Tenant wins $600-a-week rent hike case

A Queenstown tenant has scored a rare victory after challenging a 63% rent increase from $950 to $1550 a week.

The recent Tenancy Tribunal decision said the tenant of a Queenstown Hill property made the "market rent" application to the tribunal after their Northland-based landlord gave notice of the rent hike.

The tenant claimed the owner’s intention was to "get us to move out so they can turn it into an Airbnb".

Queenstown Citizens Advice Bureau manager Tracy Pool said big rent rises, sometimes by hundreds of dollars a week, were a recurring issue in the resort town.

Tenants usually decided to look elsewhere, only to find the alternatives were either non-existent or similarly unaffordable, Ms Pool said.

Market rent applications to the tribunal were a "catch 22" as the onus was on tenants to produce market rent data for the property, yet it was not in property management companies’ interests to sell them that data.

That meant "very few" tenants were prepared to spend the time, cost and effort involved.

In the decision, tribunal adjudicator Jack Tam said the tribunal ordered the rent be reduced to $1200 after an initial hearing in late 2022, but the landlord appealed the order in the district court.

In an August decision, Judge Chris Tuohy quashed the order in the district court and ordered a rehearing, saying the adjudicator’s first task would be to determine the market rent based on hard data.

The application would fail unless the tribunal could establish the rent being sought exceeded market rent by a "substantial amount", Judge Tuohy said.

In written submissions for October’s rehearing, the tenant said they called at least eight property management companies asking for a paid market rent evaluation, but they had all refused, Mr Tam said.

The tenant claimed the companies "all know each other" and worked together for the benefit of landlords.

They finally paid a registered valuer $747.50 for a rental appraisal, who assessed the market rent at $1200.

After considering that appraisal and rental data provided by the landlord’s property manager assessing the property’s market rent at $1400, Mr Tam made an order reducing the asking rent to $1350.

He declined the tenant’s application for the landlord to pay $2280 in costs — for the valuer’s report and six days’ wages foregone to attend the hearings and work on the claim — because the Residential Tenancies Act did not provide for such payments.

The decision was one of only four last year dealing with market rent applications for Queenstown rental properties.

In the past three years, there have been only 12 such applications by tenants in the resort town, figures obtained by the Otago Daily Times under the Official Information Act show.

The Ministry of Business, Innovation and Employment, which provided the data, was not able to say how many of the 11 other applications resulted in a rent reduction order.

— Guy Williams, PIJF court reporter