Taranaki Property Investors' Association

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04-09-2017

NZPIF comments on Labour policy announcements

  • Increase 42 day notice periods for landlords to 90 days to give tenants more time to find somewhere else to live

First home buyers and other home owners will not want to wait 3 months before they can move into their new home. Makes it very difficult to sell a rental property to anyone other than another rental property owner. So rather than tenants staying in place, landlords will probably give tenants notice as soon as they decide to sell the property. Properties are more likely to be empty when being sold with no prospect of the sitting tenant being able to stay on should it be sold to another landlord.  It is likely to increase the number of empty properties when we actually need more.

  • Abolish “no-cause” terminations of tenancies

This will protect bad tenants at the expense of good ones. 90 day notices are only used when they have to be. As landlords are now responsible for their tenants behaviour and how it may affect other tenants and neighbours, the 90 notice without cause is often the only tool landlords have available. It is used in situations such as aggressive and intimidating behaviour by some tenants against others. Tenants at the receiving end of anti social behaviour need to provide their landlord with evidence so they can apply to the tenancy tribunal to end the tenancy. However the majority won't do this for fear of reprisals. A 90 day notice without cause is the only option landlords have to protect and keep good tenants by ending the tenancies of bad ones. Good tenants will end up moving which is disruptive and expensive for them.

  • Limit rent increases to once per year (the law currently limits it to once every six months) and require the formula for rental increases to be specified in the rental agreement

Many costs can increase over the period of a year. If landlords have to wait a year before they can increase rents they are likely to maximise rental prices just in case costs increase.

However this could also be good news for rental property owners, who often don't increase rental prices. If there is an expectation that rents will increase annually with both tenants and landlords knowing the formula for them to increase, then it is much more likely that rental increases will occur more often than at present.

  • Give tenants and landlords the ability to agree tenants on a fixed term lease of 12 months or more can make minor alterations, like putting up shelves, if they pay double bond and on the basis the property is returned to the state it was in at the start of the tenancy

It is unlikely that landlords will have a problem with this, but there needs to be safeguards that the alterations are minor. It would be very easy for tenants to make alterations that are not to many people's tastes, then leave without repairing the property. Landlords need to recompensed should the tenants not reinstate the property to its original condition and this would need to be legislated under the RTA. 

  • Ban letting fees

Only professional property managers can charge letting fees, owner managers cannot. Depending on market conditions, either the landlord or the tenant can receive the benefit of letting fees. Currently in Christchurch there is a surplus of available rental properties, so landlords are paying property managers a letting fee to help them find a tenant. This can provide an advantage for these landlords over others who are not willing to pay. In other parts of the country it is currently harder to find a rental property. Some tenants are willing to pay a letting fee as it gives them an advantage over other tenants who are unwilling to pay for the service. By banning letting fees you are banning choice for tenants and landlords.

  • Require all rentals to be warm, dry, and healthy for families to live in by passing the Healthy Homes Bill

The Healthy Homes Bill, is just Labour out bidding Nationals Minimum Standards Bill which came into force last year. Labours Bill will require all rental properties that already have insulation be required to "top up" the insulation to today's' standards. This top-up costs nearly as much as completely installing new insulation for a 5% increase in efficiency. It doesn't make sense. Like their Capital Gains Tax, Labour have said that Government Officials will decide what type of heating will be required. Indications are that this will mean heatpumps need to be installed in every rental in New Zealand. Not every rental property suits a heatpump and not every tenant wants one. Even Consumer NZ have said “You don't have to buy the most expensive heater to keep cosy this winter - a $34 model does a pretty good job”, and “A heater with a fan was the best way to warm a small living area quickly and evenly, Consumer found”.(NZ Herald 4 Jun 2017).
This proposal means landlords will have to spend around $6,000 to comply. There will be little benefit for the tenant compared to the likely rental price increase.

  • Give landlords access to grants of up to $2000 for upgrading insulation and heating.

Labour need to provide more detail on this. If the scheme is pegged to certain products from specific suppliers it may not be the most efficient use of funds. If Labours $2,000 grant just increases the price by $2,000 then it will do nothing to offset the $6,000 cost of meeting their new minimum standards. There is a range of insulation products available from a range of large scale suppliers that meet all NZ Standards, and landlords need to be able to choose what they purchase and from where with freedom. In this way the grant would be beneficial to landlords and tenants.

Tags: media release - labours housing policy

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