Rotorua rents drop as flats sit empty | Rotorua News | Local News in Rotorua

An over-supply of central city flats, largely as a result of motels going bust, could be good news for Rotorua renters.

Richard Evans, director of Leading Property Managers of New Zealand, says while top-end homes remain in high demand, many "lower end" Rotorua flats are sitting empty.

There is an over-supply of one and two-bedroom flats for rent in the central city as well as homes in less desirable parts of the city.

Mr Evans said the economic downturn and a drop in visitors to Rotorua led to a number of city motels closing down and being converted into rental flats.

"This is a big deal - I know of 80 rental flats created from motels," he said.

As a result some rents had dropped as landlords struggled to find good tenants.

But Mr Evans said other landlords were still asking for rent people were not willing to pay in Rotorua, regardless of the quality of the property.

"We're not Auckland or Sydney," he said.

With so much choice available, the pressure was on landlords.

"Landlords need to be super efficient and really brush their properties up if they want to rent them," he said.

It's not just the central city, with rentals in some suburbs still badly affected by public perception.

"Some houses can sit empty for two to three years because of the neighbourhood they are in," Mr Evans said.

At the other end of the scale there remained a shortage of desirable family homes for rent, especially those within 1km-2km of a good primary school.

"They are being snapped up quickly. Demand is very strong."

Mr Evans said the state of the housing market meant many newcomers to the city had been unable to sell their homes in other centres and were forced to rent here rather than buy.

Rents rose as a result and this was expected to continue, partly due to the rise in insurance premiums since the Christchurch earthquake.

The Earthquake Commission (EQC) levy, which homeowners must pay on top of insurance, increased on February 1 and for most it trebled - jumping from $69 to $207 per year.

"Landlords are now saying they need an extra $10 a week rent," Mr Evans said.

In today's The Daily Post To Let section, one-bedroom properties are being let for between $180 and $200 while 2 bedrooms are being rented for between $230-$250 and 3 bedrooms for between $220-$310.

President of the Rotorua Property Investors' Association Debbie Van Den Broek agreed there was a shortage of clean and tidy properties in the city.

"I have had prospective tenants in tears because they have missed out on a property. But the grotty, run-down houses sit empty."

Mrs Van Den Broek said the shortage of well-presented properties, combined with rising rates and EQC levy costs, was likely to lead to their rents rising further in 2012.

One group who would always find it tough were renters with pets, she said. Many landlords rejected tenants with pets as they were worried about damage to the property, a perception she would like to change.

Property manager Donna Russell, of Russell Hardie, said three and four-bedroom homes were scarce and her firm had been "hectic" recently with families wanting new homes before the start of the school year.

Her firm worked hard to educate outside investors about the high yields possible in Rotorua, she said.

"A lot of people in Rotorua can't afford their own home but they will be excellent, long-term tenants."

She predicted rents would continue to increase, especially for well presented family homes.