Taranaki Property Investors' Association
While many people talk about a housing crisis in New Zealand, there is also a rental crisis with tenants facing the brunt of it. This was demonstrated last week with Trade Me figures showing rental prices increasing rapidly.
In addition to higher rental prices, there are more than 25,000 families on the state house waiting list and taxpayers are spending $1 million every day on emergency and transitional housing. This wouldn’t happen in a well-functioning rental system.
The New Zealand Property Investors Federation (NZPIF) has researched the reasons for the rental crisis and developed a five-point plan to fix it.
A large part of the rental crisis has been caused by measures to fix the housing crisis. The strategy of higher costs and taxes to reduce investment in rental property was meant to at least stabilise house prices. However, this has clearly not worked with property prices having increased at alarming rates.
What has occurred is wide-spread rental property shortages, higher rental prices and poorer outcomes for tenants.
To be clear, not all actions have created problems. Most aspects of the Healthy Homes legislation have been good and are leading to improvements in the rental stock. Likewise, most of the changes to the Residential Tenancies Act have appropriately improved conditions for tenants.
However, there are some changes to the rental industry that, while intending to improve opportunities for first home buyers, have made renting much worse for tenants. These include removing mortgage interest as a tax deduction, ring fencing and extending the Bright Line Test. These policies do not improve tenants living standards, but they have made renting harder to achieve and more expensive.
While the NZPIF is an industry body representing rental property providers, we must also consider the needs of tenants. We believe that the Government needs to acknowledge that there is a rental crisis and that some of their well-intentioned solutions to housing problems have caused it and continue to make the situation worse.
The NZPIF plan to fix the rental crisis and improve the living standards of tenants is based on five core principles of providing stable and better homes, lower costs to enable lower rental prices, more rental properties to meet existing and future demand, and facilitating improved access to justice for both tenants and landlords. The fifth principle, creating closer communities, is for the benefit of all New Zealanders.
The most critical parts of the plan are:
1. The establishment of a long-term tenancy option based on the German tenancy system, giving greater security of tenure for tenants.
2. The return of mortgage interest costs as a legitimate tax-deductible expense.
3. The repeal of ring-fencing restrictions
4. The return of the Brightline test to 2 years
5. The same rights and support for private tenants as given to state tenants.
6. The protection of neighbours and communities by returning the right for landlords to issue 90-day notices.
7. The reform of the Tenancy Tribunal
See the full report on our plan to fix the rental crisis here and a summary here.