What Is the Most Rent Can Increase? New Zealand Rent Cap Rules Explained
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Calculate your maximum legal rent increase under New Zealand's OCR + 2% rule
Every year, landlords in New Zealand want to raise rent. Tenants worry: what is the most rent can increase? The answer isn’t up to the landlord. It’s set by law. As of 2025, the maximum rent increase you can legally face in New Zealand is tied to the Official Cash Rate (OCR) plus 2%. That means if the OCR is 5.25%, your rent can go up by no more than 7.25% in a year.
How Rent Increases Work in New Zealand
The Residential Tenancies Act 1986 controls how much and how often rent can rise. It’s not a free-for-all. Landlords can’t just slap on a 20% hike because they think the market is hot. The law says rent increases must be fair, reasonable, and tied to a specific formula.
Since 2024, the formula changed. Before, rent increases were capped at 10% annually, regardless of economic conditions. Now, the cap is flexible. It’s the Reserve Bank of New Zealand’s OCR + 2%. The OCR changes based on inflation and economic health. So if the OCR drops to 4%, your max rent increase drops to 6%. If it climbs to 6%, your cap goes to 8%.
This system was introduced to make rent increases more predictable and less tied to speculative market bubbles. It also gives tenants some breathing room when interest rates are high - because landlords can’t just pass on all their mortgage costs to renters.
When Can Rent Be Increased?
You can’t get a rent increase at any time. The law says landlords must wait at least 12 months after the last increase. That’s true even if you just moved in. If your rent went up in January 2025, the next increase can’t happen until January 2026.
Also, the landlord must give you 60 days’ written notice before the increase takes effect. That notice has to say exactly how much the rent is going up, why, and what the new amount will be. No vague letters like “rent will go up soon.” It must be clear, in writing, and signed.
If you get a notice that doesn’t include all this, you can legally ignore it. You don’t have to pay the higher amount until the landlord fixes the notice.
What If Your Landlord Breaks the Rules?
Some landlords try to sneak in illegal increases. They might say, “We’re adding a $50 cleaning fee,” or “Your utilities are now included - but rent went up $150.” That’s still a rent increase. The law counts any extra charge tied to your tenancy as part of the rent cap.
If your landlord raises rent beyond the legal limit, or gives you less than 60 days’ notice, you can file a claim with the Tenancy Tribunal. You don’t need a lawyer. You can do it online at tenancy.govt.nz. Bring your lease, the rent increase notice, and proof of your previous rent amount.
The Tribunal can order the landlord to refund any overpaid rent, stop the increase, or pay you up to $4,000 in compensation. In 2024, over 1,200 tenants in Auckland alone successfully challenged illegal rent hikes.
Why This Rule Exists
Before the OCR + 2% rule, rent increases in cities like Auckland and Wellington were wild. In 2022, some tenants saw 25% jumps in a single year. Many had to move out because they couldn’t afford it. The government stepped in because housing instability was hurting families, schools, and workplaces.
The new rule balances two things: landlords need to cover costs, and tenants need stability. It doesn’t stop rent from rising - but it stops it from spiraling. It also means landlords can’t use rent hikes as a tool to push out long-term tenants.
For example, if you’ve lived in your apartment for five years and your landlord wants you out, they can’t just jack up the rent to force you to leave. Even if they offer you $1,000 to quit, they still have to follow the cap. The law protects you from being bullied out.
What’s Not Covered by the Cap
There are a few exceptions. If you and your landlord agree to a new lease with higher rent, that’s fine - as long as it’s within the cap. Also, if you add a new tenant, or if your rental property gets major upgrades (like a full kitchen rebuild or new plumbing), the landlord can apply for a rent increase above the cap.
For upgrades, they must apply to the Tenancy Tribunal and prove the cost. They can’t just say “we painted the walls.” The work must be significant and directly improve the property’s value. Even then, the increase can’t exceed the cost of the work divided over 10 years.
For example, if a landlord spends $15,000 on a new roof, they can ask for an extra $150 per month in rent - but only for 10 years. After that, it drops back to the standard cap.
How to Check Your Rent Increase Is Legal
Here’s how to verify your rent increase is within the rules:
- Find the latest OCR from the Reserve Bank of New Zealand’s website (it’s updated monthly).
- Add 2% to that number.
- Check your last rent increase date - it must be at least 12 months ago.
- Make sure you got 60 days’ written notice.
- Calculate the percentage increase: (New rent - Old rent) ÷ Old rent × 100.
If your increase is higher than OCR + 2%, or if the timing is wrong, you have rights.
As of December 2025, the OCR is 5.25%. So the max rent increase allowed is 7.25%. If your rent was $500 a week, the highest it can go is $536.25. Any more than that is illegal.
What If You Can’t Afford the Increase?
If your rent is rising within the legal limit but you still can’t afford it, you’re not alone. In Auckland, over 40% of renters spend more than 30% of their income on rent - the federal threshold for housing stress.
You can ask your landlord for a payment plan or a smaller increase. Some landlords will agree, especially if you’ve been a good tenant. You can also apply for housing assistance through Work and Income (WINZ). The Accommodation Supplement can help cover part of your rent if your income is low.
Don’t panic. You have options. Moving isn’t your only choice.
What’s Coming Next?
The government is reviewing the rent cap system every two years. In 2026, they may look at adding a regional cap - because rent pressure in Wellington and Auckland is much higher than in smaller towns. There’s also talk of introducing a rent registry so tenants can see what others are paying in their area.
For now, the OCR + 2% rule is your strongest protection. Keep track of the OCR. Save your notices. Know your rights. Rent increases are legal - but only if they follow the rules.
Can my landlord raise my rent more than once a year?
No. By law, landlords can only increase rent once every 12 months. Even if your lease says otherwise, that clause is invalid. The 12-month rule is strict and applies to all tenancies in New Zealand.
What if my rent increase notice doesn’t mention the OCR?
The notice doesn’t have to explain the OCR formula, but it must state the exact new rent amount and the date it takes effect. If the increase exceeds the legal cap, you can challenge it regardless of what the notice says. The law, not the notice, sets the limit.
Can my landlord increase rent because I got a pet?
No. Adding a pet doesn’t give the landlord the right to raise rent. If you have a pet with permission, the rent stays the same. If you didn’t have permission and now have one, the landlord can ask you to remove it - but they can’t charge extra rent for it.
Does the rent cap apply to boarding houses or shared rentals?
Yes. The rent cap applies to all residential tenancies under the Residential Tenancies Act. That includes boarding houses, share flats, and room rentals - as long as you have a written or verbal agreement and pay rent regularly. The only exception is if you live with the landlord and share a kitchen or bathroom.
Can I be evicted if I refuse to pay a rent increase?
Only if the increase is legal. If the increase is above the cap or given with less than 60 days’ notice, you can legally refuse to pay the extra amount. The landlord cannot evict you for that. If they try, you can take them to the Tenancy Tribunal and get the eviction stopped - plus compensation.
