Dark clouds on landlords’ horizon?
Wednesday 9 August 2017
APIA president Andrew Bruce
The Opportunities Party’s tenancy policy plays into the prevailing anti-landlord atmosphere but prominent investors say it is not an imminent threat – compared to others.
By Miriam Bell
Under the TOP policy announced this week, tenancy laws would be changed to boost tenant security and to make it much harder for landlords to evict them.
Property damage or non-payment of rent would be the only reasons landlords could end an tenancy and that would mean properties would have to be sold with tenants in residence.
Many people have expressed concern that legislating in such a way would impact on the property rights of rental property owners and tip the balance unfairly in favour of tenants.
However, well-known property investor David Whitburn, of FUZO, believes there is an almost zero chance of TOP’s policy becoming law.
In an election campaign, smaller parties can make all sorts of outlandish promises but the odds are that they will not be able to implement them unless a major party adopts them, he said.
“In this case, the chances of it happening are so unlikely it is funny. No other party has indicated any similar policy.”
Whitburn said that given NZ First’s current polling some of their property policies were of more relevance to investors.
“NZ First wants foreign buyers to be restricted to new builds and I think it is one of Winston Peters’ bottom line policy conditions for coalition.
“That policy will have an impact on the market and it could erode the value of some housing stock, so it is a more major concern than TOP’s tenancy proposals.”
The ongoing progress of former Labour Party leader Andrew Little’s Healthy Homes Bill, which would introduce a set of minimum standards for rental properties, is also a more likely challenge for landlords.
Auckland Property Investors Association president Andrew Bruce said that if the Bill becomes law it will impose extra costs on landlords and rents will go up to reflect that.
“Tenants might say they want things like heat pumps if they don’t have to pay for it. But if they do it is another story.”
He said he had offered to put heat pumps into all of his rental properties but told his tenants he would be putting the rent up by $10 if he did.
Without exception, his tenants all turned down the offer due to the extra rent they would be charged.
In Bruce’s view, public opinion is currently not well disposed towards landlords and, in line with that, many changes are being introduced or proposed which make it more difficult to be a rental property owner.
It all makes it harder for people starting out in property investment as well as for the majority of landlords who are trying to do a reasonable job, he said.
When it comes to long term tenancies, Bruce prefers them – and said that most landlords do whereas tenants tend to opt for the flexibility that comes with periodic tenancies.
“If you have stable tenants your rent is going to be better, there is likely to be a lower level of repairs needed, and you have fewer periods of vacancy so there is stability of income.”
It was necessary for landlords to have options though rather than being forced into permanent tenancies, he said.
Not only are many landlords in favour of longer term tenancies, but there is political support for them across the spectrum.
At a recent APIA election debate, both Building and Construction Minister Nick Smith and Labour Party housing spokesperson Phil Twyford voiced their support for them.
However, Smith said he doesn’t believe they should be enforced by legislation.
Comments from our readers
No comments yet
Sign In / Register to add your comment
New Zealand may now have a government but uncertainty over what that might mean for the housing market is set to linger for some time.
Housing affordability in regions around New Zealand may have improved over the last quarter, but price to wage ratios are still sky high.
Commercial property syndicates give investors options and risks they might not otherwise have access to – but they do come with risks.
New Zealand’s lower economic growth was acknowledged by the Reserve Bank in its OCR statement today – which means there's a chance their next call could be more doveish.