RSS Feed

Unconventional ways to increase rent

Thursday, May 09, 2019


This week's question comes from John (paraphrased):  

With respect to rent increases can you:

1. Give notice for two or more phased increases e.g. rather than one notice for $20 increase in 60 days give one notice for two $10 increase, one in 60 days and another in 240 days)? 

2. Have as a condition in the tenancy agreement to increase the rent by $x per head for any additional tenant/flatmate who moves in during the tenancy?


No to both, we are afraid. 

A quick recap on rules for increasing rent (not covering scenarios involving fixed-term tenancies or tenancies that are subject to an annual rent increase process): 

- Generally, you can only increase rent once every 180 days. However, if work has been done to the property or its facilities or the nature of the agreement has changed to the benefit of the tenant then you and your tenant can agree to an increase even if that increase falls outside of the 180-day window.  Returning to normal rent after it has been reduced for a period is not considered a rent increase. 

- All increases must be properly notified in writing: 60 days (+ service time) for normal tenancies and 28 days (+ service time) for boarding house tenancies. 

- The written notice must include: how much the rent is increasing by and the date the increased rent will take effect from. The landlord should also retain a copy of the notice.

- You are entitled to collect extra bond money with each increase. The amount must be reflective of the increase and the rate of bond collected at the start of the tenancy. For example, if at the start of the tenancy you had collected three weeks rent as bond then a $10 per week increase would entitle you to collect from your tenant and lodge to the Bond Centre an extra $30.

See this and this for more information on rent increases. 

Related resource: APIA rent increase letter template

Turning back to John's questions and assuming that the tenancies he is referring to are neither fixed-term nor subject to annual rent adjustments, we will answer in parts:

To the first part of whether you can essentially give one notice covering two increases, we conclude no. Although a plain reading of s24(1) of the Residential Tenancies Act does not throw up any specific objection to a phased notice (so long as both increases meet the statutory requirements above) s25 renders the practice problematic. By giving the Tenancy Tribunal the power to review rent increases and bringing exorbitant rent back in line with the market, s25 sends a clear message that the basis for rent increase must be that of market rate rather than the whims and needs of the landlord and/or tenant. Our view is that it would be hard-pressed for anyone to predict market rent more than 240 days out to set (phased) increases accordingly.  Additionally, when we weigh up the admin time saved by serving one notice rather than two against the risk and hassle of a potential Tribunal hearing, we just don't see the value of issuing a phased notice. For these reasons, we do not suggest decoupling increases from their respective notices. 

To the second part of whether you can anticipate an increase in occupants and conditionally increase rent in the tenancy agreement on a per head basis, we have also concluded no. Firstly, any increases will have to meet the above conditions (time and notice). If the flatmate moves in within the 180-day window then the condition must fail. Additionally, a flatmate moving in does no absolve the landlord from the obligation to give a written notice for rent increase. A conditional increase in the tenancy agreement is not a written notice to increase and cannot possibly meet the requirements of a written notice (i.e. specifying the date from which the new rent applies) even if it is capable of being a written notice. 

A landlord may wish to argue that permitting a flatmate moving in would benefit the tenant in a way that warrants setting aside the 180-day rule but that argument must also fail. Firstly, there has to be a specific action by the landlord to improve the property, facilities or services in a way that increases the value and benefit of the tenancy agreement to the tenant. In this instance, not only is it doubtful that the value of the tenancy has been increased for the tenant, the landlord hasn't, in fact, acted. Setting aside the issue of value, both parties still have to agree to the increase outside of the 180-day period. That agreement is absent under this scenario. Our view is that the original tenancy agreement with the condition to increase rent on a per head basis cannot be considered an agreement to increase rent in this instance. To do so would make the tenancy agreement an agreement to agree which is generally problematic and not always enforceable. 

If the landlord's intention is to have tighter control on the number of occupants living in the rental property, rather than toying with legal acrobatics, we would suggest keeping things simple by doing the following: 

1. Set a maximum number of occupants in the tenancy agreement and one overall rent that covers the entire tenancy with no conditions attached; 

2. When the number of occupants exceeds the maximum, terminate the original agreement and set up a new one. This is a good opportunity to negotiate a new rent with your tenant. 

Note that this piece is not intended as legal advice. In answering John's questions we have researched the subject, spoken to our industry partners and relied on common sense to arrive at these answers. We recognise that every landlord has a different risk appetite and may choose to do things differently. That is not to say one is right and the other wrong. But being a conservative organisation means that we prefer to err on the side of caution. It is our view that rent increase is a simple and straightforward process that need not be complicated. Balancing risk against reward, we simply do not see any practical value to be gained by entertaining either of the scenarios suggested here. 

Do you have any tenancy related questions? Write to us at admin@apia.org.nz or hit us up on our social channels here and here


Recent Posts


lvr termination unitary plan Kris Pedersen Mortgages and Insurance interest only property cycle building house prices property management trust capital gain yield first home buying p lab letting fee development anz apia buying housing bubble Must knows minor dwelling finance rent Question and answer privacy maintenance bad tenant tenancy issues renovation Level 4 property maintenance khh rta reform cat skill shortage insulation warm up new zealand Must know Holler kiwibuild recycling equity tenancy services ring-fencing bond form scotney williams subdivision TCIT mortgage Guest blog partners damage debt enforcement mindset personal growth extractor fan HSWA Landlording advice sublease worksafe rent arrears quiet enjoyment parry v inglis holiday house data security ventilation ask an expert asbestos buyer's agent interest rates market auckland council trademe bankruptcy airbnb relationship warren buffett investment strategy short-term rental cash-flow fixed-term tenancy meth boarding house productivity early termination heater brightline shower dome investor CoreLogic off the plan income Tribunal case study Investment tip shortland chartered accountants Sponsored post cgt Jeff Bezos return tenant sale and purchase ird market rent Investor story reserve bank beginner investor property apprentice commerce commission landlord financial advisers act water bill Property (Relationships) Act legal banking heating HHGA housing affordability Market report wealth creation retaliatory notice rental market initio opes partners government negotiation gluckman report structure principal and interest positive cash flow rta rent increase covid-19 HHS Case study auckland inspection anti-social behaviour robert kiyosaki RBNZ rtaa2020 property value equity property CCC tenancy tribunal barfoot and thompson management RTAA 2019 wins letting television How to election2020 trespass meth contamination rental wof clnz Q&A LIM nzpif smoke alarm sale and purchas re agent education will election 2017 Gluckman Editor's Choice winz business speculator tax Standards New Zealand buying rules ocr watercare insurance DTI bond twg report


Introducing Our Partners
Principal Sponsor - Kris Pedersen Mortgages & Insurance logo Gold Sponsor - Barfoot & Thompson logo Gold Sponsor - CoreLogic logo Property Apprentice logo The Insulation Warehouse logo The Renovation Team logo The New Zealand Property Investors' Federation logo
09 360 2376

The Tenancy Practice Service and TPS Credit Control work closely with the Auckland Property Investors' Association. Our vision of bringing helpful resources, documents and high quality services to Auckland Property Investors and Property Managers is shared by APIA, so its a partnership that works well. 

The Auckland Property Investors' Association is a great organisation for those who want access to advice and information from a range of industry experts and partners. 

Mathieu Holt- Managing Director, The Tenancy Practice Service & TPS Credit Control
Through the Association I found the channels and methods to fund the purchase of property I never dreamed about. Grant Brown

All round it has been one of those things Neil and I felt was really worthwhile belonging to. We have learned so much it has just built our confidence in what we are doing.

Janice Bieleski
I read two articles in the monthly magazine that saved me over $5,000. That is my membership fee for the next 26 years and I am sure I will learn a whole lot more! John Duncan
Fantastic organisation. The networking opportunities are brilliant and provide us with information and opportunities that cannot be obtained anywhere else. We learn something new at every meeting and we've been in this game for nearly 20 years. Pauline and Gyanen Kumar

I find the information obtained from various APIA meetings very useful in guiding my own property investment and rental management.  I also enjoy the networking opportunities with like-minded investors.  I am inspired by other investors’ success and find the more experiences and knowledge that I share with others, the more confident I become.  

Thanks to all APIA event organizers and administrators for your brilliant work. 

Stella Shao

I like talking to people and learning from their experience because it gives me the confidence to invest well. I think it is a knowledge thing. I now know I am doing things the right way.

Stephen Weatherall

My APIA membership has become a total success.

Every time I attend a monthly or regional meeting I come away with so many useful and positive tips that have added value to my property investments and management.

Not only that, the website is a great place for practical advice and useful information. It has now evolved into an important resource for my business.

Talk about value for money! The discounts I have been getting at Bunnings when I present my APIA membership card have more than paid for my annual subscription!

Tim Duffett, Plan A Investments Limited