If 20 per cent of landlords in Wellington wanted to sell, about 5250 properties could land on the market. (File photo)

Moves by the Government and Wellington City Council to force improvements to the capital's rental homes could end up forcing a massive selloff by private landlords, property experts say.

While that could help to create more affordable housing, it would exacerbate the rental squeeze in a city with a growing student population.

The council's rental warrant of fitness, combined with the Healthy Homes Bill still making its way through Parliament, could lead to as many as 20 per cent of Wellington landlords to quit the rental market and put their properties up for sale, Bayleys Real Estate Wellington regional residential manager Grant Henderson estimated.

SUPPLIED Bayleys Real Estate Wellington regional residential manager Grant Henderson says some veteran private landlords might see the coming changes as a sign that it was time to sell. (File photo)

That could lead to more than 5200 homes flooding the market.

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About 85 per cent of rental investors owned fewer than three properties, and they would be hit hardest by the coming changes, Wellington Property Investors' Association president Richard Bacon said.

JOHN NICHOLSON/STUFF The standard of properties may improve, but rents are likely to rise, and fewer rentals might be available. (File photo)

It could force them to go one of two ways. "That's putting rents up, or deciding that rental property is too difficult.

"Amateur property investment is just going to disappear, because the cost of maintenance is too high."

Henderson said many private investors held on to their properties for a long time, particularly in Miramar, Lyall Bay, Mt Victoria and Kilbirnie, and not all of them maintained them to a good standard.

ROBERT KITCHIN/STUFF Financial adviser and rental property owner Joseph Williams in one of his properties that failed Wellington City Council's rental warrant of fitness test, even though it was built only seven years ago. (File photo)

"People have had these properties for 35 years. Now they're thinking, 'This is going to be tough on us, and it's time for us to escape'."

Trade Me head of property Nigel Jeffries agreed many landlords would sell rather than upgrade their properties, and rents would rise.

But he said: "We see moves to improve New Zealand's housing stock as a positive thing.

"Outdated and substandard properties will get a much-needed upgrade, which can only be good for the market."

Financial adviser and rental property owner Joseph Williams said potential tenants had told him they were looking to move because their landlords were selling.

Williams took up the rental WOF for his one of his properties, in Johnsonville, but it failed. Currently, he was installing ventilation systems and heat pumps in three of his properties, at a cost of more than $6000.

Grant Foggo, director of property management company Comprende, said that, with housing as the Government's main policy priority, the rental sector would "significantly change" for the better.

He estimated 10 to 15 per cent of landlords in Wellington might sell, and "passive investors" would be affected the most.

Rents would increase, he said, as the policy changes were "a massive expectation to put on landlords all at once".

"If you're renting a property for $300, and you suddenly have to spend $40,000 on it to bring it up to standard, then of course your rent is going to go up."

Wellington City Council's rental WOF is currently voluntary, and few landlords have so far taken it up. Meanwhile, the Healthy Homes Bill – which would enforce minimum standards for heating and insulation, ventilation and drainage – passed its second reading in July.

A council spokeswoman said the WOF would remain until a government housing standard policy was formed. If the voluntary scheme was unsuccessful, a mandatory scheme might be necessary.