By Amanda Morrall
Rental hikes on a shrunken pool of habitable houses in earthquake ravaged Christchurch have triggered calls by tenants' rights group for the Government to impose a freeze.
Tenants Protection Association manager Helen Gatonyi said the move was urgently needed to protect renters from being gouged by landlords looking to capitalise on what was shaping up to be a scarcity situation.
"We'll be asking for support from all of our stakeholders that there be a rent freeze for at least the next six months,'' Gatonyi told interest.co.nz.
While it's estimated that as many as one in four residents have left Christchurch, Gatonyi said it was only a matter of time before people returned to the city to much reduced and damaged housing stock.
"People are being accommodated right now but it's only going to be short-term. When they come back, that's when the real problems begin. And the truth of the matter is that the people who are most affected are often the most disaffected and they are of course, going to be the most difficult to house, hence there being social housing.
"Private sector landlords have traditionally been known to hike rent, and I can't imagine that is going to change. It's brutal but it's the truth.''
'Back to where they were pre-recession'
New Zealand Property Investors Association President Martin Evans rejected suggestions landlords were using the earthquake as an opportunity to jack up rents.
He attributed any current rental hikes to supply and demand and said whatever increases have been imposed merely restored rents to what they were before the economic downturn.
"So they're not actually raising them, they'd be putting them back up there anyway,'' said Evans.
Evans said a rental freeze at pre-Sept 4 levels would unfairly target landlords who were already suffering themselves financially because of increased costs and devalued properties, on top of earthquake related challenges.
"Landlords are suffering more than anyone else because they have properties that once the tenants leave, they can't get new tenants. If they have damage to them, they're not going to get any rent. So they have to make it up with the property they have left.''
Evans suggested that a freeze on food prices, petrol and power would be more effective than a rental freeze in terms of providing support to victims.
"You'd be hitting the people who are already hurting,'' he said of the TPA's proposal.
Meanwhile, the Department of Building and Housing is urging landlords and tenants to "work closely together and maintain their relationships as the state of emergency continues in Christchurch."
While the Tenants Protection Association was urging the same, Gatonyi said landlords were increasingly becoming 'very unreasonable' in their dealings with tenants.
Under current laws, tenants whose rental properties have been rendered uninhabitable are required to give two days notice to quit a property.
Although not having water and or power was technically insufficient grounds to deem a house uninhabitable, Gatonyi said there was reason to suspect - in light of the National State of Emergency - that existing sections of the law were open to interpretation.
'Tenants can just leave'
She said it was her 'position' that if there were health and or safety issues arising from not having power or water, that tenants were within their rights to stop paying rent and leave.
"We're all struggling around definitions around the (Residential Tenancies) Act," said Gatonyi.
"In terms of the advice we are giving, we are giving advice on the individual's immediate need and that may be the immediate need in terms of health and safety.We're saying, if you feel your property is changed to the extent that you feel unsafe in it, then you must make that decision for yourself and your family to move."
Ordinarily, the TPA could deploy staff to make a determination on whether a house was safe or not, but as the TPA (and dozens of other social service type agencies) were affected by the earthquake, there wasn't the available manpower.
An assessment on whether a house in habitable can be made by emergency services, Civil Defence, or according to Gatonyi, a health inspector from Canterbury Community Health.
As for rental obligations, Gatonyi said it remained ambiguous.
"You may still be required to pay rent. If you are able to do so, then you should. If you are not able to do so, go but be aware you may be chased up later on.''
She urged tenants and landlords to do each other courtesy of keeping open lines of communication.
"Don't leave without telling the landlord or the property manager where you have gone, equally landlords should do the same.''
Gantonyi said the association has been besieged by hundreds of calls daily from tenants scrambling for advice. While they were taking as many calls as they could, the TPA's sister branch in Auckland was also available to help.
See the release below from the Department of Building and Housing:
The Department of Building and Housing stresses the need for landlords and tenants to work closely together and maintain their relationships as the state of emergency continues in Christchurch.
Our contact centre is fielding large numbers of calls from landlords, tenants and property managers in Christchurch who have questions about their properties and the laws that apply in these special circumstances.
Please see below for guidance on what to do if you suspect your property is uninhabitable after the earthquake.
This guidance is not exhaustive; anyone with further questions is encouraged to phone us on 0800 TENANCY (0800 83 62 62). Please also bear with us as we handle larger than usual call volumes.
Tenants
If you believe your property is uninhabitable, contact your landlord as soon as possible, and discuss the situation with them. It’s best to reach agreement together to terminate the tenancy ahead of any formal assessment by building professionals.If your property has been deemed uninhabitable, you may cease paying rent. Emergency Services, local Council or Civil Defence staff should be able to ascertain whether it is able to be lived in or not.
If your property has been deemed uninhabitable DO NOT re-enter it to retrieve belongings unless Civil Defence or Emergency Services determine it is safe enough to enter.
If the damage to a rental property has made it uninhabitable, then you may give your landlord two days’ notice to end the tenancy. (This is under Section 59 of the Residential Tenancies Act 1986).
If you are unable to contact your landlord, you can contact the Department on 0800 83 62 62, to determine if other options are available to you.
Landlords
If you have not done so already, attempt to contact your tenants to check that they are safe and find out what condition your property is in as soon as possible.You may give tenants seven days’ notice to end a tenancy if your property has been deemed uninhabitable. Emergency Services, local Council or Civil Defence staff should be able to ascertain whether it is able to be lived in or not. If it is declared uninhabitable, the tenant is not required to pay rent.
We also suggest you contact your insurance company to let them know if you may need to make a claim.
The three-week rent suspension offered to Housing New Zealand tenants does not apply to private rentals. Landlords and tenants should be open to discussing alternative rent arrangements and come to amicable agreements where possible.
Although it is understandable that many tenants may not wish to stay in Christchurch, and that the earthquake has caused great distress and hardship, it is important that rental law remains in force just the same as laws governing many other parts of society, which are necessary to maintain order during a crisis. This is to ensure that landlords and tenants are treated fairly should any disputes arise.
Applications can be made to the Tenancy Tribunal to deal with any disputes that can not be resolved between the tenant and landlord.
If you require emergency housing help, contact 0800 HELP 00 (0800 435 700).
59 Comments
When the shoe was on the other foot (i.e. when interest rates went up to 10%+) tenants did not offer to pay higher rent. We have just increased our rent for the first time in 3 years and I don't recall the tenant coming to me to ask to pay more even though costs had gone up. The market dictates the price.
Calm down Wolly, it's only for 6 months to avoid price gouging. Which is fair enough - look what happened with 9 11, hotels exploited all those people who had to evacuate their downtown acommodation. How low can you go.
"Free" markets are a myth - would you be free Wolly to employ 9 year olds on $2.50 an hour to work in a newly opened Pike mine? - mind you if National gets in again maybe you will, after all they all for "flexible labour".
It's incredible anyone still pushes the "Free" market after the last few years of casino capitalism's fallout.
Sorry..don't see the link between 9 year olds..a coalmine and my pointing out the stupidity in an idea to freeze rents in Chch.
What you need to do SP is think...for start you can tell us how said freeze would work..where would it apply....and who would 'police' it....and what would that cost...and who would pay?
What if the landlord wanted to lower the rent! Your freeze would prevent that.
Are you happy to use regulations to wipe out contract law...if so you will need to know once done tis easy to do again on any other law...consider what Labour would do with that bit of power.
I have no doubt some landlords will and already have moved to pillage the loot well the going is good....so let's have a website with their pictures up front and all the details on what they have done and a note on where they live and what they drive. See how bloody long they last.
You said the 'free' market should set rents. I pointed out that there is no such thing as a 'free' market.
The child miners are an example of how ethics trumps 'free' markets. There are regulations against it. Of course there didn't used to be, it took organised labour and middle class progressives to stop it. No one ( except The Economist rag ) screams "market distortion!", "how are you going to regulate it/enforce it!", "Nanny state!" anymore.
Ditto with stepping in to stop price gouging by landlords of refugees. Ethics trumps "free" market.
Name and shame website? - lame. How are you suppose to regulate that? Look what happens when they try to do it with neighborhood pedophiles - mistaken identities, same name confusions, false accusations, inaccurate files, typos...
It will be a cold day in hell the next time a landlord volunteers to decrease rent.
Can someone please give me an example of when rent or price controls haven't led to unintended consequences that were worse than the problem trying to be solved by a price control?
Makes you wonder about the quality of the advice received from organisations such as the TPA.
True, in this case the unintended consequence is (hopefully) better for freedom and liberty in the middle east.
The long-term solution is to provide a country that will create productive jobs for it's citizens, rather than the short-term option of a increasing food subsidies. No matter it looks like the citizens are demanding this change for themselves to remove the despots and the corrupt! I suppose thats the teach a man to fish argument ...
Although Saudi has resorted to the subsidy route, how long it can last is the question.
Im not sure what you are saying here......are you saying price fix food? because that wont work, dictate the price of food and farmers etc wont produce it at a loss, Venezuela tried that a few years ago (still doiing it?) result empty shelves.......
Food is surging because there are too many ppl and not enough food is not evenly distributed....throw in the inflation that the US is exporting and there isnt a huge amount that can be done. Long term there will be a lot of hungry ppl.
So subsidize food? rather hard....have to get the Govn income from somewhere to do that....
regards
They have a basic premise that tenants have more rights than the landlords, it's their ideological position. And it is probably true, tenants with that minset can muck landlords around big time, just like those with countless car/traffic fines muck the Courts around
There are nightmare stories about tenants parking their motor bike in the living room. There are nightmare stories about psycho landords harassing/intimidating their tenant.
Guess the idea is to strike a balance - but my impression is the landlord organisations are least interested in that.
Its never a free market, always distortions to the market. Took a day out after sorting my businesses interests in Christchurch to try to secure property for some displaced non profits in town. Had a few contacts and they had reasonable reserves to pitch much higher than an average mid tier rate. However the margins on those fletcher contracts etc must be massive as in both case the contractors were able to swoop in and pay rents that were mutiples higher than local business would be able to pay. Its ironic the business coming to rebuild the community also can crowd out the local community. An outside contractor approached me to buy my commercial building...
Yes it is fair. After all a tenant might lose their job, or land a better one somewhere else, there might be changes in family circumstances . Big upheavals in their life that could turn into an unmitigated disaster if they are locked into a rental agreement for months.
After all the landlord only needs get another customer, no life changing event for them - or at least it shouldn't be if they've done their home work. You know like before speculating in the rental investment market making sure you can afford a certain annual vacancy %.
There are going to be winners and losers in this situation. My local cafe was struggling for a long time, now they are flat out, the cafe in town is no more- Winner and Loser. Construction workers will have jobs for next 20 years in CHC, Small business owners may not Winners and losers...the demographics of the city are going to change and that will be hard for people to get there heads around..I just hope there are more winners than losers in this situation.
Well hopefully the state steps in with a bit of support for the losers and protection from the winners - eg TEMPORARY rent freeze if price gouging is occuring. Of course Wolly et al will scream "Nanny State!", "Communism!". Apparently he thinks families can go sit in the gutter and beg, coz its a 'free' market.
But they will price gouge you are admitting. You don't seem to get it, it's unethical to exploit refugees. People who have had to bury their dead, live in a tent next to the rubble of their home. And landlords salivating about the opportunity to make bigger profits out of it - nice one Duke.
Back to the 'free' market myth. How come the guys who pushed this nonesense pre the financial melt down ended up in front of commission of enquiries ringing their hands and squeaking "'I'm shocked, I'm shocked!".
Economic text books - you mean the ones the economists who got us into this mess studied as undergrads, or later wrote as professors?
You just dont get it do you.
We do. It's obvious that you don't.
Rents will fall to whatever level that tenants can afford to pay.
Fixed that for you.
Landlords are not going to price gouge to the point that their properties sit vacant are they?
That's already happened. They paid too much for their properties, in the belief that "property prices always go up!", and are now desperate to recoup some of their massive loss and repay some of their enormous debt. So they demand too much, and the market laughs at them and moves on.
This is what happens in a free market, the equilibrium price is what prevails, the price that works for both renters and landlords.
Eventually, yes, that's exactly what happens, so long as the "free" market is properly regulated, to prevent monopolistic and otherwise immoral, unethical and unscrupulous behaviour by greedy scumbags.
Right now the property market is falling, an obvious example of natural "self-regulation": prices were talked up to insanely unsustainable levels, while incomes failed to grow, but the cost of almost everything else did.
Prices too high + incomes too low = few able to pay = falling prices.
Just go buy an economics text book and start reading. Its really not that complex.
So why don't you take your own advice, instead of spouting laughable crap and making a dick of yourself for all to see?
The theory of efficient markets is basically what you’re exposing with the reference to equilibrium. Unfortunately the Dot com bubble and the subprime market aftermath have wounded that theory severely. It is predicated on all things being equal, known and all decisions rational and makes no account for moments when it is not.
Landlords are investors and varying in scale. Some investment properties are based on gearings established during a false economy fueled by easy money, since dried up. Normal efficient market theory would dictate that they liquidate the asset, take the loss and move on which many have but many hold out unable psychologically to take the loss and hunker down waiting for the good times to return, which in their mind is the norm. This is not that time.
The demand this time is not generated by normal churn in an improving economy but a sudden shortage generated by a natural disaster, which is not a market force. Demand is generated not by improving circumstances but a sudden deterioration of them. Willingness to pay high prices to secure premises at this stage is akin to buying seats on a lifeboat.
It is justifiable to increase rents in relation to costs and fair return on investment but not windfall profiteering or attempts to recover losses on poor investments made during investment bubbles.
The black market is an example of a pure demand driven economy. Corruption is another and drug trade a third. Regulation of market demand is everywhere. The current issue is balance and societies tolerances, which profiteering during times of crisis falls outside of.
Duke your explanations only work when economic, financial and social normalities prevail. I’m sure with almost daily increases in basic needs e.g. petrol/ food a majority of NZpeople are increasingly under financial stress. The situation is forcing many people/ families out of especially average quality houses/ apartments into cheaper solutions.
What are you doing in cases, where renters are struggling ?
south paw, there are twinkerings of truth in your muddle, but no more.
There is already a legal restriction on receiving rent above market so why create more paperwork? the cost of such unnecessary bureaucracy would surely be better spent on the poor Christchurch residents you want to help?
Then again, you may just want to huff and puff for the sake of it. The system works well for the very people you won't to help, but don't let that stop you trying to change it.
It takes all sorts I suppose.
Yeah why not? Nobody likes a carpet bagger.
What about all that tanked in water? Giving it away! That's a market distortion! Communism! Nanny State! Duke would say the quake victims would have to pay the rate set by the 'free' market. After all the water suppliers wouldn't price gouge to the point they couldn't sell it. After a while they would realise the quake victims weren't able to afford the water and were dying in the dozens from drinking contaminated ground water from the back yard. Then they would start dropping the price until 'equlibrium' is achieved.
It's the miracle of the 'Invisible Hand of the Free Market'.
"The govt is paying for that water you moron"
Oh no, isn't that interference in the market place, I thought you hated government doing that?
According to you the market place should set rent prices for earthquake victims, so water too right?
After all the water sellers will only be able to sell at the price the victims can afford. When the earthqake refugees start dying from dehydration and polluted ground water ( the babies will go first ) then the water sellers will realise they need to drop they're prices if they want to make a profit - and so the 'free' market will have set the right price!
The problem with all this too and fro denouncements and recourse to increasingly extreme examples to outflank the last respondent is that empirical evidence often contradicts all political theory.
For example, in my own experience in ChCh, while ringing around trying to get assistance we experienced Smith & Smith Glass charging $320 for the call out plus $150 per window, which was 'ok' as it had been cleared with EQC (which we all pay in our soon to increase levies).
Instead, though many wouldn't and may not have been able to, we persevered and found a sole 0800 handyman operator who came around and boarded up the windows (as the glass had all been claimed by major chains). He charged $40 which was an obvious undercharge.
Another came to repair the garage door so we could extract a car. He charged $40 call out and $22 for 1/2 hour labour although he was there longer.
Hopefully these example help to illustrate how gross generalizations about people or groups are usually unedifying.
I'll be interested to see what percentage of Canterbury people leave for Australia..there is already talk here of quite a few going, renting their houses if they can and going as they see huge social issues developing in the city and schooling will be a mess for years to come so they are off.
And it may not even be limited to Canterbury. I know people in Wellington who haven't been directly affected yet are looking at options outside NZ. NZ may not be a more risky place to live in than it ever was but the events of the last 6 months have made people think.
yes after the shock has worn off, and reailty sets in, some of CHC biggest Schools are gone, they will share sites with other schools, once school starting at 7.00-1.00 and another 1.30 to 6.00pm....CHC in winter is dark till 8.30am and dark again at 5.00pm..imagine your child walking or biking to school in this. And then there will be massive social issues with people beign forced to live in camper vans on the racecourse, unemployment is already at 3,000 direct result earthquake and will go up and up, etc etc...then the government saying be 15 years for CBD to recover and decades for suburbs....anger will set in if recovery is this slow and people will walk away..it is somehting that the government and local government are really going to have to watch, becuase if parents think there is little future for there children then they will go elsewhere.
I recall you calling them losers, that they contribute nothing and they should all go to Australia. Wolly makes more sense than you and that is saying something. If you don't like the majority view on this site then dont look at it and dont respond to other peoples comments. Pretty easy to do if you really want to but your ego will get in the way I think.
Message to "the Duke" .... seems to me you have a "vested interest' in the residential property market... in a nutshell "best of luck with that" ... that is the last place I would have money tied up in at the moment ....if you are so "clued up" by refering to everyone as "losers", why did you borrow so much and believed the "property will keep going up forever" crap ... therefore the rental return would of not mattered so much ... while also reducing the stress levels eh Dukey :)
Duke your explanations only work when economic, financial and social normalities prevail. I’m sure with almost daily increases in basic needs e.g. petrol/ food a majority of NZpeople are increasingly under financial stress - redundancy another problem. The situation is forcing many people/ families out of especially average quality houses/ apartments into cheaper solutions.
What are you doing in cases, your renters are struggling ?
I am returning to the original post and the comments of Helen Gatonyi of TPA. Comments by many other commentators and stakeholders in Christchurch and elsewhere have also been make in a similar vein.
Why do well meaning people keep making things worse by not getting their facts right and pontificating when they are in a position of to influence others due tpo the position they hold?
The buzz word at the moment is 'uninhabitable'. This occurs in s59 of the RTA.
This term is qualified, a point almost always ignored. The qualification is that the building needs to be uninhabitable because it has been destroyed.
It is something of a stretch to think that the destruction of a building also includes the failure of the water or power supply; the potential hazard to the tenants' health; the feeling of being unsafe.
Even the partial destruction of a building is not adequate ground to give a s59 notice (2 days). In this case the rent abates accordingly.
Try as they might the well meaning crowd seem unable to see the simple truth through the fog that they have largely created.
If a property is destroyed so as to be unihabitable then the rent stops and a tenant must give 2 days notice. Verty good advice would be to tell the tenant that they must be quite certain that the property is uninhabitable before doing this otherwise all sorts of negative consequences for them might follow.
The majority of tenants who might feel that their home has not been destroyed but they do not want to continue living there to give 21 days notice and just grin and bear it in the meantime. What on earth is the problem with simply giving 21 days notice?
If the tenant is on a fixed then the situation is not as straightforward but there are ways.
So please, for goodness sake all you nice people trying to help the tenants,
1/ Stop rent and 2 day notice if the building is destroyed
2/ 21 Days notice if you want to leave (it is not rocket science!)
3/ On a fixed tenancy? There are ways but it is not so easy to leave. Tough?
All these comments of providing a healthy and safe enviroment, of a lack of facilities, and so on make for interesting reading and they do have an element of truth to them, but what a complicated mess you do gooders are creating! Keep the advice simple please and safe so the people you are trying to help do not end up in a worse position than before they listened to your advice.
It should also be remembered the Tenanct Tribunal decides what is correct, not health inspectors, builders, TPA staff, NZPIF members, or Jonny the helpful poster on the net.
I am returning to the original post and the comments of Helen Gatonyi of TPA. Comments by many other commentators and stakeholders in Christchurch and elsewhere have also been make in a similar vein.
Why do well meaning people keep making things worse by not getting their facts right and pontificating when they are in a position of to influence others due tpo the position they hold?
The buzz word at the moment is 'uninhabitable'. This occurs in s59 of the RTA.
This term is qualified, a point almost always ignored. The qualification is that the building needs to be uninhabitable because it has been destroyed.
It is something of a stretch to think that the destruction of a building also includes the failure of the water or power supply; the potential hazard to the tenants' health; the feeling of being unsafe.
Even the partial destruction of a building is not adequate ground to give a s59 notice (2 days). In this case the rent abates accordingly.
Try as they might the well meaning crowd seem unable to see the simple truth through the fog that they have largely created.
If a property is destroyed so as to be unihabitable then the rent stops and a tenant must give 2 days notice. Verty good advice would be to tell the tenant that they must be quite certain that the property is uninhabitable before doing this otherwise all sorts of negative consequences for them might follow.
The majority of tenants who might feel that their home has not been destroyed but they do not want to continue living there to give 21 days notice and just grin and bear it in the meantime. What on earth is the problem with simply giving 21 days notice?
If the tenant is on a fixed then the situation is not as straightforward but there are ways.
So please, for goodness sake all you nice people trying to help the tenants,
1/ Stop rent and 2 day notice if the building is destroyed
2/ 21 Days notice if you want to leave (it is not rocket science!)
3/ On a fixed tenancy? There are ways but it is not so easy to leave. Tough?
All these comments of providing a healthy and safe enviroment, of a lack of facilities, and so on make for interesting reading and they do have an element of truth to them, but what a complicated mess you do gooders are creating! Keep the advice simple please and safe so the people you are trying to help do not end up in a worse position than before they listened to your advice.
It should also be remembered the Tenanct Tribunal decides what is correct, not health inspectors, builders, TPA staff, NZPIF members, or Jonny the helpful poster on the net.
Renting is really hard since it's hard to deal with landlords because most landlords really have high interest rates with their properties being offered for rent. But if the property that they are offering are in good condition and of high quality, renting it would be worth it. But according to the news that I've got, it has become less expensive to buy a home than to rent one in 39 of the 50 largest United States cities. That is the conclusion of Trulia's current Lease vs. Purchase index released Wednesday.The study predicts a deepening slum in an already troubled real estate market.It might be welcome news, however, for those seeking to buy a home. I found it here: Cheaper to buy than to rent in many U.S. cities.
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