfortable."

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."