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Thousands of Bay tenants could be in for a shock as experts predict rents will continue to rise this year as demand for rental properties soars.

Trade Me figures show there was a 30 per cent drop in the rentals advertised on its site in 2014 and Ross Stanway, chief executive of Realty Services, which operates Bayleys and Eves, said demand was higher than supply for good rental properties.

Rental rises were inevitable because people wanted to live and work in Tauranga. “This is a reality that has been happening for some time and I don’t think that will slow down, quite frankly.”

Tauranga Rentals owner Dan Lusby agreed and said there would be more rent increases on the horizon.

It reviewed rents every six months and tended to raise them by about 5 per cent a year, he said. “It’s only fair owners get at least 5 per cent every year if we can. But it depends on the market, we would rather put the rent up $10 or $20 a week than $40 or $50, that is for sure; it makes it too hard on people.”

Tauranga Budget Advisory manager Diane Bruin said the service was seeing an increase in the number of tenants seeking financial advice after being hit by big rental increases.

One client’s rent had gone from $200 to $240 but she believed others had faced bigger increases.

“Often there isn’t room to stretch the family budget and it immediately affects money left for food. We can initially assist with food parcels to assist but this is not a long-term answer.”

Landlords were trying to achieve market rents but she believed there should be a cap on how much they could increase their rent by after a rent review. A maximum percentage increase should be written into the tenancy agreement, she said.

Tauranga resident Ross Marsh said he was shocked when told after a six-month rent review that the cost of the four-bedroom home in Papamoa would rise more than 10 per cent from $470 per week to $520.

The 30-year-old said he was fortunate to have saved enough money for a deposit to buy a home of his own but those less fortunate would be at the mercy of landlords.

“We are looking to buy, however, it’s getting to the point were it will be impossible for people to save a deposit because rentals are so high,” Mr Marsh said.

The Government needed to introduce legislation to protect tenants from large hikes, he said.

Hannah Collins said her rent had been increased from $530 to $580. She rents a three-bedroom home in Mount Maunganui, one street back from the beach with two other flatmates and they had to move out for six weeks over the holiday period.

“None of us were very happy about it but there is nothing we can do. It is just too difficult to find another place.”

She supported the idea of writing a clause into the tenancy agreement that would effectively cap the increases “then you know what you are agreeing to”, Ms Collins said.

Tauranga Property Investors Association administrator Lindsay Richards said investors who were not “locked into a rental property will run a mile” if such legislation existed.

“That is very scary … a communist-type economic policy, it does not work in the long term. Market forces are what needs to apply for economics of scale for efficiencies, it’s the way that we do things otherwise people won’t bother.

“And there will be a shortage of rental properties pure and simple because people won’t invest if there is risk that there is going to be price control.”

A spokesman for Minister of Housing Nick Smith said the Government was not considering caps but landlords could not charge more than the market rent. Ministry of Business Innovation and Employment senior communications adviser Tamara Lovett said tenants could apply to the Tenancy Tribunal if they thought their rent had increased too much and it could make an order reducing the rent in line with the market rent for the property.

By the numbers

Market median rent for a four-bedroom house in Papamoa, $450, top 25 per cent, $470

Mount Maunganui, three-bedroom market median rent, $390, $420 for top 25 per cent.

Market rent is described as what a willing landlord might reasonably expect to receive and a willing tenant might reasonably expect to pay for the tenancy, in comparison with rent levels for similar properties in similar areas.

– Ministry of Business Innovation and Employment

Bay of Plenty Times