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Comcom Rent Warning

Landlords thinking of discussing rent increases on social media should tread carefully. The Commerce Commission has issued a warning to landlord representatives about doing just that.

By: Property Investor Team

1 October 2020

Recent exchanges in online forums for landlords included some online posts asking what others planned to do when the Government’s rent increase freeze ended on September 26.

This prompted a complaint to the Commerce Commission which then wrote to landlord representatives to alert them to their concerns. That’s because the discussion included comments suggesting the whole group could band together to increase rents and, if any such attempt was to occur, that could constitute price-fixing under section 30 of the Commerce Act 1986.

A Commerce Commission spokesperson says landlords can be in competition with each other for the supply of rental properties and can be carrying on a business in trade.

“Landlords should make independent pricing decisions about rent and rent increases to avoid breaching the cartel prohibition.

“Cartels deprive consumers and other businesses of a fair deal. A cartel is where two or more businesses agree not to compete with each other.

“This conduct can take many forms, including price fixing, dividing up markets, rigging bids or restricting output of goods and services.” Not only are the penalties for cartel conduct very hefty, but from April 2021 cartel conduct will be a criminal offence, punishable by a jail term of up to seven years.

The Commission spokesperson says they did not open a formal investigation or issue warnings to the parties concerned. “But we chose to alert industry representatives to the risks of this sort of conduct to increase awareness amongst property investors that they are subject to the Commerce Act.”

Landlord representatives were stunned by the warning but have taken it on board. Nick Gentle, who is an administrator of one of the online groups, says rhetoric can get very heated, but he doesn’t think anyone would seriously collude
against tenants.

However, we’ve told our members that posts which ask what rent you should set for a particular property and/ or suggest a rent movement in response to something won’t be allowed.” Administrator post approval will be kept on and they are asking members to report any comments on posts which breach that guideline.

“It’s frustrating because the group is for the purpose of helping one another, but that is how the law works,”
he adds.


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