Property

Freeze on rent rises introduced - temporarily

The Government has introduced a freeze on rent increases on residential rental properties as part of the economic measures announced in the fight against Covid-19 and its impacts.

Monday, March 23rd 2020

New Zealand today moved to Level 3 of the Covid-19 Alert system and over the next 48 hours the country will move to Level 4 – which means a national lockdown will be in place.

This is expected to lead to widespread job loss and so, in a bid to provide further support for the economy, workers and businesses the Government has also announced further economic measures.

As part of this, Finance Minister Grant Robertson says there will be a temporary freeze on all rent increases and they will be looking to extend no-cause terminations to protect people during this difficult time.

As yet no further details on this announcement are available, but Robertson says they will be releasing more details over the coming days.

Investor Andrew King, who was until recently the NZ Property Investors Federation executive officer, says he can’t see the rent increase freeze being a problem for landlords.

“As a landlord, I increased my rents in January but I’ve already informed my tenants that we won’t be enforcing that. I imagine lots of other landlords will be doing something similar.”

He says that, given the amount of potential job losses, it will be important for landlords to try and help tenants so that they can keep living in their rental properties.

“It would be good if Government can provide some support to rental property owners by ensuring that the existing mechanisms around WINZ payments can be processed quickly. Speed will be crucial.

“We’ll also be putting a message out to our members that they need to prepare and they should make sure that they can cover the rent, if need be, for a couple of weeks while tenants who need to work out their situation with WINZ can do so.".”

But King was disappointed with the Government’s move to extend no-cause terminations for people.

He says it looks as though the Government is trying to push through its controversial tenancy law reforms without going through the Select Committee process.

“Given the level of opposition to the removing the ability for landlords to issue 90-day notices, it doesn’t seem fair to do that.”

REINZ chief executive Bindi Norwell agrees with King on both fronts. She says that in the current environment, implementing a freeze on rental increases is a sensible and moral step to take.

“The strict Alert Level 4 measure means that in the coming months a number of people are likely to lose their jobs. To have to deal with a potential rent increase at this time could be incredibly stressful for a tenant to have to deal with, so we welcome the Government’s announcement around this particular measure.”

For landlords who have already spoken to tenants around a rental increase in the previous few weeks, we believe this will be unable to go ahead, she says.

“But we will work through what this means for these situations as the finer details of the announcement become available.

“In the interim, we would encourage landlords, tenants and property managers to keep the lines of communication open – as some rent may be better than no rent in the current environment.”

However, they are disappointed with the announcement on the removal of the 90-day notice, given the property industry has made its views on it very clear over the past few months, Norwell says.

“We do understand they are trying to do their best by tenants in these trying circumstances and we will be looking for further clarification in the coming days from the Government as to what this means for landlords and tenants who have already issued/been issued with a 90-day notice.”

Read more:

How to address tenant job loss in the age of coronavirus

Comments

On Monday, March 23rd 2020 5:51 pm Kune31 said:

How about tenants that are scheduled to move (or house buyers) during level 4 restrictions ? Will they be able to physically move in to the next property, or will it be a non essential activity.

On Tuesday, March 24th 2020 9:12 am Robdacol said:

@kune31, that is a good question. I have a similar situation with a break-lease. There will also need to be a final and first inspection as part of the process. There are no level 4 guidelines for landlording given - just rent freeze.

On Tuesday, March 24th 2020 5:33 pm Propjourno said:

According to new guidelines from REINZ: Settlements: In lockdown, vendors and purchasers will NOT be able to move in and out of their houses. For this reason, Auckland District Law Society is recommending that settlements be deferred until after the Alert Level 4 restriction is lifted. The party's lawyers will make appropriate amendments to the contract to facilitate this. Moving if a property settles during lockdown: Travel will be restricted to essential travel only e.g. pharmacy/supermarket trip, so settlements and moving house should be deferred until after the Alert Level 4 restriction is lifted. The parties’ lawyers will make appropriate amendments to the contract to facilitate this. But re: tenancies due to end or commence during lockdown - MBIE is confirming the situation and REINZ will issue an update when they have further information.

On Wednesday, March 25th 2020 7:35 am Joejames said:

Mortgage holidays are being discussed. Will this be extended to investment properties? I ask because: My landlord pays his mortgage with my rent. If he gets a mortgage holiday, why am I not getting a rent holiday?

On Thursday, March 26th 2020 11:15 pm Nabla said:

With the 6 month rent freeze, does it mean we need to wait 6 months before advising of a rent increase then wait a further 60 days?

On Friday, March 27th 2020 1:47 pm Shorty said:

plesse clarify the rent freeze, as there is confusion online, tenants are saying they dont have to pay rent for six months? I understood the announcment made was a six month freeze on rent increases, not rent itself? Landlords still have to pay rates and insurance premiums too. Doesnt help with news headlines click bait says 'Rent freeze'. Thank you

Heartland Bank - Online 1.85
The Co-operative Bank - First Home Special 2.09
HSBC Premier 2.19
Kiwibank Special 2.19
TSB Special 2.19
SBS Bank Special 2.19
ANZ Special 2.19
ICBC 2.25
The Co-operative Bank - Owner Occ 2.25
Kainga Ora - First Home Buyer Special 2.25
AIA 2.25
ICBC 2.35
Heartland Bank - Online 2.35
HSBC Premier 2.45
SBS Bank Special 2.49
TSB Special 2.55
BNZ - Classic 2.55
Kiwibank Special 2.55
The Co-operative Bank - Owner Occ 2.59
AIA 2.59
Westpac Special 2.59
ASB Bank 2.59
ICBC 2.99
China Construction Bank Special 2.99
HSBC Premier 3.19
Kainga Ora 3.37
TSB Special 3.39
AIA 3.39
ASB Bank 3.39
Bluestone 3.54
Resimac 3.54
The Co-operative Bank - Owner Occ 3.54
Select Home Loans 3.54
ASB Back My Build 1.79
Heartland Bank - Online 1.95
Resimac 3.39
Kiwibank Special 3.40
Kiwibank - Offset 3.40
Kiwibank 3.40
Select Home Loans 3.49
Bluestone 3.49
ICBC 3.69
The Co-operative Bank - Owner Occ 4.40
The Co-operative Bank - Standard 4.40

More Stories

Details emerge of property investor tax exemptions

Friday, June 11th 2021

Details emerge of property investor tax exemptions

Consultation opens today on how new builds will be exempted from investment property tax changes, in rules to be in place by October 2021.

Market starting to cool

Wednesday, June 09th 2021

Market starting to cool

While the number of residential building consents issued continues to break records there are not enough houses for sale and consequently new rentals coming to the market.

Treasury’s house price claims debunked

Tuesday, June 08th 2021

Treasury’s house price claims debunked

The chances of Treasury’s predictions average house prices will only rise 0.9% in the year to June 2022 being correct have been deflated by independent economist Tony Alexander.

Five ways clean tech can make commercial buildings energy efficient

Monday, June 07th 2021

Five ways clean tech can make commercial buildings energy efficient

As corporate commitments to net-zero carbon targets gain momentum, there is a growing focus on the energy efficiency of buildings – and the technology that can make a difference.