Expect negative impact from regulation overload

Wednesday 23 August 2017

Too much heavy handed tenancy regulation will lead to a drop in the supply of rental property and make renting harder for tenants, the NZ Property Investors Federation says.

By Miriam Bell

The NZPIF was responding to a new report from tenant advocacy groups Renters United and Action Station which paints a dire picture of rental conditions and calls for major changes to the industry.

Based on stories from around 610 tenants, the report comes to some damning conclusions about cold, damp properties, lack of insulation and tenant rights.

It then goes on to recommend some sweeping changes. These include recommendations that:

• all rental properties should have to pass a mandatory warrant of fitness (WOF);
• no-fault evictions – and letting fees – should be abolished;
• all landlords and property managers should be licensed;
• the Tenancy Tribunal be changed to give more power to renters; and
• a commission for housing be established.

However, the NZPIF believes that if the recommendations were introduced they would cause more harm for the tenants they represent than good.

NZPIF executive officer Andrew King said the system can’t be altered to be in favour of tenants at the expense of landlords because people will simply stop renting properties out.

“The supply of rental properties will go down and that will mean a reduction in choice and higher prices for tenants.”

In New Zealand, the bulk of rental properties are provided by private landlords.

But the spectre of ever increasing rules and regulations for landlords is already prompting some private rental property owners to get out of the industry, King said.

“For most landlords, it is already a marginal investment to provide a rental home for tenants.

“It is naive for tenant advocates to call for such one sided changes without understanding that it will make it harder for tenants to find and afford rental property.”

A number of the issues touched on by recommendations in the report, such as rental property WOFs and more “secure” tenancies, have been generating heat in the public arena for some time.

King reiterated that the NZPIF supports the minimum standards for rental property introduced last year as it is a practical piece of legislation which balances efficacy of insulation against cost.

But he said it is necessary to look at all the other factors at play when it comes to healthy homes and properties not being heated and ventilated properly, which comes down to tenants, are a significant part of the problem and would not be covered by a WOF.

When it comes to more “secure” tenancies, he said most landlords prefer longer term tenancies, but their introduction must be balanced.

“Having tenants take permanent control of a property without any benefit or allowance to the owner would see many rental properties removed from the market – which would not be good for tenants.”

Further, requiring that rental properties only be sold with the tenancy in place would impact on a landlord’s right to sell their own property, King said.

“Forcing rental property providers to only sell to other rental property providers would take away two thirds of potential home owner buyers, thereby reducing the achievable price they could expect to obtain.”

He added that the NZPIF finds it curious that tenants would feel powerless to discuss problems with landlords over fears they'll be moved on.

“Tenants are legally entitled to have their rental home maintained by their landlord and failure to do this is unlawful and the Tenancy Tribunal can award $3,000 to be paid to the tenant by the landlord.”

“If a tenant makes a request to fix something that they are entitled to have fixed, and the landlord ‘moves them on’ this is called retaliatory action and the Tribunal can award the tenant $4,000 to be paid by the landlord.”

Landlords do not end the tenancies of tenants without good reason, he said.

“The above mentioned fines for retaliatory action mean that a landlord evicting a tenant for asking to have maintenance issues taken care of would be taking an extremely large risk.”

Read more:

NZPIF opposes Wellington rental WOF 

Dark clouds on landlords’ horizon 

Insulation, heating improvement needed 

Comments from our readers

On 24 August 2017 at 3:07 pm jpaynter said:
I have given up actively seeking residential tenancy properties for the reasons NZPIF list. The risk (tenant damage, P, non-payments) are not just worth the return. I created two tenancies by relocating dwellings to a piece of land and would do more but council regulations and the RMA etc make this harder. I am now focusing on Commercial property where the agreements are based on leases, not on what Tenancy Adjudicators decide. The returns are better and the tenants pay the OPEX (rates, insurance, water, repairs and maintenance, Body Corporate etc). More and more regulations e.g. smoke alarms, insulation (I have already provided these where possibly but am now doing the undefloor) and residential WOF are increasing costs and compliance.

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