Determining Market Rent

[rockabella]

So a new tenant is in the legal profession. Yes I can see you smiling...

Viewed the property, signed the tenancy agreement and then says it's above market rent and wants a rent reduction of $100 per week. Has applied to TT for an independent review under section 25.

I have supporting evidence from the property next door (mirror image but smaller and only single garage) at the same rent. The rent is at the lower end of the range from a rent appraisal commissioned last month. However it still sits higher than the MBIE figures.

Does anyone have any experience with this clause in a similar situation? I would have thought this clause was more intended for where a fixed term rolls onto another and the rent goes up quite a bit.

Any help much appreciated, particularly other TT decisions that may assist.

[artemis]

Oh dear, that's not a great start to a relationship!

When you say rent is higher than MBIE figures, do you mean higher than the upper quartile?

Have you looked at this page:

http://www.dbh.govt.nz/mbie-and-trademe-rental-figures

It compares TradeMe rents with bond rent info, and explains why TM figures tend to be higher than MBIE figures. Might help. Plus a few printouts of similar properties, including in next door suburbs, from TradeMe might help as well.

Might pay not to post too much info on here, you never know ....

Are you aware that giving notice in the circs will probably trigger a TT application to set this aside as retaliatory?

Don't have TT info personally, but would just say hang in there, gather plenty of data, write up a long* and logical response to read out in full at the hearing, and finally treat it as a 'personal growth experience"!

* I am a believer in the 'blind them with science' approach. For example, as well as the next door place and the rent appraisal, step through several printouts from (eg) TradeMe, setting out in detail similarities, differences and conclusions. I would say don't say s/he is gaming the system - let the facts speak and the adjudicator come to that conclusion.

Keep us informed.

ETA - did you check the name on the TT online database in case this is not the first time?

[artemis]

Have offered to reduce the tenancy or terminate it so can take up a cheaper property. Tenant doesn't want to move. Likes it there...

Well that's a surprise.

Hopefully Glenn or Keys will be along as they both have heaps of experience at the TT.

[PTILoveYou]

Usually Trademe is a good tool to use too.

[Lovethiscountry]

Can't believe it. Viewed the property and signed the tenancy agreement knowing what the rent is.

[flyernzl]

There is also the NZPIF rent calculator at http://www.nzpif.org.nz/items/view/56592/ which is available for anyone to use.

Don't forget that it is up to the Tenant to prove their case, not you to prove their claim is false.

[artemis]

Not wanting to teach you to suck eggs, but suggest you are very careful to follow the letter of the law in all respects during the tenancy as it may not end well. A wise old lawyer once said to me that contracts should be drawn up as if they will be used in anger. Even though most will stay in the bottom drawer for the duration.

So, for example regular inspections, properly notified and documented incl photos. A record of all interactions kept. Proper notice given at the end of the tenancy.

[Lovethiscountry]

If the property next to yours is rented for the same amount, and is smaller with only a single garage, that's good for your defence.
Step up to the mark and do everything absolutely correctly in a nice civil way.
Good advice from artemis and flyernz

[Keys]

Has applied to TT for an independent review under section 25.

Have you received a copy of the application?

[Keys]

A post scraped from my face book page.

Market rent, what drives it?

It's an old saying but still relevant. Supply and demand.

This is most acutely found here in Christchurch post earthquakes as the insurance companies wade in to secure accommodation at a (relatively) cheap rate compared to motels for their clients. Together with thousands of homes being written off as unlivable there is a huge shortage of rentals here.

Scenario, three applications of equal quality are received for a property. One of the three offers $50 per week more than the asking price. That one is successful and the rent value flows through to the statistics available for landlords.

Second scenario. A property is advertised and gets no applications at the price advertised. The landlord either holds out or drops the asking price.

It may not be palatable to hear but the rental rate achievable on any property is ultimately set by the tenant.

How many applications did you receive?

[Eugene]

Is it a fixed term tenancy? If so they have only the two weeks after moving in to contest the rent, I think.
I had the same thing happen to me this year. Miserable blighters didn't stop complaining.

[rockabella]

Wise words Artemis.

Keys, yes have the application lodged at TT. It's based on trademe and MBIE. Tradme is fine to argue. It's tricky as the MBIE figures are lower but it's not a good measure of 'apples for apples' in this case.

Eugene, They have 90 days to get an independent review.

I had a lot of interest and proof of enquiries. Received other applications and the decision came down to 2 applications. Unfortunately I chose the short straw and have to live with the consequences.

I would have thought too that the tenant is the one who ultimately set the rent. They conduct their own market research in the market and ultimately choose the property best suited to their requirements and wallet. If it didn't represent market value tenant wouldn't have signed.

[Keys]

I had a lot of interest and proof of enquiries. Received other applications and the decision came down to 2 applications.

Re-read Section 25 (3) {a willing landlord might reasonably expect to receive and a willing tenant might reasonably expect to pay} and also note the words in 25 (1) {exceeds the market rent by a substantial amount}

Market rent has been established by the number of applicants and the tenant must prove that your rental exceeds the market rent by a substantial amount.

Having said all of that, I wouldn't be at all surprised if you get told to reduce the rent a little. Seems to be the way.

Just letting you know.

[skid]

Im both intrigued and horrified by your situation.
Im assuming that they are paying the original agreed rent in the meantime as they are required to do.

Makes you wonder on the fixed term--If the rent is not fixed-then why should the term be fixed--It is an agreement to be renting this place for a fixed term at the agreed rent Flat=rent (for a fixed term)

It seems to be breaking the basic laws of a contract. You are trading a service or asset for a certain amount of reward $$

I personally would let them know at the TT that you have given them the opportunity to end the tenancy if they are not happy with the rent and you will rent to one of the other applicants that were (market rent=what people are willing to pay)

It would be interesting to know what the adjudicator would do, if in response to him asking you to reduce the rent ,you simply said I cannot do that, but would be happy to end the tenancy and rent to one of the other applicants that were more than willing to rent at that amount
since in effect, they are asking to break the terms of the contract.

[klauster]

Well, not a good start which projections to the end.
I go along with spaceman’s reply and also "market rent" is what the renter is willing to pay. He has made his way through the application process. Why would he expect a reduction, is something missing promised to him, something not working etc