Property Management

Labour plans could force out landlords

Labour’s newly announced rental market plans could scare existing landlords out of the market and will lead to increased costs for tenants, industry experts say.

Monday, September 04th 2017

Property Institute chief executive Ashley Church

Under Labour’s proposals, landlord notice periods will be increased to 90 days, “no-cause’ tenancy terminations will be abolished, rental increases will be limited to once a year, and letting fees will be banned.

The Party also recommitted to passing its Healthy Homes Bill into law and requiring rental properties to be warm, dry and healthy.

Landlords will still be able to get rid of tenants who breach their tenancy agreements by damaging the property or not paying rent and Labour committed to resourcing the Tenancy Tribunal to ensure quick action in such cases.

Grants of up to $2000 to upgrade insulation and heating will also be made available to landlords.

Labour Party leader Jacinda Ardern said they want the rental system to be fair and to take away stress for both tenants and landlords.

“This package has been designed, based on international examples, to get the balance between tenants and landlords right. It’s time to make renting a stable, healthy option for families.”

However, property industry experts have condemned Labour’s proposals.

Property Institute chief executive Ashley Church said the plan will scare existing landlords out of the rental market and will make the current housing crisis even worse – particularly in Auckland.

Landlords already have the deck stacked against them, due to the slower market, LVRs impacting negatively on equity positions, and tighter bank credit rationing in place, he said.

“Now, Labour is telling you that, if elected, they’ll take away your right to terminate a tenancy and they’ll regulate the circumstances under which you can increase rents to make them comply with some as-yet-undefined Big Brother formula”.

Labour has also put the possibility of a Capital Gains Tax back on the table, which sends a negative warning message to investors, Church said.

“Private investment is the key to solving the housing crisis but no one is going to invest in property if they’re worried that they’re going to be regulated and taxed to death”.

First National Real Estate chief executive Bob Brereton agreed that Labour’s plans will hurt the market.

He said the proposals will severely and negatively impact on landlords’ ability to protect their investment and will result in increased rents for tenants.

Removing the right to end a tenancy, with 90 days’ notice, without cause and increasing the provision to end a tenancy after 42 days to 90 days were a direct challenge to private property rights.

Brereton said Labour’s policies come on top of other pressures, already faced by landlords, and they risked being “the straw that breaks the camel’s back”.

“Landlords are facing negative returns, flat prices and the threat of a capital gains tax. If interest rates go up, as predicted, it would only take a small move in a flat market to convince many landlords to get out of the market.”

Prime Minister Bill English told media that, in National’s view, the current tenancy law is about right when it comes to balancing the rights of landlords and tenants.

Read more:

Expect negative impact from regulation overload 

Minimum standards for insulation and heating a step closer 

TOP tenancy policy ignores rental realities 

Comments

No comments yet

Most Read

SBS FirstHome Combo 4.29
Unity First Home Buyer special 4.29
Co-operative Bank - First Home Special 4.85
China Construction Bank 4.85
ICBC 4.85
TSB Special 4.89
Kiwibank Special 4.89
ASB Bank 4.89
Westpac Special 4.89
BNZ - Std 4.89
AIA - Go Home Loans 4.89
Nelson Building Society 4.93
ICBC 4.95
SBS Bank Special 4.95
China Construction Bank 4.95
Wairarapa Building Society 4.95
TSB Special 4.95
ANZ Special 4.95
ASB Bank 4.95
Kainga Ora 4.95
Westpac Special 4.95
AIA - Go Home Loans 4.95
SBS Bank Special 5.39
Westpac Special 5.39
ICBC 5.39
Co-operative Bank - Owner Occ 5.59
BNZ - Std 5.59
BNZ - Classic 5.59
AIA - Go Home Loans 5.59
ASB Bank 5.59
Kainga Ora 5.69
Kiwibank Special 5.79
ANZ 5.79
SBS Construction lending for FHB 3.94
AIA - Back My Build 4.44
CFML 321 Loans 4.99
Co-operative Bank - Owner Occ 5.95
Co-operative Bank - Standard 5.95
Heartland Bank - Online 5.99
Pepper Money Prime 6.29
Kiwibank - Offset 6.35
Kiwibank 6.35
TSB Special 6.39
ASB Bank 6.44

More Stories

Four decades of 6-7% yearly house price growth ending

Friday, March 21st 2025

Four decades of 6-7% yearly house price growth ending

New Zealander’s reliance on property capital gains in the mid-single digits is at an end.

[TMM Podcast] Yelsa serves up “marine reserve” of property buyers

Friday, January 31st 2025

[TMM Podcast] Yelsa serves up “marine reserve” of property buyers

It’s been years in the making and former real estate agent Mike Harvey is now coming to market with his platform matching buyers and sellers, an offering he says will be a gamechanger for the industry.

Leaving last year's stumbling housing market behind

Friday, January 17th 2025

Leaving last year's stumbling housing market behind

As interest rates ease and job losses climb, New Zealand’s housing market faces a mixed year of modest growth, with conflicting forces shaping the outlook for homebuyers and investors.

Don’t bet on house prices rising faster than incomes

Wednesday, January 15th 2025

Don’t bet on house prices rising faster than incomes

Former Reserve Bank Governor and National Party leader Don Brash says there are grounds for believing that house prices may finally have ended the three-decade period when they rose significantly faster than incomes.