Property

Landlords’ plea: don’t unfairly target us

There are growing concerns among many landlords about unreasonable expectations from tenants, and the Government, in relation to rent during the lockdown.

Friday, March 27th 2020

Part of the Government’s economic response to the Covid-19 crisis has been to introduce a freeze on rent increases for the next six months and increased tenant protections.

That means it is now not possible to terminate tenancies during the lock-down period, unless the parties agree or for a limited, but specific, set of reasons.

These reasons include a tenant being 60 days behind in paying their rent.

However, on Thursday after reports some property managers were getting tough on tenants on rent payments and threatening to evict them post-lockdown, Prime Minister Jacinda Ardern told media she wanted the names of landlords flouting the new rules.

This has heightened existing concerns among many landlords about the attitude of both tenants and the Government towards landlords.

These concerns have prompted landlord Tracey Powell to send a letter to a long list of MPs, including the Prime Minister and Finance Minister Grant Robertson.

In the letter, Powell, who appreciates that these are extremely trying times and wants to be understanding, says landlords are providing an essential service to the country by providing housing.

Yet the vibe from the Government and public, via social media, suggests that it is OK for rents to be delayed or not paid during this time, she says.

“We don’t see supermarkets offering free groceries, utility companies offering free utilities, petrol companies offering free fuel, Councils offering to cancel rates or banks not charging interest on mortgages during these unsettling weeks or months.”

Nor are other services, like Councils and supermarkets, being forced into prices freezes, so why are landlords being targeted to give them, Powell asks.

“Landlords should not be forced into bankrolling their tenants - and the extension of the non-payment period from 21 to 60 days (before eviction) forces landlords into being a bank.”

She says that if tenants are given a “rent holiday” many will not be able to catch arrears up, while any bond collected will not cover a 60-day loss of rents should it arise.

“Please stop targeting landlords and assist them should a tenant not be able to pay their rent. Supermarkets are in the fortunate position of not supplying goods until payment is made – not so landlords! Please, treat us as the essential suppliers in society that we are.”

Powell is far from alone in her view that landlords are being unfairly targeted, rather than acknowledged for providing an essential service.

NZ Property Investors Federation executive officer Sharon Cullwick says while you would think that supplying a house for someone to live in should qualify as an “essential service”, it appears not.

“We agree that a rent freeze is appropriate during this lock down period and that tenants should not be given notice to leave for this period.

“However to extend this to three months, except if tenants are behind 60 days in rent, have caused substantial damage to the premises, abandoned the property or engaged in significant anti-social behaviour, is unjustified.”

The situation is made more unfair because tenants can give notice and vacate the property during this time, if they want to, leaving the landlord with no income, ongoing costs and little likelihood of finding a new tenant.

Cullwick says the increasing costs of providing a rental property, which include the upgrading of rental properties to meet the Healthy Homes minimum standards, had forced some landlords to notify their tenants of rent increases earlier this year.

But the strict new tenancy provisions mean those notices will now have to be put on hold for at least six months, or they’ll face exemplary damages of up to $6,500.

“These penalties on landlords are enormous and uncalled for. We should also point out that during this time the bills still have to be paid by someone, whether that be a landlord or a tenant.

“Yet for most landlords in the business of owning rental properties they are not classed as business owners or self-employed, or even as an essential service, so there is no financial relief in sight.”

A big part of the problem seems to be confusion around the concept of the rent increase freeze with some tenants, mistakenly, thinking it means they don’t have to pay rent for six months.

Additionally, the fact that landlords are effectively unable to evict tenants for not paying their rent over the course of the lockdown appears to have emboldened some tenants.

Not only are many landlords reporting a surge in requests for discounted rents, but several landlords have approached landlords.co.nz with questions about what they can do about tenants who have told them they won’t be paying their rent.

Since the Government’s announcement that banks will offer “mortgage holidays” to property owners whose incomes have been affected by Covid-19, tenant pressure for rent relief has increased further.

It seems that many people don’t understand what a “mortgage holiday” actually is or that many property owners won’t be taking one.

Cullwick says that it remains unclear whether the possibility of a “mortgage holiday” applies just to owner-occupiers or also to those who own rental properties.

“In addition, it should be realised that this isn’t really a holiday but rather a ‘deferred mortgage payment’ with increases in additional repayments and costs. So, in real terms there is no holiday, just extra payments and increased costs.”

The NZPIF understands that many people are really hurting at this time but some of these people are landlords who have always tried to supply good quality housing for their tenants, she says.

“We would like the Government to consider housing as an essential service and to include landlords in the measures to ease the current difficulties rather than just talking about heavy penalties.”

It’s worth noting that Housing Minister Megan Woods has said tenants do have obligations too.

“It is not acceptable for tenants to abuse the current situation by refusing to pay rent when they have the capacity to do so, causing significant property damage, or significant anti-social behaviour. Tenants are still fully liable for their rent payments and any damage.”

Read more:

How to address tenant job loss in the age of coronavirus 

Covid-19 crisis: what landlords need to know 

Emergency rules boost tenant protections 

Comments

On Friday, March 27th 2020 1:27 pm Gabrielle said:

Thank you for writing this letter. I hope it is heard!!

On Friday, March 27th 2020 1:38 pm Cafeg said:

This govt seems hell bent on painting landlords as bad people who need to have harsh penalties put on them. We are not like that, we are paying mortgages just like your next door neighbor and have more bills than a normal household. I disagree completely with the eviction period being raised to 60 days for no payment of rent. It should never be more than the bond that is held. I think most of us hold 3 or 4 weeks bond so it shouldn't go beyond that. As I have said before everyone seems to lose sight of who owns the property. The landlord owns it not the tenant or the Govt.. I'm sure they wouldn't let someone walk into their own house and not pay, wreck things then walk away free. People need to think of Landlords as "homeowners" just like everybody else !!

On Friday, March 27th 2020 1:42 pm RADNZ said:

Would it be a good idea to publish Tracey Powell's letter and the list of MP's so it could be copied by other landlords and sent again?

On Friday, March 27th 2020 1:43 pm DMCHL said:

I’m reading these comments and nodding wholeheartedly. We have four rentals on IO loans and two out of the four are in trouble. We pride ourselves on ethical renting providing well above average properties and exemplary customer service. The perception for both of the wobbly tenants is that we’ll be fine as landlords because we can stop paying our mortgage. The concept of accruing interest is beyond them. I have worked with one tenant to provide rent reduction and other savings and bought food boxes for them. They’ve already claimed the business support package. Go them...The other rung me Monday night to say they were half-moved out (barely through a 12 mth tenancy) and wanted to leave their stuff in the flat till after the lockdown, pay no further rent, not give up their bond and not pay the early termination fee. All against a backdrop of us potentially losing jobs due to this lockdown, Fun and games being a tyrannical grabbing landlord right now isn’t it.....

On Friday, March 27th 2020 1:52 pm WellyLL said:

Yes it does look like the Government is shifting some of the social support burden to private landlords. They are being asked essentially to provide interest free unsecured loans to tenants funded via cash or borrowing from the bank either directly or via mortgage holidays. It is helpful as the lending is off government balance sheet and banks have security for the lending against private assets. It's fine for now...but what happens if we have lock down for 180 days or more? Will banks start to take possession with falling property values and eroding equity into negatives and still unable to evict tenants? what will become of the property market if lock down becomes so protracted?

On Friday, March 27th 2020 1:57 pm Michele Walker said:

This is a good article and totally reflects my thoughts about how landlords are being wrongly treated. We have only 1 rental property, but will struggle financially in this environment if our tenants require a rent reduction.

On Friday, March 27th 2020 2:10 pm Donc said:

I don't have a problem with not being able to give notice during the lockdown period but surely that should apply to tenants too. Well, at least without certain reasons such as losing their jobs and being unable to pay rent. Technically, how can someone move during the lockdown anyway! That's not "essential" travel. But the 60 days requirement of nonpayment of rent before action can be taken is unreasonable. If a tenant can't pay because of job lose or similar then they need to be helped by MSD or other support services. Many landlords won't be able to fund this!

On Friday, March 27th 2020 2:17 pm Vlwallace said:

Yes - clearly the social support burden is being shifted to landlords ! And YET - we seem to be all forgetting that the GOVT's billions & billions $$ package has been outlaid to provide just the kind of support that tenants who are struggling to pay their rent need in times like this. We had a tenant telling us they lost their job & therefore couldn't pay their rent...turned out that their employer has just stood them down during lockdown (they still have their job to return to when this is over) & they are receiving the wage subsidy...so CAN still actually afford their rent & food (maybe a bit more of a struggle) but like the rest of us - we're all making sacrifices ! To NOT pay rent will be remembered by landlords in the long term & it will be again renters down the track who will suffer. I have a uni student SON in Dunedin who worked his butt off over summer (has $$ behind him) & supports his rent/living exp on the govt $230 student living allowance...students are all still paying rent ! I don't see Countdown saying to the shoppers - take what you want - pay later when you can afford it ? OR if you can't we will let you off for a couple of months or longer ? And then, to not even be considered an essential service - really ?? My feeling toward the government at the moment is very mixed - yes they're trying to do their best but not looking after the very people who are trying to provide the basics in society - what is their true thinking at this time ? One wonders if it isn't a tactic to reduce rents via govt intervention & change tenancy laws that they would otherwise find it difficult to pass thru usual parliament! Mr G Robertson certainly has had landlords in his sights for some time.....

On Friday, March 27th 2020 4:27 pm Lin35 said:

Great letter from Ms Powell. It appears that Landlords are the bad guys that needs to provide a "free" essential service to tenants. The message here for all the landlords is at next election to vote national, and be very careful in selecting new tenants in the future. Is interesting that the Government correctly is supporting the most vulnerable, but instead of helping also the landlords in a difficult time are instead creating an environment where the most vulnerable will be the people that will pay for their mistakes in the future. Stay all safe!

On Friday, March 27th 2020 11:59 pm Jewels said:

This totally reflects my thoughts and frustration at this time. I would love to see Tracey Powell’s letter published or even this article published much more widely than just here, perhaps on Stuff or the Herald. Perhaps even sent to a TV reporter who will question & tell the other side, being a whole lot fairer than what is being reported now. I have 1 rental property that I worked hard to get that is supposed to go towards a retirement income. I have gone without the café lunches, lattes, good wine, overseas trips, latest fashions etc to get this place.Plus I also contribute to the mortgage payments on it. It meets the Healthy Homes minimum standards plus some; my own home doesn’t even meet it. I have a good tenant who I look after because he is a good tenant. With lock down having come into effect, my business is closed for however long. So I am also without an income, except the Govt Subsidy that I am extremely grateful for, but that won’t go anywhere near covering my expenses. With a shop lease & shop expenses still to pay while I'm closed i.e opex, phones eftpos, etc, my own house & household living expenses, plus the rentals mortgage & expenses. I am no better off than anyone one else & I don’t believe I am a lot different from many other landlords. I don’t understand why it is thought that all landlords are heartless & made of money and should be the social ambulance. It is great to see someone lobbying for the landlord; we just need to get it out there more

On Saturday, March 28th 2020 10:58 am KeenReader said:

Like many landlords we've gone without to look after tenants and property, upgrading things over and above the minimum years before it was mandated. We've always kept rents well below market (example $255/ wk instead of $330) despite skyrocketing rates and insurance. Much like others posting here. We've also always allowed pets and give tenants Christmas presents. All are on benefits like sickness benefits, some with mental illness like hoarding. We've had unintentional damage which we fix and don't charge for. Now we are dropping rents further and always offer longterm tenancies. Tenants have told us we're the best landlords ever, although take that with a grain of salt. We try our best and hope now they'll appreciate cheap, secure, warm, longterm rentals and repay that by continuing to pay rent and work with us through this period. We anticipate massive numbers of rentals dumped soon and more tenant demand but we won't be buying and will continue to look after our tenants longterm and select any new ones extremely carefully. Thanks Labour. Voters won't forget this in September.

On Saturday, March 28th 2020 12:06 pm Pngent said:

There is an anomaly in the Government speak. Accommodation is an essential service. I had a toilet cistern fail in a single bathroom rental – a health and safety issue as the toilet could only be flushed by bucket. The government has only authorized only tradespeople to work outside the self-isolation protocol to maintain human health and safety. I am quite capable to undertake the repair, but needed a $6 part to effect the repair. As a landlord I am classed as a member of the public by the front line folk in big box building material suppliers and in theory can’t purchase the part needed for health and safety of the tenant. I can’t evict the tenant. Landlords should be included as essential business allowing them to maintain essential services to their properties.

On Saturday, March 28th 2020 5:25 pm Rcorlett said:

Totally agree with most of what has been said here including many of the readers comments. The whole government attitude to property investors leaves me bewildered as to what they want to achieve unless it is to drive investors out of the market. I sincerely wonder if maybe either Jacinda or Grant Robertson may have once had a bad experience with a landlord at some time in the past or their youth???

On Monday, March 30th 2020 6:45 pm Marty29 said:

Is there any other business whereby the govt dictates terms of trade?

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