Flawed rental policy not the answer

Friday 13 July 2018

Renters United's plan to "fix" New Zealand's "broken" rental laws is poorly thought out and will negatively affect everyone, NZ Property Investors Federation executive officer Andrew King argues...

Renters United says that rental homes are cold, damp and unsafe but this is a gross exaggeration as it is not true of all rentals.

They say that renters can have their home taken away from them for any reason or no reason which is completely false.

The whole point of owning a rental property is to rent it to tenants. If the tenant is paying the rent, looking after the property and not upsetting neighbours, then there is no need to end a tenancy.

If a rental owner ends a tenancy, there is always a reason.

It is cheaper to rent a home in New Zealand than it is to own the same home. On top of this you do not need to save for a deposit to buy your home.

These are two extremely beneficial advantages. However, nothing is perfect and because you do not own the home, there may come a time when
the property is needed or required to be sold.

Renters United says that half of all New Zealanders rent, but this is also untrue. Approximately one third of New Zealanders rent, the majority of New Zealanders are home owners.

Renters United wants tenants to stay in a property for as long as they want. The only way an owner could end the tenancy is for non payment of rent, serious illegal or antisocial behaviour, or significant damage.

They say that "no other reason will be legitimate". This means moderate illegal or antisocial behaviour and moderate damage is fine. Who are they trying to protect?

They would like tenants to keep any pet of right and to be able to make changes to the property to make it their home. They want renters to make changes to the terms of their tenancy when their
personal circumstances change.

They want rent increases limited to general inflation rather than actual costs. They want to increase the existing limits on when an owner can inspect their property.

In other words they want all the benefits of home ownership without the additional cost, requirement for a deposit or any risk of mortgage interest rate increases.

Renters United says that the system to sort out tenancy disputes must be fair, timely and well resourced, which sounds perfectly reasonable. However their definition of reasonable is anything
but fair.

They want to change the Tenancy Tribunal into an investigative model, establishing facts and resolving disputes. That is exactly what we have now.

They want mediation services before needing to go to the full Tribunal. That is also what we have now.

They want free, Government funded tenancy advocates, essentially expert lawyers, to represent tenants in mediation and at the Tribunal.

They want more sanctions on landlords and higher fines. Plus they want some landlords to be disqualified from renting their property.

Given that around 90% of tenancy tribunal applications are made by rental property owners for non payment of rent and damage to property, we think it would be fairer to introduce laws that
discourage rent arrears and penalise tenants for damaging property.

We also believe that enforcement would be improved by holding tenants more accountable for the money they owe. This would reduce some of the the risks and costs of providing rental property, potentially lowering the cost of rent for all tenants, the vast majority of whom are excellent.

Renters United also claims that the existing Tribunal system is funded by tenants. This is wrong. The system is funded by the interest earned on holding bonds.

Before this system was introduced, bonds were held by landlords and they retained the interest earned. Landlords lost this income when the new system was introduced. So it is landlords who actually pay for the system.

It would be grossly unfair for tenants to receive free advocates (i.e. lawyers) when it is landlords who need more improvements to the system.

There are some things we agree on however.

Renters United says that renters should not fear eviction for reporting problems. The New Zealand Property investors Federation (NZPIF) agrees.

We inform our members to encourage their tenants to report problems so they can be addressed in a timely and usually more cost effective manner.

Renters United want to establish indefinite tenancies as the norm. The NZPIF agrees. Renting is a perfectly sound way to provide yourself or your family with a home.

The rental market is made up of rental providers and tenants. Both these parties need the other and poorly thought out policies will negatively affect everyone.

Read more:

Rental fix plan not realistic

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