Rule changes could be bad news for tenants, investors warn

Monday, 27 August 2018

The Residential Tenancies Act is to get an overhaul.

Property investors say proposed changes to the rental market could make life harder on tenants, too.

The Government is proposing a suite of rental law changes, including a limit on rent increases, an end to no-cause terminations, and a ban on so-called 'rent bidding'.

Housing Minister Phil Twyford has launched a discussion paper for consultation with a set of proposals aimed at increasing security for tenants.

The policies mostly mirror Labour's election policies. The reforms are unlikely to become law before mid-2020.

* Limits on rent increases and an end to rental bidding as Government reviews rental rules

Landlords would only be able to raise rent once a year, under the proposals.

* Rise of property management industry 'significantly disadvantaging tenants'**

Economist and commentator Shamubeel Eaqub said the reforms were overdue, and necessary in an environment where more New Zealanders were renting longer.

But landlord Peter Lewis said it could be bad news for tenants.

'The more difficult they make it for landlords to remove tenants, the more selective and cautious landlords are going to be in their choice of tenants,' he said.

Andrew King says investors don't object to security of tenants' tenure.

'You may also ask what other commercial activity in New Zealand will also be subject to direct price control restrictions: Rates? Insurance? Building materials? Tradesmen's hourly rates? Water? Power? Accountants' fees? Lawyers' fees?'

New Zealand Property Investors Federation (NZPIF) executive officer Andrew King said landlords were not necessarily opposed to everything being suggested.

'We want tenants to be able to stay as long as they want to, as well. But we don't want that in such a way that it takes away our rights to do what we want with the property. It will require a good open discussion. There are lots of conversations to be had.'

He said changes were needed for landlords, too, and many felt they had been attacked over recent years.

About 80 per cent of Tenancy Tribunal time is taken up with tenants not paying rent, and it was a huge issue for the industry he said.

If that were tackled, it would reduce the cost of running a rental property, which should benefit tenants.

'The NZPIF believes there needs to be stronger rules around rental payments to dissuade tenants from not paying. This could involve the ability to charge interest on outstanding rent, the ability to charge tenants' credit cards or exemplary damages if they don't pay their rent.

'Landlords also need faster access to the Tenancy Tribunal for rent arrears cases, especially where a tenant stops paying rent but stays in the property.'

Tenants should also be responsible for damage they caused, he said, pay for water use, and have to give at least six weeks' notice. The cost of providing heating and insulation should be tax-deductible, he said, and it should be illegal for tenants to stop paying rent as soon as they gave notice.

'It is becoming harder and more expensive to provide rental properties, yet we are seeing increasing demand for good rental properties from tenants.

'While there is nothing wrong with trying to improve the lives of tenants, there needs to be an acknowledgement that the problems caused by poorly performing tenants also needs to be addressed.'

Property investor Lisa Dudson is still owed $28,000 by tenants who damaged properties.

'There are bad landlords but there's a few bad tenants too we have no protection against… this is so focused on protecting tenants, what about protecting landlords? If you're too tough on landlords they're going to go running scared.'

She said if the law was to give tenants more leeway with properties, they also needed to be prepared to take more responsibility for them, too.