The government has announced its latest raft of regulations for private landlords. Rents will only be increased once a year (instead of every 6 months, at present), and landlords will be unable to end tenancies for no reason. Yes, that’s right. You will not be able to evict a tenant in a house that you own because you feel like it; you will have to have a good reason, such as wanting to sell the house. Really.
Landlords will also need to be careful if they put tenants onto a fixed tenancy because, once that fixed term ends, the tenant automatically rolls onto a ‘periodic’ tenancy, and can then not be evicted without a good reason. Tenants will also be allowed to make ‘small changes’ to the property, and landlords will not be able to refuse. The devil will be in the detail here, but those changes might include things like putting up a baby gate. OK, I can live with that. But if, for example, a tenant wants a dishwasher installed, then the landlord not only has to front up to the cost, but also has to maintain the dishwasher. And the definition of ‘small changes’ is something that can be interpreted widely. Let’s see how that pans out.
If a tenancy is ended for a ‘valid’ reason, the notice period given will be increased from 42 days to 63 days. Landlords will also be required to produce records to prove that the property reaches ‘healthy homes’ standards.
This will turn into a can of worms. My property on the West Coast is less then 10 years old, fully insulated and double glazed, and lately, the bathroom has been getting areas of mould. It has rained so much in the area in the last 5 months that locals have been building large wooden boats, but instead of investing in a bottle of bleach, tenants will be off to the Tenancy Tribunal, or the media, in a heartbeat. Sometimes all you can do about these things is to apply a bit of elbow grease. But you know how all this will pan out for landlords.
Apparently, Kris Faafoi has stated that he wants to ensure that the new rules do not unfairly punish landlords. I am impressed with his concern, but as landlords have been kicked in the teeth so many times by this government, his pretence to care about them now is risible. He ought to care though. Here is why:
There are more than 600,000 rental households in New Zealand with about a million people living in them, up from 453,000 in 2013 and 388,000 in 2006. The proportion of households that rent has risen from 27 per cent in 1999 to 32 per cent now – and rental households generally have more people in them than owner-occupied housing.
Stuff.
There are more people renting than ever, and private landlords are being bashed to smithereens by this government. The government cannot build public housing fast enough, and now there are over 13,000 tenants on the public housing waiting list. That is not 13,000 individuals, but 13,000 prospective tenants, including families. We could be talking over 30,000 people here.
And this government wants to shift the ‘imbalance’ of power from landlords to tenants? Fine. Then more landlords will leave the market. In droves.
Don’t forget that the year to March 2020 is the first year that rental losses cannot be offset against other income, but must be ‘ringfenced’ against future rental profits. Rental property owners are the only taxpayers affected like this. If you buy and sell stuff on TradeMe, you can claim losses against your other income. If you house a family that cannot get public housing, you cannot. Where is the sense in that?
These rules will make it harder to get rid of bad tenants, of course. The government claims otherwise, but clearly, they will. I had a tenant who was dreadful; the house was a constant tip, his dog was always inside (in spite of promises that he would stay in his kennel) and he frequently failed to pay his rent. We gave him 90 days notice. The house has been sold now, but the mess, the dog hair and the deep purple paint that all had to be cleaned up was unbelievable. It took me 6 weeks, with the help of a cleaner. Under the new rules, it would be much harder to get rid of him, particularly as he always promised to do better… but never did.
He also almost ended up homeless. Rental properties are hard to come by these days, because, guess what? There are a lot less of them than there used to be.
Oh, and I forgot to say that landlords who fail to comply with the Residential Tenancy Act will be liable for payouts from the Tenancy Tribunal of up to $100,000 (up from $50,000 at present). At the moment, damages over $50,000 go to the District Court. The regulator, MBIE, will also be able to make one application against a landlord over a number of properties. Great.
This government is trying to stop landlords from booting out anti-social tenants, so that they won’t have to house them, but it won’t work. All landlords with half a brain and with those types of tenants will get rid of them before these regulations come in, next year.
All other landlords will hike their rents much more than they were planning, because they will not be able to do so for another year.
Smart stuff, CoL. You have just given landlords another very good reason to exit the market, but what you are going to do with the unhoused tenants is anyone’s guess. That is going to be your problem now. But tenants mostly vote Labour, so you don’t care. But you should care, because the homelessness in New Zealand is set to get a lot worse. And this government is entirely to blame for that.