Auckland landlords who tried to increase their tenants’ rent by $80 per week after the federal government closed a property tax loophole have been overruled by the Tenancy Tribunal.
In January, landlords Jeffrey and Karina Wong tried to increase their tenants’ rent, for a three-bedroom Seventies home in New Lynn, from $570 to $650 per week.
In a letter to the tenants, the Wongs wrote the prices of proudly owning a rental property had elevated following “change in tax laws to remove interest deductibility for landlords”.
This yr, the Government introduced in new guidelines that now not allowed landlords to write off their curiosity prices in opposition to the tax on their rental revenue.
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The Wongs threatened to promote their rental property, saying the modifications had made letting it out uneconomical with out a rent rise.
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The landlords claimed the home was “stand alone” and subsequently may command a excessive rent, however the tenants efficiently argued an adjoining home meant it was solely “semi-detached”.
“We are not able to simply absorb these massive cost increases. This would make owning the property uneconomic, and we would then seriously consider whether selling it would be the best option.”
The Wongs gave their tenant an ultimatum: to pay the brand new rental fee or discover a new dwelling, the tribunal heard.
“If you wish to pay a lower weekly rental amount, you are completely in your rights to end this tenancy and shift to another property,” they wrote to the tenant.
However, tenants Caroline Fergus and Thomas Lorenzo efficiently utilized to the tribunal to have their proposed rent rise decreased – and finally had to pay simply $6 per week extra.
The Residential Tenancies Act permits the tribunal to order a landlord to scale back rent if it exceeds the market fee “by a substantial amount”.
Adjudicator Rex Woodhouse decided the rent ought to be $576 per week, primarily based on knowledge from bonds lodged with Tenancy Services in addition to listings from comparative leases from Barfoot & Thompson and on Trade Me.
Data launched by Barfoot & Thompson this week confirmed a mean weekly rent increase in Auckland of about 3% in contrast to 2021.
Supplied
Barfoot & Thompson director Kiri Barfoot stated Auckland rents had been rising after a “slow-moving” couple of years.
This was an increase from a mean $597 weekly rent in March 2021 to $616 in March this yr throughout the corporate’s 16,000 managed properties.
Barfoot & Thompson director Kiri Barfoot stated rising rents had been doubtless due to rising compliance prices, inflation, rates of interest and decreased tax deductibility.
“We are also likely seeing a slight rebound off the back of a period of frozen and slow-moving rents during the challenges of 2020 and 2021,” she stated.
South Auckland recorded the best share increase in Auckland at 4.47%, whereas the inside metropolis noticed the bottom at 1.5%.
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