Always look for the unintended consequences.
Invariably whenever changes are proposed for rules there will be some aspect of those changes that has the inverse effect to what was planned.
And so I think it will be with the ending of 'no cause terminations' of periodic tenancies.
I think it will see more socially deprived people who might already be struggling to get private rental accommodation being driven into the arms of the state.
It may also see more lower-cost rental housing simply taken off the market, with the houses sold. That COULD be good for would-be first home buyers for example. But for those who would already struggle to get private rental accommodation now, I think their options could dry up - and it might be a state house or nothing. And I'm sure the Government has not intended that outcome.
The suite of changes to our tenancy laws now proposed was initially signposted last year by then Housing Minister Phil Twyford. It included release of a discussion document.
I suggest anybody, particularly landlords, who might think what's now being proposed is tough, should read again that original document.
What they wanted
Originally the Government wanted to force tenants' pets on landlords. That's been quietly dropped. The proposed annual review of rents is going ahead - though I don't see that too many landlords could have serious arguments with that. The most silly suggestion from the original proposal that has survived is that it will be now possible for tenants to inflict on landlords things like shelf units. Oh, dear me. My suggestion to landlords is, if your tenants say they are going to put some shelves up, you get them to buy the shelves and then put the damn things up yourself! This might be the best way to avoid disaster.
However, the biggie is around the 'no cause terminations'. Here the Government had an idea I think for something very radical and ended up watering down its proposals in a way that's produced a very dubious outcome.
What we are seeing here I think highlights what happens when a Government has a broad idea about what it wants to do on an issue, decides to consult on it, and is then told in no uncertain terms that what it proposes is not a starter. In this case it means the Government has had to change what it originally intended and has come up with something ripe for unintended consequences. Maybe it's better not to consult! Although I think if they had not consulted on this, then they might have had some real problems.
Getting rid of fixed term rental agreements
It becomes clearer reading everything the Government was originally suggesting through the second time around that one of the key parts about that original discussion document was the way in which it sought to lead discussion in favour of getting rid of fixed term rental agreements.
That would have been a huge thing to do and it would have changed everything.
From the get-go a big part of these proposals was getting rid of the 'no cause' termination of rentals. But, and this is the big but, this could only ever apply to open-ended rentals, the so-called periodic rental agreements.
It seems clear to me that the Government was keen to rid of fixed term rentals altogether. Read the discussion document and the attempt is definitely there to push that - to get the idea embraced.
So, okay, IF the Government had been able to persuade people that getting rid of fixed term rentals was a good idea then ALL rentals would have become periodic and getting rid of 'no cause' would have been huge.
It would have overnight changed the whole rental environment in New Zealand.
But no, there was huge pushback.
Some 88% of landlords who submitted (and actually even 49% of tenants) were against the idea.
So, it died.
Pushing ahead
But, intent presumably on still getting 'tough' the Government has pushed ahead with the 'no cause' plan for periodic tenancies.
Right, so, here's what I think will happen. Landlords will in increasing numbers look to fill their properties with fixed term tenants.
You might argue that for a landlord there's a risk in that, because if someone's signed up for 12 months, well, then they are going to prove difficult to get out of there if they prove to be troublesome. But, particularly with sought-after properties, (and this is already the case with many properties) the landlords can seek a high degree of comfort for themselves in terms of getting references from would-be tenants, talking to employers, checking out the ability of the tenant to pay.
Accidents can always happen, but if someone's employment checks out and they have great references from former landlords, well, you would be very unlucky indeed to get problems from them.
I actually found myself on the market looking for an apartment to rent in Auckland earlier this year. And I went through the whole thing of providing an example of a payslip, a very good reference (thank you Crockers!) and then, because the letting agent suggested it would be to my advantage to do so, I proposed taking the chosen apartment for a year. Now, I wasn't that comfortable about committing for such a period, but it worked, I got it, and now I'm seven months down the track and all is good.
What about those on low incomes?
Consider though the situation of a lower income person, perhaps not with job stability, perhaps not with a job. Are they going to be in a position to go for a 12 month fixed agreement?
No, they are going to want an open-ended agreement.
How many landlords, given the option now though, are going to want open-ended agreements, when it's likely to prove to be difficult to get rid of tenants if there are problems?
Surely fixed term rentals will be the way to go. And that means the more socially deprived will end up the only logical place they can end up - in state housing.
Faced with overwhelming opposition to getting rid of fixed term rentals, the Government should have actually rethought the idea of ending 'no cause' periodic rentals. I would suggest they should still possibly rethink it. Maybe there is a compromise that can be reached.
As proposed it will have the opposite effect to what the Government intended - unless it is the Government's wish to have more and more New Zealanders become state house tenants.
89 Comments
I think given the ongoing fiasco that the private sector has become over the past decade that the best thing to do is to admit the experiment was a massive failure and get on and build more state houses then things are stable and relatively healthy for those in need. TBH, even in my eyes as a asset minded person, the state house stock should never have been mishandled the way it purposfully was by the Key government as the social costs have far outweighed the gains from selling off statehouses to nick smiths mates...if you don't believe me go look at how much money is going into the hands of motelliers who are leasing rooms to MSD! If you're going to pay to house people at least own the assets instead of making opportunistic immigrant motel owners wealthy. The new legislation will raise the calibre of landlords who remain as will licensing letting agents. And finally we will see the exit of the 'thick as pigshit' types too brainless to run a proper business (aka Auckland Swamphouse landlord) and instead opt to exploit those who simply need a safe place to live. Anyone got a problem with that?
Since that OBB and other measures to curb, you can see the effect - not big you've said. Off course, because the stability of debt ridden economy need to be maintain, let me ask.. what happened when the real Banks capital ratio being implemented, instead following the world herd debt, RBNZ actually rise the OCR significant enough, implement DTI & LVR prudently.. than that those dreaded CGT being put like the rest of other nations that adopted. I know right? all wishful thinking - What sort of housing price distortion did you think occur between 2012-2016? - Boom time, like the RE claimed - but WHY? we don't have a sudden gold deposits or natural oil/gas under AKL..so? - Watch the plane run out of gas, even the false calculated Chinese economy is needed money more reserve to fight economic war/downturn.. so they restrict capital outflow, have a look at the timing.. then check those RE in OZ,UK,CAN,US.. market outlook.
I’m struggling to see the direct link from your answer to my comment? Housing is a debacle due to both labour and national governments and poor local councils. Gov has created these issues and now a certain commentator above is saying to give them more power? I do agree however that we are running a false debt ridden economy, I think that’s pretty obvious but again, successive governments have made the “rules” that have lead us to where we are now. What do you do?
... I'm with you on this ... the private sector must operate within the framework of rules that the central and local governments have created....
We've had bloody awful rules ... and swathes of them ... since the 1970s ....
... it ain't rocket science to figure out the solutions ... its pollies having spine and balls of steel to get it done ... that's the problem ...
I mean, what I pointed out.. is the RBNZ.. but you're right that their think tank, suggestion/wishful tools, are just that... being ushered by the govt. of the day or being outright rejected by govt of the day - it's a type of governance for the short term thinking based on supporters based reaction. May be it's a time to reduce our voting age rights.. to 16, see how the dynamic result change as a result. Only top down government approach can addressed this debt ridden economy.. the other one? No one willing to ponder about: if we believe in 'self govern market', then surely it will do a 'self correction' at some point? - no one likes those sequences; correction-recession-depression.
Um, didn't the waiting list for a state housing go from steadily decreasing to below 4000 at 2016 when National was in to now over 14000? And these new laws are going to reduce this number how? So you want tax payers to pay for yours and everyone else's state house? How is this supposed to encourage people to work hard, save and aspire to be home owners? Or you think we all should live in state houses singing kumbaya and party everyday? Tbh I'm 100% for this if I had fuck all idea of where the money the current government is pissing away comes from :)
both of you get your hand off it and digest that its been proven by even the Key governments Treasury benches that raising the standards of rental accommodation is cheaper than having the entire country end up in hospital with rheumatic fever. The genesis of this latest update of rental standards began with no other than...the National Govt circa 2014...
Very well put, as my guess limited of these commented against the policy, have ever been in such current housing condition, let alone attending the sick in majority due to the respiratory system problem in healthcare systems. It's disheartening, specially when you do community visits.
... given the dreadful laws around construction , building materials , the consenting process , the RMA , land use restrictions ... the quickest partial solution to the housing shemozzle would have been for the government to ramp up the Housing NZ stock ...
Instead ... they came up with the barking mad answer : Kiwi Build ... saints preserve us ... Taxcindas lot are as useless as Tugger Key's gnats ..
Landlords need to understand they are not renting a car, but a home. And the home for the tenant should he theirs for as long as they are not wrecking it and pay the rent. Sell the house, the tenant comes too. No ability to remove apart from that. In effect, the same rights as a home owner.
So a fail for the COL..way to soft.
:) and the said tenants can leave anytime they want or are they obliged to continue to pay rent for life too? how come they have all the rights of a home-owner but nothing of the negative risks? and pry tell me why anyone should buy a house then? if you can be a home owner by simply paying the "rent" instead of the full price of the house? This is really good. I think you are stopping too soon as just houses. I can easily see the concept of renting something and then demanding ownership rights to apply to almost anything you need in life. Why should I pay for the capital expenditures of an airline? The airline shareholder must pay for the price of the plane, i just pay for my share of fuel (because i am being generous) and flying crew wages.
You have my vote for Prime Minister if you promise to extend this model to everything.
No. I think it is an immoral occupation, only possible due to regulatory and tax bias. Create a level playing field which means no tax deductions on anything. Renters need to stand up to landlords. This will happen eventually as the asset bubble continues to create more and more social unrest.
we are in changing times....tun on the news.
What tax deductions Rastus? the tax treatment argument is between owner-occupiers and renters, not between renters and landlords.
Also, your original comment is absolute non-sense from the conventional economic perspective. regardless of how many thumps up it get. The difference between an owner-occupier and a renter is that the owner-occupier pays for the capital portion of the house as well as the interest charged
and other operational costs . The renter pays for the interest and operational costs plus a small margin. You are saying that you must only pay the interest portion yet own the whole thing as if you were paying the capital too? why? how does this make sense to you?
Also, if being a landlord is immoral, being a doctor is immoral too. as they will only do anything for you when they have been fully paid. Farmers who grow you food too. Nurses and teachers. Pretty much anyone. Very very few of us do things for the good of others. Being compensated for what you do is the absolute norm. Why is it immoral for a particular group and not others?
Believer - I think you mean the tax treatment difference is between owner-occupiers and landlords. For example, in NZ a landlord can expense mortgage interest on their earnings/income - whereas an owner-occupier cannot. As I understand it, in the US this tax treatment/advantage is enjoyed by all owners of residential property assets (whether owner-occupiers or landlords).
No Kate. I mean between owner occupiers and renters. It is called imputed rent for owner-occupier (i.e. they are making income by leaving in their own houses for rents that they are not paying). Look at TOP tax policy. Property investors, are a business so you cannot compare them with tenants for tax purposes.
Oh, yeah I recall the TOP proposals. That whole idea of 'imputed rent' is econo-speak gobbledegook. We (and TOP) have to start thinking of residential housing as shelter, not assets.
In the real world housing market, non-owner-occupiers (i.e., prospective landlords) compete with owner-occupiers on price for the same product - a particular house/shelter. The non-owner-occupier can always pay more given the favourable tax treatment they have regarding shelter-as-businesses.
Even worse in the past, was the ability to expense those business losses against one's salaried day job tax paid. I think that's been shut down, hasn't it?
As I see it, all the coalition initiatives are trying to level the playing field where obtaining shelter is concerned.
I am not convinced. Lets say I am a first home buyer and can pay $500k for a house. An investor also want the place for $500k, he is borrowing all the $500k at 3.69% (about $18k interest in the first year of a 30 year mortgage). Lets say insurance and rates are $5k also. If he is unable to rent the place for a whole year, he will be able to claim back about $23k of losses at top marginal rate this means he can claim back $7,500. He is still making a net loss of $15,500 (out of pocket, actual expense, dear cash paid). He must be really financially illiterate to think this is a good idea. And now, he cannot even do that (as rental losses are ring-fenced, you can only use them against future rental profit). So no real "tax advantages".
The real advantage investors have over others is that they generally have a stronger financial position and a great ability to leverage this to burrow more money. The LVR for investors set by the RBNZ reduces their leverage ability a little bit.
The only significant tax advantage is that capital gains are not taxed. This is very important as taxing capital gains reduces the asset return by 33%!. But the Labour have backed down on this.
"Heal" and "feed", yes they are basic necessities of life along with shelter. Good on the doctor for doing his job, he is thanked and praised. BUT the farmers and the house-owners are hated mocked and ridiculed for their efforts in providing food and shelter. Maybe we should all train as doctors after all they earn more than everyone else but please dont call them greedy.
Do you actually understand why there is a difference? Doctors contribute a service that provides a net benefit to society. When a profession or industry generates private profit, while generating negative externalities (paid for by wider society), its understandable that these aren't viewed as favourably.
It does not help to discredited professional groups if looking for a constructive solution. In general landlords maintain their properties/ have them looked after, hence they earn praise as every person who is doing a good job. Of course there are landlords who neglect their properties but so there are doctors, nurses or farmers (or name any other professional group) neglecting their jobs.
Regulating one industry only would be unfair. Regulation would have to extend to all sectors in the name of fairness. Our dairy products are far too expensive when compared to overseas costs. Solicitors take an awful amount of money for their service, a simple A4 hardcopy will cost you $ 70! The list can be extended to all professions.
My question would be, do we want a system based on free economy rules where to shaping it everyone is invited to contribute, or do we prefer more regulation and potentially a communistic approach, leaving the shaping of our country to a governing minority?
Yip, hopefully we're not going to resort like that Hong Kong option; I would rather choose the option B/Hickey suggested couple months ago.. all young people, eligible then go for voting, if possible? (like current Brexit).. gather more number by asking legislation to reduce the voting age to 16 - Let's iron out the old guards/old protective policy for a few. Let's play by the rule, it can be done. Remember the real boss is the masses.
You know what Rastus, I don't agree with you but I can kind of get where you are coming from. The generational development is interesting...
A landlord provides a service, one I've used and been thankful for as I moved around. Houses are finite and private property, a service is offered and you can choose to accept it or not. Free markets aren't perfect, but history has shown there is no better way to allocate scarce resources. I have no qualms in protecting good tenants, but bad ones need to be able to be weeded out or everyone will pay.
we have to now to come to the conclusion that private rentals are only acceptable to a small portion of the population, mostly young or transit workers so a small portion of the population,
most people want a stable home and environment and the only way to accomplish that is via the state, either by their own or in partnerships with housing authorities
and so we need to rethink how funding is applied.
i.e do away the accommodation supplement and instead fund houses
Indeed. How about regulating that if landlords want accommodation supplement they have to sign their house over to HNZ for management. Debt remains dirt cheap at the moment so cant see this going away any time soon. Personally picking this to get worse without the mass increase in state housing. If Nats get in it will be role on debt speculation to the moon.
Just wish the global debt reset would get on with it. Lets face it most of Europe and the US and China are never going to fully repay their debt. Model is at tipping point just like a fish pond running out of oxygen.
The unintended consequence could be similar the the unintended consequence of removing the 90 day work trial.
The 90 trial allowed businesses to give risky candidates a go. Of course there was the odd employer who abused this law but by and large it was a success and gave a lot of people the opportunity they needed.
Removing of the 90 trial meant employers went back to "safe" candidates. The same will happen with rentals in that landlords and property managers will do more due diligence than ever before and many in need wont get a look in. End result will be more homelessness.
Isn't that the purpose of this CoL? To have more people on the government teat so they get more votes, keep the vote buying cycle going by destroying the middle class, fuck up the country by destroying the productive sectors then turn the whole country into New Venezuela? I'd say it's all intended :)
Beefing up renters by Nats Co? is productive economy? - I knew Labs Co full of those odd creativity.. but mate, C'mon 9yrs already given to the previous bunch.. if they're so successful? why then, almost half this country votes is between the twos - I would think that if Nat co. were so ok then they should govern the vote by at least 80% support of the population, the fact it's not - even some avid Nat co supported abandon their vote, why would that be?
The 90 day trial was abused, there's a stack of evidence from MBIE's own research as well as the unions representing workers at companies that most employed the practice. Unfortunately the smaller firm is still allowed to use the trial which only legitimises the poor hiring decision they made in the first place...
Two edged sword that and 90 days is not long enough.
Yes some employers got slack and misused the hiring process.
Yes a lot of people who would not have gotten a chance got one now except they would not know that it was because of the 90 day clause.
Should have remained for all companies. By and large it worked well, but of course it depends on what outcome you want from your research.
Both sides want to impress for the serious jobs, only one side can get out at will.
Bullshit, an enterprise needs to have its recruitment process nailed down watertight, anything less simply implies the enterprise is functioning sub par and will not meet the markets demands in the long run. This is true of many of this countries businesses...I cite the businesses involved in the ultra fast broadband project under Chorus or fruit pickers employed by Zespri our great kiwifruit exporter.... and yes even Pak n Save and Count Down...all taking the easy route hire then fire on day 89...or make you volunteer for 88 days then sack you...
The issue is those on low income where that already low income buys less and less every day. The are pushed out of better places by those on higher income who can afford higher rents/property prices.
Then you end up with the fallacy of a "high standard" business (i.e. rental properties) for those who cannot afford it. How can you have a business model that provides quality housing for people who cannot afford to pay for it? it is like saying I want to have an airline with business class seat formation but with jetstar prices. Never gonna happen.
You will either need to reduce the number of low income people OR "non-market" solution. That is a simple fact. There will be no real way of fixing housing problem for low income tenants with fighting with the landlords, as greedy and deplorable some of them maybe.
You may need to visit & stay longer in Q/town.. then start shifting the think to AKL... put yourself on their shoes of those low wages workers.. yip. .the one that pickup your rubbish, wiping your bum if you're a terminally ill patients at the public hospital as HCA, cleaners.. are all of them house owner? or renter? - I cannot put a calculation two in two together, you may need to teach me.. a family, hardworking, low wages, yet needed to service AKL.. still renting in bad place, barely survive due to costing, keep being revisited by healthcare workers. Who do you want to employ for such low wages task? at what $ you want to offer them fairly/living cost? .. put a rule: is it local/foreign student? is it single person/young healthy?..import low wages workers from overseas? - may be it should be that? like the one you'll find plenty in Flat Bush area.. painter.. car groomer.. cleaner.. yet? they all occupying not just single.. but couple of those 1-3M houses, be it as owner or as renter? - I still cannot put my head around it. Even after comparing to local graduate healthcare workers that earned a handsome salary & still paying student loan...they find it too expensive, and with ease smile just said.. after contract finish, they'll move to OZ.. Rock Star economy.. bummer
I agree with you. But it will be a very difficult business case to execute. You want something cheap (so can be afforded) and high quality. That is often very hard to come by, you either get cheap (not a desirable location, shoddy construction standards, cheap material etc) or quality (that will not be cheap).
From a financial perspective, it will be a perpetual loss making business for government (exactly because the Government can never threat it as a business. It will always be a benefit needed to be funded from collected tax). Again that in itself is not a reason for government not to do it, as there are very obvious social costs associated with avoiding the "financial" one. But they would need a very good plan as how they are going to fund it.
Rest assured the KiwiFlop reset is dead before it started!
By the way where is this KiwiFlop reset thing?.....
Who in their right mind is going to invest their hard earned into a property for someone else now, with the BS that has just been announced.
David is correct, the people who have some black marks against their names will have far more difficulty getting a private rental.
KiwiFlop was exactly that and the reset is too hard and wont work so this COL government brings out this BS just to try and show that they are doing something.
Anyone with any intelligence will work out and find that it is going to backfire bigtime.
I disagree. What needs to happen in property letting is a massive raising of the levels of professionalism to something more like what I have been involved in internationally. Property syndicates and the like have far better systems than your grey haired semi retired boomer could ever aspire too...and efficiency of scale to boot...imagine the money you could really make...time to think big and better kiwi landlords!
Luxon, yeah right! His former (state owned) airline is now cancelling flights during peak season because he pushed for all heavy maintenance to be contracted out...and theres no space for such a small time airline..which is why AirNZ did their own engineering in the first place....responsiveness! Never mind the customer...typical bean counter, all about the short term money but no long range vision! No votes for that guy!
Heavy maintenance is contracted out because of the union. Yes, another leftie concept hurting those it supposedly rep represents. Maintenance workers are guaranteed pay rises, year in, year out with no end in sight. The wage bill has ballooned, and these old useless workers are being paid well into the six figures when they produce nowhere near that value. Air NZ has tight margins, they can't afford these shenanigans. The law of unintended consequences ladies and gentlemen.
National Co. only subscribe to the Capitalism, Neo-Liberalism, have & have not, winner/looser.. what will it be in the end? to walk straight you must walk with both legs, just using one? guarantee that you'll go in circle. We gave Lab 9yr, then Nat 9yr, why not Lab again now 9yr? means.. 6 more to go.. he heh. - Just don't get cocky when you want to consume all those Oyster, when you sick.. one of those low wage worker might be the one that will look after you.
I'm sure that is their intent.
Ie leasee/tenant has fixed long term, with rights of renewal. Leasee's right of occupancy is secure as long as they pay as agreed and stick to other conditions of occupancy
Lessor can sell property based on the strength of the lease and leasee
I agree with all but one of the governments changes. Getting rid of the no clause termination. If it’s going to be Really difficult to kick troublesome people out, why would anyone take a risk on some young bogans for example. Unfortunately if this goes ahead you will quickly find that no-one is going to rent to a certain sector if society. Just to bigger risk. I feel sad writing this, but it’s true.
There is so much demand for rentals, that the "certain sector" you refer to already face that type of difficulty and discrimination - hence the huge waiting lists for social housing.
The new requirements for legitimate cause for termination are aimed at good tenants having longer tenancies and greater stability and certainty.
Correct Kate, so much emphasis on bad tenant comment, as to be honest? not many willing to admit/disclose the bad landlord out there. Why do we actually encourage this private landlord activities as an industry the past 9yrs? - is it fair to say with all these negative commentary.. that this 2.5yrs of Lab, they're out to get/destroy the landlord, now the opposite is my querry. What is the past 9yrs under Nat co? are they actually baby sitting/care more for the landlord? eg. hardly anyone commenting negative of Nat co policy, yet? plenty, of negativity from the renter perspective. Anyone willing to admit/happy to see that now NZ got more homeless populations? courtesy of ..c'mon the new bunch is not even 3 yrs yet.. bee oonest. - Balanced, is what we need in this life folks.
Right, so, here's what I think will happen. Landlords will in increasing numbers look to fill their properties with fixed term tenants.
David, just to clarify my understanding. Families seeking rental accommodation normally start out as fixed term now. What I understand the difference to be with these new proposals is that after (let's say) the first 12 months as a fixed term - the tenancy automatically renews as a periodic tenancy... giving the tenant a stronger likelihood that the tenancy will run longer term (i.e., until such time as notice is given for a just cause).
When you have school children it is a nightmare to try and find a new rental within the same primary or secondary school area, particularly when rentals are scarce. And if one has to change schools - the cost of new uniforms is another large expense associated with the move (not to mention the difficulty the children have in leaving classmates and familiar teaching/admin staff behind).
I think the changes are mainly targeted to improve tenure/certainty for those with school children.
Hi Kate, I guess my assumption of what would likely happen is that when the fixed term is moving toward expiry the landlord would offer tenants they were happy with a new fixed term. It is correct that the tenants would NOT have to accept the new fixed term and in theory the tenancy would revert to periodic. However, landlords, if they really wanted to avoid periodic tenancies could, if the fixed term offer was turned down, then change tack and say they were going to refurbish the property, or whatever, and end the tenancy. In such circumstances I think most tenants would probably just rather accept a new fixed term, wouldn't they?
We always talk to our tenants 3 months before a fixed tenancy is up currently.
If the tenants are not prepared to signed a renewed fixed term tenancy and Want a periodic tenancy, we will do that but we will raise the rent by a significant amount to cover the increased risk.
We have only twice not wanted to renew tenants tenancy over many years and if landlords don’t want to renew a tenancy they clearly have a reason for this!
As for only one increase allowed in a 12 month term rather than every 6 months is dumb.
If a landlord has a 12 month agreement in place I would doubt that landlords are increasing the rent after 6 months as we never have or never would.
What these new requirements are only going to do is ensure that any tenants with any previous form will have a much more difficult time finding a new property to lease.
Landlords will also. E very unsure of young tenants as it won’t be worth there while.
I think putting the rent up is all the landlord could do to make the tenants vacate, and even that could be problematic if the proposed rent is not 'fair market value'.
The FAQ explicitly states that tenants told them in the consultation that landlords have claimed that family members needed to move in to the rental as the reason for them to leave, only for them to then find that the rental is re-listed at a much higher rate than they were paying. So the ministry knows about this sort of false claim and now require the family live in it for at least 90 days - with the implication that there will be some sort of penalty if this is found out not to be adhered to (otherwise why tweak this rule at all?). I expect they'll have similar penalties for landlords claiming to renovate properties and then not carrying through with it. Probably the jilted tenants would have to go to the tenancy tribunal (where their names are now anonymized if they win), but if the penalty on the landlord required them to pay an equivalent amount of money as the bond, then I think that would be a pretty strong discouragement to landlords trying to pull this trick.
Frankly the current proposal seems to make fixed term tenancies pretty pointless for the landlord. Basically you give up most of your rights of eviction for a fixed term (such as the new 'anti-social behaviour' and late rent 3-strikes system), and then at the end of it the tenant gets to choose whether they want a periodic or new fixed term and the only ways out of extension are exactly the same clauses that apply to periodic tenancies that you just waived access to for the last 12 months anyway. Since the proposals also require landlords to allow fixed term tenancies to be assigned to other tenants, there's really very little specific value to landlords in having fixed terms, outside of attracting certain types of tenants (eg offering 12 months for uni students with leases starting in Jan / Feb).
So it would seem to be "if you go on periodic tenancy I'm increasing your rent by $50/week, or do another fixed term for X months at your current rent" is the only real recourse left to landlords wanting to end a fixed term tenancy without extension.
Faafoi has not considered the replications of his meddling.
Currently the way we operates works just fine for both ourselves and our tenants and how he is allowed to tell us how to run our business is just plainly disgusting.
He is dreaming if he thinks that we will be allowing any of our tenants to sublet one of our rentals without our approval as to any new tenants.
They will be operating under our rules and not Faafoi’s as we don’t tell him how to run his family or life.
Yes we will increase rents to tenants if we want to and if we feel the risk is warranted.
We already run a very good business at the moment and everything is documented however with this new meddling by the socialists, we are going to be running an even tighter ship.
Faafoi, talk to you cohorts and and advise us now what you are doing to assist people into homes without continually trying to screw landlords because you continue to show that you are totally out of your league and anyone with any knowledge are also telling you that.
You are gone at the next election!
Well, yes they would, and that outcome also meets the objective of these changes, in that the tenancy has greater continuity and longevity.
Lanthanide's explanation is my thought on likely landlord responses to the changes. Much less ability for landlords to simply end a tenancy at the end of a fixed term in order to bring someone else in on a much higher rent. Hence, rent increases will be subject to greater fairness by the new rules.
Hi David, Can interest run a stat based on investigative data about socially disadvantaged that being treated with substandard building condition in private rental accommodation? - It is possible to shift the accommodation subsidy that currently being suck up by private rental by increasing cost, every time increases on the socially disadvantaged being announced. May be? as social welfare state, we should shifted back to the state? - No matter how intelligent we try to mutter the tone, about prison, housing.. it's back to the basic, manage by the state/costly for overall tax payers? or manage by the private sector.. it's not going to be effective BUT opportunity of efficiency is always open there.. cost cutting, low/substandard, cut corner.. in the end? where they end up to again? - more heavy burden, on future tax payers. Social burden cost will be much higher.
[edit: this is incorrect - it is actually the end of fixed term agreements] I think this is the end of periodic tenancy agreements. I think they will pretty much only exist in circumstances where the landlord forgets to renew the fixed term before it expires and it roles over into a periodic agreement. I feel sorry for any landlord that finds themselves in this situation.
These changes will mean that 1. Tenants will have to go through tougher checks/rigmarole to secure a rental 2. Tenants won’t have the flexibility of periodic agreements 3. Longer-term the rental supply curve will shift to the left.
Actually it's really the opposite. At the end of a fixed term tenancy, if a tenant wants to go onto periodic, the landlord can't prevent them like they can under the current rules.
I think their only reasonable recourse is to say "sign another fixed term agreement or your rent is going up by $50/week" and I suspect it won't take long for the TT to set a precedent that that is an unreasonable action by the landlord.
If you think that landlords,and property managers are going to allow tenants to dictate things, you have got your head in the sand.
This is going to backfire and tenants are going to be far worse off.
Tenants will be paying more as landlords raise the rents to cover the increased risk and there will be fewer periodic tenancies and landlords Will not be taking on tenants that previously they would have.
Government is going to have to step up and find more motels!
Nothing wrong with the way it currently is!
Tenants who sign up for a fixed term often try to get out of a fixed term and when periodic do Not need to give much notice.
Landlords always have to honour the fixed term and need to give more notice.
This is going to end badly for many and is going to have penalise tenants more than landlords.
Homelessness is going to grow as landlords won’t take on suspect tenants and who could blame them.
We will leave it to the socialist COL Who are doing such a wonderful job
As a small scale 'amateur' landlord of a single unit, this is bad policy. I am of the relaxed/lazy model of landlording and don't use an agency. Sign up tenants for 6 months then let it lapse to periodical. Don't raise the rent until the tenants change. Usually young professionals so usually move on after 2 years.
Now, I think I need to switch to using a property manager. So that, I don't accidentally let a fixed term expire and lapse into periodical. That will come with the extra costs and higher rent (and rent reviews etc that I'm too timid/lazy to do myself).
Labour voter, as well.
It seems like every time a teeny change is made that makes things even slightly better for tenants, landlords come out of the woodwork crying. The balance of power has changed to 90% landlords, 10% tenants and you'd think it was the end of the world for some landlords.
Regulating the rental market will undoubtedly reduce the numbers of rentals. In these discussions it is often referred to overseas markets, where proof of my statement has just been provided. Looking at Germany, many of the larger housing investors have now pulled back on earlier planned developments, since a newly introduced rental capping has made it unviable to proceed. https://www.en24.news/news/2019/11/12/mietendeckel-in-berlin-cooperativ….
If your boss or client informs you that your salary will be reduced from tomorrow but keeping up your workload at the same level, you would probably reconsider your possibilities/ consequences too.
Good thoughts but I have been doing a bit of research of my own. Over the last 10 years the number of private rentals has increased at double the rate of new owner occupied dwellings. For instance 2018-19 private rentals grew 17600. However based on annual Housing NZ reports their stock 15/16 was 64,400, 16/17 63600, 17/18 64000, and 18/19 65300. In other words HNZ net supply is hardly increasing at all. At this rate they will never clear their waiting list. There is no future for any tenant to think about getting a government house. They are all going to end up in the private market.
The change is solely driven by Labour trying to offload all the bottom of the barrel tenants on to private landlords. Forcing the private rental market to become de facto social housing, without having to pay them for it or remediate the damage they cause. You see, if private landlords can no longer evict bad tenants, those tenants won't end up on the HNZ waiting list, and Labour won't have to take responsibility for them. And lets be clear - its only ever bad tenants that are given a 90 day notice. No one ever says "hey you are the best tenant I ever had, you keep the place spotless and pay your rent on time, now get out of my house when your fixed term is up so I can rent it to someone new and unproven"!
At the end of the day, the effect will be that those landlords who are stuck with bad tenants, will have no choice but to put the house up for sale. Which they will probably be happy to do, as who wants to spend their time constantly stressed out about the state of your investment property? Especially baby boomers - they will likely be mortgage free, so can sell and put their capital into power company shares or something, get a nice 5% return a year, and the ability to sleep soundly at night.
Look, people here who believe that landlords (LLs) are the devil incarnate and renting out houses is immoral and so on...
You are blaming the wrong people. The reason that tenants or first home buyers or young people wanting to own a home rather than rent, but can't is down to massive price increases in homes in the last 10 years or so.
We had the GFC in 2008. The National government's response was to a) Import a shit ton of low skilled people and b) Allow every man and his dog from around the world to speculate in our housing market.
And given China, the US, Japan and Europe were printing money like no bodies business, some of that money found it's way here and went into housing.
How on earth is this LLs fault? Yes we did well out of it, because our assets massively increased in value. But we certainly didn't create this mess.
So if you want to get angry, blame the central banks of the world (including the RBNZ) and the Aussie banks we have here who added fuel to the fire by lending to anyone who could fog a mirror.
If it was me, I would require a termination Cause, but under embargo so only the LL and TT know the reason and the complainer for the termination. That way the tenant has to petition TT for clarification and possible challenge of the reason as now, but will never be told the complainers details, because in this fraught termination procedure that aspect is the only point of contention, identifying the complainer for retribution purposes. The tenant can still challenge the 90 notice, but the challenge of the complainant has to be left to the TT.
Presumably you do realise that the intent of the proposals is to grant lifetime tenancy to the tenants.
So if you give a tenant a fixed term tenancy, the tenant can decide to stay or go as they wish. If they go, OK. If they decide to stay they can simply not agree to a renewal of the fixed term, let the tenancy become periodic, and then they can stay on forever. The landlord will have no power to terminate or require a new fixed term. All the power will be in the tenants hands.
As with all of the recent tenancy legislation (insulation, healthy homes), the concept is based on the belief that once a property enters the rental pool it will stay a rental - forever.
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