New Education Minister Chris Hipkins and Housing Minister Phil Twyford. Twyford said the long term solution is increased supply.

Renters are blaming a new $50 boost for students for a spike in Wellington rents, but landlords say the market is simply tight.

The price hike is particularly acute in the capital, where 30,000 students compete with highly-paid young professionals and families increasingly priced out of the property ladder.

The average rent for new leases of an entire property in Wellington increased $42 between November and December 2017 to $482.

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The Ministry of Business Innovation and Employment (MBIE) stressed that rents in Wellington traditionally rise over the summer months when many tenancies change hands. Between November and December in 2016 mean rents increased by $32. Averaged out over the past three months of each year rents rose a more modest $26 between 2016 and 2017.

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The new Labour government increased all student allowances and the living costs portion of loans by $50 a week from January 1, 2018.

Several students say that in anticipation of the boost, their rent has been hiked by landlords specifically citing the extra cash.

Wellington student Teri O'Neill, 19, lives in a four bedroom flat near the central city and was paying a combined $185 for her room and expenses.



"Two weeks after Winston [Peters] decided the Government, the landlord said from the first of January, because some of you are on living costs and allowances, we are looking to increase the rent to $230."



This per-room figure includes roughly $15 for expenses. The rent rise applied to all rooms despite the fact that O'Nell lives with two young professionals.



O'Niell said she was supportive of the boost to student allowances however, saying the previous figure of about $175 was not enough for people to live on, but she was shocked by her landlord's behaviour.



"Especially because I don't take a benefit myself. It felt a bit like we were all being punished.



"The policy that was put in place was for students who can't afford rent as it is. I work 25 hours a week but that barely coves the cost of rent and food."

AMY JACKMAN/STUFF NZUSA president Joanthan Gee: "At the moment students are competing with potential first home buyers who can't afford their first home, families who can't afford homes, and young professionals."

New Zealand Union of Students' Association president Jonathan Gee said he had heard several stories similar to O'Neill's.

"We support that $50 increase to meet basic needs. But there is that fear that because there is a housing crisis we know rents will increase," Gee said.

"At the moment students are competing with potential first home buyers who can't afford their first home, families who can't afford homes, and young professionals."

Rents for new leases in Christchurch and Auckland rose a more modest $14 and $15 between November and December.

Trade Me's head of rentals Aaron Clancy said many landlords would see the boost as an opportunity.

"There's no doubt that private landlords will see this as an opportunity to increase their rents," Clancy said.

"But this is across the board - we are all time highs for rent and demand in Wellington. It's perfect timing for a landlord to lift rents knowing that this is going on."

He said Wellington was "ripe" for higher rents as there were plenty of high paying jobs in the city and not much new residential development.

"If you look around there aren't cranes everywhere."

In fact there were 462 less active bonds in December 2017 than November 2017.

"Labour's first year free will increase student registration. Even if it is just a small amount we still need to find a home for these students," Clancy said.

The Government estimates the tertiary fees-free policy will draw in an extra 2000 students nationwide this year.

But head of the Property Investor Federation Andrew King doubts more than a handful of landlords would raise rents solely because they knew students had more money in their pockets.

"I cannot imagine that people have just said 'well there's a student in this house they've got another $50 I'll put it up $50'. And if they did that there is a very good chance that would be against the law."

Any landlord who charges significantly above "market rent" can be taken to the tenancy tribunal. Market rent is calculated monthly by MBIE and is based on bond data for similar properties in the area.

However, King said some landlords may have been reminded by the increase in allowances to check their rents were in line with market rates.

"Things like knowing tenants have more money may prompt them to look at what market rents are and rise them to match that," King said.

He also said many landlords would be looking to get more money from rental yields as the Government were moving to stop a tax break that allows investors to claim losses against their other taxable income and increase rental standards.

"The cost of providing a rental property has gone up tremendously."

Housing Minister Phil Twyford said in December that rent increases were concerning.

"There is always the danger with a rent supplement, like the accommodation supplement," Twyford said.



"The long term solution is increased supply in the market, that's the only thing that will stabilise rents."

Twyford is looking to bring in major changes to the Residential Tenancy Act by the end of 2018, including a provision that would limit rent increases to once per year (up from once every six months) and require a formula for rent calculations to be included in every tenancy agreement.

MBIE's manager of tenancy compliance Steve Watson said landlords could raise rents but there were limits.

"With the correct notice period, and if the tenancy agreement allows, a landlord can decide how much to increase rent. However, if a landlord is charging significantly more than for other similar properties, the Tenancy Tribunal could make an order for it to be reduced," Watson said.

"The tenant will need to provide evidence that their rent is substantially higher than rent for other houses in the area similar to the one they're renting."