Landlord "screwed" by HNZ

Thursday 30 December 2010

[UPDATED] Housing New Zealand has responded to complaints about its Home Leasing Scheme from Auckland landlord Ian Crayton, who claimed the scheme had "screwed" landlords.

By The Landlord

"I'm frankly pretty upset by the way we are treated by these people," Crayton said.

Crayton had set up a Facebook page (Housing NZ Owners Landlords) to share his grievances with fellow landlords in the scheme.

He was also able to email other landlords on the scheme after HNZ inadvertently sent out a group email to more than 500 landlords containing their email addresses.

Crayton said he emailed other landlords to ask if any others had experienced problems with HNZ and received dozens of responses.

His main complaint centres on the fact HNZ had failed to conduct yearly rent reviews and often paid less than the market rents promised.

He said if he'd opted for a private sector arrangement with a letting agent instead "I could get $100 a week extra for my properties."

HNZ hit back at the claims with a spokesman saying, "It is important to note that Housing New Zealand is not providing a property management service."

The HNZ scheme promised landlords market rate rent payments minus a 8-10% property management fee and guaranteed rent payments 52 weeks a year.

Crayton believes HNZ is biased in favour of tenants and that rents are artificially low due to poor valuations.

"I'm not getting annual rent reviews, and when they are done they're not done fairly," he said.

He said one of his properties is 195 sq m, has four bedrooms, three bathrooms and a double garage, and is valued at just $5 a week more than "an old bungalow with no garage."

"Rental reviews done by HNZ's self-nominated valuers seem to artificially under value the rents to the tenants' advantage," he said.

On the issue of valuations HNZ said "in many cases" the valuer is selected by both HNZ and the property owner when the lease is first signed, and "provided both parties agree, the valuer can be changed."

Despite this, Crayton was insistent there was no mechanism in place to challenge valuations and that he had lost confidence in HNZ.

In his email he told fellow landlords, "We'd all be much better off using a commercial letting agent to manage our properties. They would charge us 7.5%, they would deal with all the damage and repair issues for us at cost, and would automatically act in our interest [not automatically the tenants]. After all we are paying!"

The HNZ spokesman said it was important to make the distinction between a commercial lease - which landlords in the scheme sign up to - and a property management agreement.

"Housing new Zealand uses the property it leases for the purposes of its business, which is housing state tenants. Housing New Zealand is in effect the tenant of the owner, not the state tenants that may be occupying the property," the spokesman said.

"This is an important distinction. Unlike a private property management service, Housing New Zealand will ensure the rent is paid even when the home is unoccupied, provided the home is habitable."

Another issue Crayton raised - one HNZ failed to comment on - regards water rates.

Crayton believes landlords are being short-changed as they have to pay water rates on their properties and most are unaware of a rate cap that means they can claim back any money over $500.

He believes HNZ is poorly managed and has called on fellow landlords in the scheme to contact his Facebook site, write to Housing Minister Phil Heatley and their local MP.

"HNZ is currently advertising for more owners. It is our duty to warn others away from this disastrous ‘investment' with a bureaucratic and all-powerful body whose aim is to squeeze the life out of the owners with low rents to save the government money subsidising these rents for HNZ tenants," he said.

"We need something to be done."

Comments from our readers

On 31 December 2010 at 8:19 am Ted Grenfell said:
Insightful article. I feel well and truly warned off the HNZ model.
On 7 January 2011 at 8:48 am k said:
This is tax payer money, going out to property investors. All investments carry risks. Quit being an investor if you are not happy with the terms.
On 9 September 2011 at 1:01 pm Edith said:
Interesting article I am glad I did some research. So let me get this straight HNZ and homeowners go into a ten year rental agreement whereby HNZ agrees to pay the market rent? But HNZ is not honouring the agreement by not conducting annual housing reviews and thus not meeting the market rates. Water rates are also charged to the owner. It sounds like a renegotiation of agreement is needed to enforce yearly reviews to take into account, current up to date market rates and to include water rates. Why do homeowners have to accept under market rates? Isn't that the way people lose their homes? Why should homeowners be forced to pay for water they do not use? In reply to K the homeowners were probably not told about all the above matters prior to this article so how can they be blamed as investors. Investors are proactive its not their fault K doesn't have the initiative to invest. One more question when the market rate is not met by HNZ does HNZ still put in a tax return to recover cost that of that initial loss and therefore claim the landlords money? Interesting question don't you think? Email me with your reply as an interested possible investor. Thanks Ian for your warning I will look into it further :)
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