Rental WoF won't help affordability

Sunday 9 September 2018

The Green Party is again calling for the introduction of a rental Warrant of Fitness (WoF). But NZ Property Investors Federation executive officer Andrew King is questioning that call...

By The Landlord

The Green Party has relaunched a campaign to introduce a rental property Warrant of Fitness.

“Private owners provide around 85% of rental properties in New Zealand. Do we really think that making it harder and more expensive to provide those rental properties is going to improve rental affordability and choice for tenants?” asks Andrew King, Executive Officer of the NZ Property Investors’ Federation (NZPIF).

The idea of a rental WOF was first proposed some 20 years ago and since then has continued to be rejected by successive Labour and National Governments every time it has been raised.

Previous WOFs have been based on various factors, such as disallowing properties over a certain age so that tenants can have newer homes.

The suggested WOF from Otago University is mostly reasonable, with most aspects already covered in existing legislation. Yet it still contains items such as a minimum size for kitchen benches, which many rentals will not be able to meet.

Before the WOF was even considered, Otago University had produced a paper with “improvements” to the WOF, one of which was correct orientation towards the sun. This is an unrealistic expectation likely to remove properties from the rental pool.

Some of these expectations are higher than the current building codes. This would indicate that the building codes are acceptable for owner occupiers but not good enough for tenants.

NZPIF is particularly concerned about the possibility of on going increases in the requirements contained in a rental WOF. Once as rental WOF is introduced, people are likely to be employed to continually “improve” it. 

This will inevitably add more costs to providing rental property and cause more and more properties to become unable to be rented. This will increase the cost of rent and also reduce the number of properties available for renters.

Some people believe this is a good thing, arguing that the property doesn’t disappear, it just gets bought by a home owner.

Unfortunately, rental properties are on average smaller than owner occupied properties yet they contain more people. This means that when a rental property is sold to an owner occupier there will be tenants looking for a rental property that no longer exists.

Additionally, many rental properties are owned by people moving overseas for one or two years. Rather than sell the property, they are more likely to leave it empty or rent it out on Airbnb.

It is patronising to tenants to say that they need to be told what their home should be like and that they cannot judge this for themselves.

Like all industries, customers end up paying more when the cost of a product or service increases. If they don’t, then supply of those goods and services reduces.

Rental prices have been increasing at a faster rate than inflation for the last eight or so years and will continue to do so if more unnecessary regulations and costs are applied without actually improving tenants lives.

Comments from our readers

On 6 November 2018 at 9:17 pm John Butt said:
The last paragraph makes a bold statement without any reference, so I suspect it is assumption rather than fact Fact checking, prices actually stay pretty close to a fixed percentage of household income, now you could argue that HH income rises faster than CPI but so what, rents come out of HH income not CPI The truth is the real story is far more interesting, rents are rising quickly at present to catch up with incomes;

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