A glut of vacant rentals in the capital city has shifted the dynamic between landlords and renters, with some tenants knocking close to $100 off their weekly rent.
Landlords are offering all kinds of incentives to entice people to viewings, and those who are looking for a home have found they’ve got their pick of the bunch.
Property experts say it’s a stark contrast to a couple of years ago, when the market was a “little bit crazy the other way,” with rents rising every year.
TradeMe’s August data showed that while the national median rent remained flat at $620 a week, Wellington prices continued to fall to $595 – down 8.5% year-on-year.
Cotality chief property economist Kelvin Davidson said rents were still high compared to incomes overall, and a tenancy advisor urged tenants to take advantage while the market was in their favour.
Better now, but still not the best
South coast resident, Ross, described the past 10 years renting in Wellington as a mixed-bag in terms of housing quality – but could easily point out the worst.
“It was really terrible. I got electric-shocked in the shower one morning. We had a private landlord, and it was basically his project house, and we’d have contractors coming in and out.
“That was my worst flatting experience ever.”
He said his current place was great, but following a job loss and two flatmates leaving, had decided to look elsewhere, but found there weren’t many people going to viewings, and the ones that were, were negotiating on price.
After learning their property manager was concerned about filling the place, Ross said they decided to change tack.
“That kind of gave us the confidence to go on and say, ‘We’d be looking for a bit of a decrease.'”
They asked for $90 per week to be knocked off the rent – and got it.
He said while it was a considerable amount that would help him at the supermarket, overall, housing affordability was still an issue.
“It’s better as a renter now, but contextually it’s still not the best. Being able to spend less on your rental so that you can work towards your own property is a big bonus.
“[But] I was part of the redundancies in the public service in October last year, so that’s kind of put a hold on that.”
‘Flipping of the script’
Founder of Tenancy Advisory, Sarina Gibbon said tenants needed to act while the market was in their favour.
“Hearing, seeing, feeling a flipping of the script in terms of the power dynamic between landlords and tenants, because that is very much driven by the reality of being excess supply and insufficient demand.
“Tenants who for so long just have to suffer … forking out most of their income each week, just to get a roof … I’d love for more tenants to take action at this moment and realise that they have leveraging power.”
But she warned that the rebalancing of power was superficial and unlikely to last.
Gibbon said tenants should look at what would improve their living situation, while they could – whether that be reduced rent, better chattels, a healthy homes inspection, or even knocking out clauses in the tenancy agreement so that they could enjoy 2025 prices for longer.
Head of the Property Investors Federation, and president of the Wellington branch, Peter Ambrose said the number of vacant rentals in the capital, was the highest he’d seen in a decade.
He said the Wellington market usually hovered around 500-1000 vacancies according to TradeMe listings, but in June this year it peaked at more than 1700 – a conservative snapshot, as it didn’t account for rooms advertised on social media.
Ambrose said on Thursday there were just under 1400 which was still “extremely high”, and said job losses in the public and private sector, as well as lower numbers of university students, were behind it.
“There is a lot of choice out there. Some landlords have experienced vacancies just about all year on some of their properties. I personally know people who haven’t been able to tenant the place for a few months so they’re taking it off the market and looking to do a complete renovation.”
He said the real issue was getting people to viewings.
It was a stark contrast to a couple of years ago, which he described as “a little bit crazy the other way,” with lines out the door at viewings, legislation to stop bidding wars, and rents rising every year.
Ambrose and Gibbon said landlords were now offering a range of incentives, such as free weeks rent, whiteware, and paying for internet and moving costs, to entice people through the door.
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‘Why are you trying to bribe us?’
For the past couple of months, Lower Hutt resident Angie has been turning down rentals and fending off property managers.
“Every placed we’ve applied for we’ve been offered the tenancy. It felt like a little bit desperate. Felt a bit of desperation from the property managers.
“It seems like when they get someone that’s keen on the place they’ll bend over backwards to give you the tenancy.”
Her current place, which she’s been in for a decade, is being sold but said she was under no time pressure to move, so was doing her due diligence.
She said in her search, she’d come across some “clearly converted office buildings,” and also landlords offering incentives to prospective tenants.
“A $400 grocery voucher, a week free rent, two weeks free rent – just all sorts of different sign-on bonuses, basically.
“Which was a great incentive to look, but then it also gave me pause, like ‘Why are you trying to bribe us for this property?’ So you look at things a little bit more cautiously.”
She said she was tempted by one place that had dropped from $1400 per week in rent, to $675, but on second viewing found a “massive leak” in the communal hallway wasn’t being attended to.
“I just think some of these properties haven’t had the TLC that’s required and it’s coming back to bite them.”
Will rental standards lift?
Gibbon said landlords needed to pay attention to the current market, and only the “strategic and confident players” would survive.
“Good quality properties are being taken off the market very quickly. The ones that are sticking around are either flawed in certain ways, or the owner is just not being price realistic.”
She said tenants weren’t after gold-plated kitchens, and at the very basic level, landlords needed to lift the rental standard inline with owner-occupied homes.
“Tenants are sick and tired of feeling like second-class citizens. I think landlords need to recognise that it’s not about putting the lipstick on the pig, so to speak, but just making sure it’s not a pig in the first place.”
Ambrose said landlords needed to meet the market where it was at and that meant reducing rents as well as ensuring quality.
“Making sure you have a well-maintained home or flat is absolutely paramount.”
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