Comment

Up close and personal with Auckland’s rental crisis

A shortage of properties, a host of younger people who can’t afford to buy their own home, and the Airbnb effect, are having a big impact on the Auckland rental market, as Newsroom’s Mark Jennings discovered when he went to look for a flat.

I’ve been lucky when it comes to housing. Years in the family home, then a longish-term rental. But that all changed when my landlords needed to re-occupy their property. Suddenly I was flat-hunting again.

It’s a sobering experience.

The internet, by which I mean Trade Me and the websites of various property companies, makes it relatively easy to find what’s out there. In fact, the process is almost entirely digital.

If you want to physically view a property you apply online and then get a text message with a time.

You’re told to confirm or unsubscribe. On the day you get a text reminder.

The only contact with a human is when you turn up to the viewing and meet the agent or property manager.

At first, the text confirming a time seems almost intimate and has you thinking that you are personally invited to view a property. But arriving at the address you realise that’s not the case at all. There are carloads of people arriving to see the house at the same time.

Often as I walked up a driveway anxious prospective renters would ask me “Are you the man from Barfoot’s? I don’t think I look like an agent, but you excuse everyone as house hunting is a stressful business.

While you wait outside, a sort of bonding takes place. Everyone knows they share the same predicament.

“How long have you been looking?” “Where do you think tenants park their car?”

More experienced house hunters reveal themselves: “There is a lot of rubbish out there, I wonder if this one will be rubbish?”

Just about all photographs in online listings I saw bore little resemblance to reality. Why do they do that? It is not as though you are not going to notice.

The agent will generally be late as Auckland’s hopeless traffic screws with their company’s drive for efficiency. Property management is a competitive business and now that tenants can no longer be charged letting fees, margins are under pressure - or at least that’s the claim.

Clutching a bunch of keys and looking constantly at a smartphone, the agent’s first words are usually apologetic. Greetings are perfunctory. This is a transactional business, they are mostly polite and professional, but it is not about building customer relationships.

The problems of the rental market seem to be twofold. Not only is there a shortage of rental properties, but the properties that are “out there” are often poor quality. And I’m not talking about the cheap end of the market. It is hard to imagine how bad that might be. Places with price tags of $900 a week have rundown kitchens and bathrooms. Stained carpets are common and if there has been any repainting, it never seems more than a “quick lick” or a patch up job.

It is hard to blame the agents, and most defend themselves with the standard “We work with what the owners give us”. But in the same way that real estate agents embellish houses they advertise for sale, there is a high degree of unnecessary embellishment around the condition of rentals.

Just about all photographs in online listings I saw bore little resemblance to reality. Why do they do that? It is not as though you are not going to notice.

What are often described as bedrooms, particularly third or fourth ones, would struggle to make it as small storage rooms.

When I turned up with all the other candidates to look at one three-bedroom property, builders were still turning the one smallish bathroom into the third bedroom and a laundry area into an even smaller bathroom. Most of the prospective tenants grumped at the agent and left.

But the situation is starting to get desperate, particularly for younger people who need to put together a group to be able to afford the rent. Several agents confided that younger people will always miss out to older tenants with good references.

There are clearly opportunities for exploitation and the Government’s plans to stop landlords evicting tenants on 90 days’ notice without giving a reason, and the idea of limiting rent rises to one a year seem sensible.

So too was the National government’s initiative making it mandatory that all rental properties be properly insulated before July 1 this year.

But these steps, and calls by a tenant advocacy group to limit rent rises and link them to the proportional increases in the minimum wage, are likely to only exacerbate the two biggest issues – a lack of rental properties and a growing population of renters.

Then there’s the Airbnb problem. When I was looking at one inner city apartment, the affable owner, who was doing a spot of painting, mentioned he had four rentals in the area.

“I’ve turned three of them into Airbnbs, but this one will stay as a longer-term rental ... for now,” he told me, adding that a lot of apartments in the large complex had been converted to Airbnbs.

So, many properties are now servicing the burgeoning tourist trade, rather than the local rental market.

While Airbnb is no doubt a tougher, more labour-intensive business model for landlords than a ‘set and forget’ rental, it’s more flexible and the returns can be higher.

And this is a problem. In cities like Barcelona, Toronto and Amsterdam, the long-term rental market has been hit so badly by Airbnb that local authorities have been forced take action.

The same has happened in Auckland and Queenstown, where councils have introduced higher rates and tighter regulations on short term accommodation, including full commercial accommodation rates for anyone renting their Auckland property for more than 180 days a year.

But if you are one of the thousands looking for somewhere to rent it doesn’t appear to have made a whole lot of difference. In the end I found one that suited my needs but it took a slice of luck.