Landlords Urged to Negotiate Rents as Tenant Demand Shifts

Landlords in New Zealand are being advised to reconsider their rental pricing strategies or risk losing tenants and revenue. Housing policy expert Stuart Donovan recently experienced this firsthand when he sought a rent reduction for his home in Island Bay, Wellington. After being denied a request to lower the weekly rent of $1,250, he and his partner decided to move to a new rental in Berhampore, which is 30% cheaper at approximately $400 less per week.

Donovan, who works as an economist at Motu Research, noted that he was surprised by the lack of negotiation from his landlord. “We asked if they could consider the rent in line with market conditions, but the answer was no,” he said. As a result, his previous landlord is now advertising the Island Bay property at $1,100 per week, illustrating a shift in the rental market dynamics.

Recent data from realestate.co.nz indicates that the average national weekly rent has decreased by 2.4% to $626. In Wellington specifically, rents have dropped by 8.4% to an average of $663 per week. The number of available rental properties has surged nearly 20% year-on-year, with over 5,000 homes now on the market. This increase in inventory is particularly notable in Wellington, where available rentals have skyrocketed by 91.5% in the past year.

Central Otago Lakes District remains the most expensive area to rent, with an average price reaching an all-time high of $891 per week in December 2025, marking an increase of 11.8% from the previous year. The substantial rise in rental listings affords renters more options and the potential for increased negotiating power in their lease agreements.

Donovan pointed out that the current economic climate is contributing to a demand shock in Wellington. Cuts to public services and a stagnant economy have led to a surplus of housing options. He emphasized that the recent changes in the local housing policy, which encourage increased housing development, are starting to yield results. “Demand is the main driver, and supply is starting to come on,” he said, suggesting that landlords who fail to monitor these trends may find themselves unprepared.

In a recent New Year’s update, Sean Audain, strategic planning manager for the Wellington City Council, shared that consented dwellings in Wellington City increased by 79.5% in the year leading up to October 2025. While the overall number of dwelling consents still requires improvement, the growth in various locations and property types is promising.

Donovan highlighted a common misconception among tenants: they often believe they should not ask for rent reductions. Under the Residential Tenancies Act, it is possible for tenants to request the Tenancy Tribunal to assess and potentially lower their rent to align with market rates, provided they can present relevant information.

Luke Somervell, president of Renters United, also advocates for tenants to negotiate. He noted that tenancy agreements are open to discussion between landlords and tenants, although a culture of negotiation is less prevalent. “Fear is justified, especially with recent rollbacks on renters’ rights,” he stated. Somervell remarked that while some landlords have reduced rents in certain cases, there remains little incentive for them to lower prices when a tenancy is already established.

As the rental landscape continues to evolve, both landlords and tenants will need to adapt to these changing conditions. The ongoing increase in rental listings suggests that negotiation may become a more common practice in the near future, making it essential for all parties involved to stay informed about market trends and their rights.