One sided review of renting

By Andrew King

Andrew King - NZPIF

Tenant advocates have produced a report calling for widespread changes to the rental industry that if introduced would cause more harm for the tenants they represent than good.

The advocates admit that their findings are not representative and that the nature and timing of the review meant they were more likely to hear from people sharing negative experiences. However this didn’t stop them from using the report to call for a string of changes to the rental property industry.

While the report states that 70% of rental properties don’t have insulation, another genuine study by BRANZ shows that 77% of rental properties do have insulation. This is more than a complete contradiction of the tenant advocates’ report.

The NZ Property Investors’ Federation finds it curious that their respondents feel powerless to discuss problems with landlords over fears they’ll be moved on. Tenants are legally entitled to have their rental home maintained by their landlord. Failure to do this is an unlawful act and the Tenancy Tribunal can award $3,000 to be paid to the tenant by the landlord.

In addition to this, if a tenant makes a request to fix something that they are entitled to have fixed, and the landlord “moves them on” as they state, then this is called retaliatory action and the Tenancy Tribunal can award the tenant $4,000 to be paid by the landlord. Unlike the advocates’ claims, tenants have a huge amount of power under the Residential Tenancies Act.

It is already a marginal investment to provide a rental home for tenants. It is naive for tenant advocates to call for such one sided changes without understanding that it will make it harder for tenants to find and afford rental property.

The report has made a number of recommendations which need addressing:

All rental properties pass a mandatory warrant of fitness: A WOF for rental properties has frequently been called for by tenant groups over the past 20 years. However it has been rejected by both National and Labour governments. There are already many regulations controlling the standard of rental properties in New Zealand and high penalties for landlords who do not meet these regulations. Children being admitted to hospital is often cited as a reason for a rental property WOF, but it is doubtful that it would bring about significant improvements.

Consider Emma-Lita Bourne, the poor little two year old who died a few years ago. The coroner concluded that her cold damp house may have contributed to her death, yet her state house had insulation, a heat pump and even a ventilation system. It would have passed a WOF and yet proponents used her death as a call for widespread WOFs in rentals.

Tenants have been told that a WOF will improve the standard of their rentals, but what they haven’t been told is that this will also increase their rental costs. There are no free lunches.

The Property Investors’ Federation supported minimum standards for rental property introduced last year. This was a good and practical piece of legislation that balanced efficacy of insulation against cost. However we need to look at all the other factors that are leading to children ending up in hospital. Homes not being heated and ventilated are a significant part of the problem.

Abolishing no-fault evictions: Landlords do not end the tenancies of tenants without good reason. The above mentioned fines for retaliatory action mean that a landlord evicting a tenant for asking to have maintenance issues taken care of would be taking an extremely large risk.

In 2010, landlords were made responsible for the neighbours of their tenants. Faced with threatening or antisocial behaviour, neighbours of tenants often do not want to make written complaints against their neighbours, but without this evidence landlords cannot end their tenants’ tenancy. The 90 day notice is an essential tool to assist landlords to protect their tenant’ neighbours when they cannot produce sufficient evidence to obtain a Tenancy Tribunal award to end the tenancy. In cases like this, if you had to tell the tenant why you were ending their tenancy you could potentially create a reason for them to stay and you could risk harm or fear for your tenants’ neighbours during the 3 months notice that you have to give.

Introduce a tax on property speculation. This has always been a part of tax law and was enhanced with the introduction of the Bright Line Test.

Make all tenancies permanent. Landlords should only be able to end the tenancy by mutual consent. Many rental property owners would also appreciate long term tenancies, but their introduction must be balanced. Having tenants take control of the property without any benefit or allowance to the owner would see many rental properties removed from the market. This would not be good news for tenants.

Rental property can only be sold with the tenancy in place. This would impact on a landlord’s right to sell their own property. Forcing rental property providers to only sell to other rental property providers would take away two thirds of potential home owner buyers, thereby reducing the achievable price they could expect to obtain. Again, having tenants take control of the property without any benefit or allowance to the owner would see many rental properties removed from the market. This would not be good news for tenants.

Additionally, rental properties are exactly the kind of properties that are attractive to first home buyers. If rental property owners are not allowed to sell to them, then a first home buyer’s choice of home will be severely reduced.

Funding tenants’ education and advocacy services: The vast majority of rental properties in NZ are managed by their owners. Ninety percent of rental property owners only own one or two rental properties and are not experienced in Tenancy Tribunal hearings. Providing advocates is another way of saying tenants should be provided with free lawyers to argue their position at the Tenancy Tribunal.

This would be extremely unjust and likely lead to many owners to sell, deciding that it is too easy to get something wrong when managing their rental and find themselves up against lawyers.

Changing the Tenancy Tribunal to give more power to renters. As above, this would be completely unjust. The rules and regulations are already in the tenant’s favour and the Tenancy Tribunal needs to be a balanced organisation if it is to equitably and fairly handle disputes between tenants and landlords.

Source: NZPIF

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