Renting Houses In NZ – A Manual

This manual to renting houses was first published on Expatexposed.com, a not-for-profit self help and advice forum for migrants to New Zealand and one of the few (only?) uncensored NZ immigration forums on the net.

This is a primer on renting property in New Zealand and is essential reading for everybody migrating to New Zealand:

Renting houses in NZ – a manual.  Posted: Fri Aug 14, 2009

One of the biggest culture shocks I got from NZ is the way rental houses are being handled here. In many countries, renting a house is a respectable alternative to buying a house. Not so in NZ, and this different attitude of landlords towards tenants can become a big pitfall for new migrants who aren’t careful.

The background

In NZ, many rentals are being rented out by private individuals. The way to save for a retirement here is not by saving money, but by buying houses. By the time your retirement starts, you hope that the price of your house(s) has increased enough to build you a good nest egg.

To pay the mortgage of your speculation house, you put a tenant in there. You will charge him rent to cover the repayments of your mortgage, and in the end you will have a house for free.

Renting a house is therefore not a respectable alternative to buying a house, because it is not cheaper, even often more expensive. You only rent a house if you are a poor loser who isn’t able to talk a bank into providing you a mortgage, for example because you can’t save up a 20% deposit.

As a tenant you are not a customer, far from it. The landlord is actually doing you a big favor for letting you live in his house, and you must be very thankful for that. You are just a second-rate person, a cash cow that by all means should not burden the landlord with trivial or less trivial problems, because he doesn’t need to provide you any service at all.

Well yes, officially he does have an obligation to provide service and keep the rental house livable, but for rental houses, promising service is more important than actually providing it. If you don’t like it then just piss off, there are enough other losers standing in line for his house.

As a tenant you do have the legal possibility to sue the landlord at the tenancy tribunal for a very low fee (I think it is only NZ$20). For example, to demand the installation of a heat pump he promised, or to get a reduction in rent if he fails to do that. You may win this, but beware. The tenancy tribunal publishes all cases on line, so everyone can see who sued whom, and who won. If you later want to rent another house, and the new landlord sees you have sued another landlord he will never rent out his house to you, because you are difficult. That’s the way the small society in NZ works, shut up and swallow or you will be in big trouble.

Anyway, after arriving in NZ you’ll probably start out with renting a house, as many people don’t buy a house right away. One of the options is to start looking for rental houses offered by a real estate rental agency. These companies sometimes have their own houses, but they mostly work as intermediaries for private landlords. This means that not you, but the owner of the house is their customer. The company only chooses the tenant, makes sure that he treats the house neatly and pays the rent on time. So they have done a good job if the landlord is satisfied and the tenant is kept submissive.

House hunting

And then the big search starts: which houses on the company’s list do you like and aren’t too expensive. You absolutely cannot rely on photos made by the rental agency (this also applies to buying houses for that matter). I have never seen as skillful a photographer as the Kiwi real estate agent. Misleading is the only correct word for it. The house in the picture looks great, but you can’t see the garbage dump in the garden, the sky blue kitchen with a 20 year old electric stove with only one element in working order, or the neighboring deteriorated back street houses.

Even generally knowing the locations doesn’t say anything, at least in Christchurch (I don’t know other cities too well). The first 100 meters of a street can be gorgeous, and the next 100 meters can be a complete dump. At home I was used to whole areas being either good or bad. Not so here. Seeing is believing… the only way to find out if you really like a house and the neighborhood is to go there yourself. First by taking a look from the street (a so called drive-by viewing), and if the house still appeals to you, the agency usually can give you the keys so you can go and take a look inside on your own. Sometimes you can’t get the keys so you have to make an appointment for someone to show you around the house.

House inspection

If possible, try to arrange viewings on a rainy day, because it will expose more problems. When entering the house, take care to note if it smells moldy, even if only a little. Look at the bottom of the window frames if you can see any traces of mold. Moisture and mold are really big problems in NZ houses, causing a lot of health issues. Respiratory diseases are very common in NZ and the single biggest cause is a moldy home. If you own a house, you can install a ventilation system to take care of the problem. In a rental house however, you are not allowed to change anything, so it should be good from the start.

During the house inspection you soon notice that you don’t get much value for money here as far as rental houses are concerned. A lot of these houses have very tiny (bed)rooms, are poorly maintained and some are even downright filthy. It doesn’t really help that the houses are rented out furnished, because you can’t choose the carpets and drapes to your own taste, you are dependent on what the landlord has put in there once upon a time.

The poor state of maintenance is due to two reasons: firstly, everything that the landlord has to spend on the house while a tenant is living there is pure loss. Secondly, many tenants are put off by the take it or leave it attitude of the landlords, and as a result don’t really treat the house carefully. And so the catch-22 is born: it makes no sense to put something nice in a house if the tenants wreck it instantly anyway, and the tenants are careless with the house because they are treated badly by the landlord. If the landlord has just replaced the lot, he of course wants to recover the cost as soon as possible, which translates into a high rent.

Finally, after a lot of viewings, and either drastically lowering your standards or increasing your budget (or both) you have found your temporary dream house. Now you have to put a bid on the house and sign the contract. And that’s when the fun really starts…

Making an offer for a house.

In NZ, bidding for a rental house works really simple. Everyone who wants to rent the house makes an offer to the landlord, and the person whom the landlord likes the best gets the house. So if you make an offer, it doesn’t mean that you actually get the house, because you are just one of many who are interested in the house. However, for you, the offer is binding. This means that if you do get the house, you HAVE to take it. For this reason it is not wise to put an offer on two houses simultaneously, because if you get them both you are stuck with both, at least for the minimum lease period you had indicated on the offer.

This process (not being able to put an offer on more than one house at a time) is very inconvenient because it may take the landlord a few weeks* to decide whom he will rent out the house to, and if you don’t get the house, by this time all the other houses you have looked at and liked, are already gone so you have to start all over crisscrossing the city to hunt for a house. Fortunately it usually doesn’t take several weeks but only a couple of days to get the results back from the landlord, but even then many houses you have looked at two days ago are already leased to other people.

Increasing your chances

So, how can you increase your chance of getting the house? Don’t smoke. Don’t have kids or pets (this will be written on the rental contract and a reason to kick you out of the house if you decide to get them later on). Offer a long lease period (9 months or a year). Have a permanent job on a good salary (savings don’t count). And, above all, provide references who can tell the landlord that you are a good tenant, you have kept their house tidy and you always paid the rent on time.

They really dote on references here. Not written references, no, people in the flesh whom they can call and talk to. Whether you apply for a credit card, want to rent a house, or just get a membership card of the video store, they all want to interrogate at least two references (not family and not living at the same address as you) on how you live your life. Even if you apply for a New Zealand passport (we just had a baby here and he will have a NZ passport) you have to provide a photo of yourself with a signature on it of a person – no family and knowing you for at least a year – who declares that you are indeed the person you say you are.

If you thought that after all the nonsensical bureaucratic misery the NZQA and the NZIS have put you through you were finished filling in forms or following idiotic procedures, you are mistaken. Better get used to it, because in NZ, bureaucracy will haunt you for the rest of your life. I always am very reluctant to bother friends with being a reference, but here they know no different – everyone has to go through it once in a while – and generally don’t mind being a reference.

Oh, you don’t have NZ references because you only just arrived? “Well, that’s not very helpful, is it?” That’s what a property manager told us, before she declined us the house 2 days later. If you don’t have NZ references, you better hope that the other people bidding on the house are alcoholic hippies full of tattoos, because otherwise you don’t stand a chance. If all else fails, try to use other migrants you might already know (from message boards or so), or their NZ friends. Use whomever, as long as they want to tell the agency that you are great.

Well, you finally got the phone call that you are the chosen one, and now you have to go sign the rental contract.

Reasonably clean

Before they proceed with the rental contract, the first thing they want you to sign is a declaration that you have inspected the house and that you found it to be reasonably clean. This means that you accept the house as-is, and that it is clean enough. Sometimes the house actually is clean, but many times it can be quite filthy too. However, if you refuse to sign the document that the house is clean, you won’t get the lease. So reluctantly, you sign. You can always clean it yourself.

The next document you have to sign is a statement that at the end of your lease you will leave the house spic and span, and that you will have the carpets professionally cleaned, of which you have to provide a receipt as proof. In other words, they want a declaration that you will leave the house in a cleaner state than that it is now. If you don’t sign, forget the house.

“But… but… the house isn’t exactly clean at the moment…” you try to say before signing the statement. “Oh, no problem at all, we will clean that well before you move in”, they reply with their most honest smiley face. They appear to be exceptionally friendly and helpful, so you believe them, you gullible fool. Wrong… In NZ you will soon find out, promises are for you to believe and for the other person to ignore.

Write it down

Lesson 1: Even though you knew this already, don’t let the friendly NZ smile make you forget: do NOT make verbal-only agreements. Even if it makes you feel pedantic: make sure the landlord writes down and signs everything he promises, either in the rental agreement itself or as an attachment.

Writing everything down not only applies to house leases by the way, but to absolutely everything here in NZ. You are easily fooled by the unconventional friendly attitude you encounter here, compared to your home country. This of course doesn’t mean that everyone tries to fool you here, but I found it was a lot harder, if not impossible, to separate the wheat from the chaff. And better safe than sorry, especially when your future home is concerned.

If the landlord really intends to do as he said, why would he have a problem with writing it down? If he thinks it means that you don’t trust him, well, he didn’t exactly trust you either, wanting to talk to your references…

Having to clean the place is just an inconvenience and writing everything down might seem over the top in this case, but there are some horror stories right here on EE about broken heat pumps or promised insulation, and even an unexpected renovation that rendered part of the house uninhabitable, and unlockable, for several months.

Oh, you don’t like to live in an uninhabitable house? Well, why don’t you just leave? No one puts a gun to your head to stay in the house. There is total disregard for the house where you live in actually being your home at that time, and that you basically do not want to leave. This even apart from the fact that moving isn’t exactly a trivial undertaking (finding another house, packing up, renting a truck, etc). But the landlord doesn’t worry about that… The popular NZ “no worries” phrase actually means “we don’t worry about what we put you through”, and this isn’t just true for landlords but is a given throughout the NZ society. You ask yourself why, after the landlord has gone through all the trouble of making sure that he gets good tenants, he does everything in his power to chase them away once he’s got them.

The contract

The rental agreement itself is fairly standard. You are required to keep the garden and the house nice and tidy. The landlord has the right to come into your house every month, to confirm that you are looking well after his house. He does have to inform you beforehand when an inspection is imminent; I believe 2 days in advance for normal inspections, and one day in case of an emergency. Fortunately our landlord visited us only once every 4 months, and gave us 2 weeks notice. But it remains a bit of an uncomfortable thing, your landlord poking his nose into your private life.

The rental agreement is signed, you receive the long awaited key of your temporary dream house and you finally can start moving your stuff into the house.

The bond… and getting it back

You usually pay the rent weekly, in advance. Before moving in, you also have to pay a bond that is typically 2 to 3 week’s rent. You pay the bond to the landlord, and the landlord then deposits the bond into a government fund where neither of you can touch it. At the end of the lease, the landlord and you both have to sign a form agreeing who gets which part of the bond. Only if the two of you agree, the funds will be released. If you haven’t caused any damage to the house and are not behind in payments, you will get the full bond back. Or will you?

Some landlords try to do everything in their power to keep your bond (or even sue you for more), for example by arguing that you caused damage that was already present when you moved in. Very childish, but it happens. So before you unload the truck, enter the house and create a list of every nail or hole in the wall, every stain on the carpet, every tear in the drapes, every trace of mould on the window frames, places where paint or wallpaper is coming off, doors that don’t shut tightly, the oven that was not cleaned, every scratch on the weatherboard, you get the idea. Take pictures of the rooms, especially the drapes if you plan to hang your own drapes, because some landlords are short of memory and consider them their own when you leave. Date and sign the list, and attach the photos to it. Copy the list with attached photos, give the original to the landlord and ask him to sign your copy as a receipt. If he doesn’t want to sign, send him the list by tracked mail so you have proof that he either received it or refused to receive it (if you get the envelope back, don’t open it. The contents will be safe until someone opens it as proof).

One last trick

After all this effort, you can be sure that you will get the full bond back, right? Well, not quite yet. Do you remember the bond form that you and the landlord both have to sign? At the end of our lease, our landlord asked me if I could sign the form while it was still blank, and hand it over together with my lease cancellation letter. That way, processing would be faster. Excuse me?? On the bottom of the form it clearly states that a signature means that you agree with all of the above. Signing a blank form therefore means that if the landlord fills in that he gets everything, you can’t appeal, because you agreed to it, didn’t you???

Yeah right. I did hand in a signed form, but not before I had filled in that I would receive the full amount back. No tampering possible there. And I did receive the full bond back, without even professionally cleaning the carpets. 🙂

Conclusion

Do not make the mistake of trusting landlords too much. Everything seems OK at first, because they really are all so friendly here. The way many stores people talk to customers here is a breath of fresh air. No grumblers, they are just very nice. They are your friend, and understand your situation completely. Everything is possible, they will fly for you. Until you walk out the door.

New Zealanders are stars in bringing a bad message in such a way that you really think for a moment they have helped you. But stay on your guard. It happened to us on several different occasions that verbal agreements were not upheld (not just with landlords, but with our mortgage broker too for example, about interest rates). And I wouldn’t exactly describe ourselves as the most gullible types. But still we fell for it. Maybe the fact that you think of NZ as a friendly place when you first arrive makes you lose focus. You know, that eerie feeling you get when thinking “but you don’t have any proof if… nah, he’s a really nice guy, it’ll be all right this time”. Well, it won’t be. Trust me.

So stand your ground and make them write everything down. If they have a problem with that, you know what their promises are worth. You can still decide to do business with them anyway, but at least you know not to expect anything.

Epilogue

After all this you might be tempted to believe that NZ is full of cons. Well, that is really not the case. I have read stories from people here who are very content with their landlord. Some prefer doing business with a landlord directly instead of through an agency (look in the newspaper or on trademe), because the landlords themselves are usually not as strict as the agencies when it comes to pets etc, because the agency’s job is to keep the house tidy with as little effort as possible, which means no pets.

And the flip side of the coin is, that for private individuals who own one or two rental houses, putting tenants in the house is a huge risk because the tenants will never treat the house the same as they themselves would. And if the tenants wreck the house, it is a lot harder to take for individuals than for big companies that own whole apartment blocks.

This story is therefore not to scare you away or to complain. This story is about giving you enough knowledge to be well prepared so you can avoid being conned or walked over. We found it a lot harder here than back home to distinguish the liars from the genuinely friendly people, and as such it is easy to fall in a trap. Be on your guard, especially if you have just arrived here. Do nothing you wouldn’t do back home, and you’ll probably be fine.

She’ll be right, mate. 🙂