No go for rent controls

Thursday 1 February 2018

Changes to tenancy law which aim to boost tenants’ rights are on the way – but landlord advocates are relieved to find rent controls won’t be among them.

By Miriam Bell

Housing and Urban Development Minister Phil Twyford has confirmed that he wants to introduce legislation to reform the Residential Tenancies Act by the end of this year.

He says New Zealand tenants have less rights than any in the Western world and he wants to modernise the law to improve their lot and to encourage longer, more settled tenancies.

The reforms are likely to include restricting rent increases to once a year, banning letting fees and abolishing no-cause terminations.

However, Twyford has also confirmed that rent controls will not be part of the reform package.

That’s because he thinks rent controls are bad policy which drive landlords out of the market, discourage landlords from upgrading and maintaining their rental stock, and only protect tenants in properties under rent control.

Ultimately, the only lasting solution to addressing the current rental market squeeze is to increase the supply of housing on the market, Twyford says.

Tenant groups have been advocating for the introduction of rent controls following claims that a rise in student allowances has led some Wellington landlords to significantly increase their rent.

But NZ Property Investors Federation executive officer Andrew King says that imposing rent controls would only make the situation worse.

“There are high levels of regulation and new compliance costs already. That’s contributing to rising rents at a time when there is already a shortage of rental supply.

“Enforcing further regulation, like rent controls, is only going to accelerate the problem as private landlords stop replenishing the rental stock.”

For this reason, he is relieved that Twyford has ruled out rent controls – the prospect of which was worrying many landlords.

“I feel that is very positive, but we will have to wait and see what happens with the rest of the suggested reforms.”

The government is planning to conduct extensive public consultation with landlords, tenants and the general public before the RTA reform legislation is introduced to Parliament.

Twyford says they have to get the legislation right so that it works for both landlords and tenants.

Read more:

Rental squeeze to intensify 

No winners from tenancy law tinkering 

Comments from our readers

No comments yet

Sign In / Register to add your comment

Property News

Homesellers required to provide IRD number

Investors who flip properties are currently subject to the bright line test, but owner-occupiers are not. That is now set to change.

House Prices

Market rebound coming - Westpac

The cancellation of a capital gains tax combined with lower mortgage rates will be game changing for the housing market, believes Westpac’s chief economist.

Commercial

Transforming commercial investment

Many investors are switching from residential to commercial property and now a new platform aims to makes access to the sector easier.

Mortgages

Investor lending weak in March

The latest Reserve Bank lending data reveals investors borrowed more than $1 billion in March, the highest figure since November, but a 10% fall on the same period last year.

Site by PHP Developer