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

Monday, 27 August 2018

Housing Minister Phil Twyford wants to make life better for renters.

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.

They would limit rent increases to once per year, up from once every six months.

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Landlords could also be required to include a formula for any rent increases in tenancy agreements, giving tenants transparency about how increases might be calculated.

An end to 'no-cause' evictions is also on the table.

Currently landlords can kick tenants out with no reason with a 90 day notice, or with a set reason like late rent or that they are selling the property with 42 days notice.

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One of the proposals would end those no-cause terminations and raise the notice period of with-reason evictions to 90 days.

Twyford said landlords would still be able to evict 'rogue tenants' damaging the property, not paying rent, or engaging in 'anti-social behaviour'.

The reforms would also make it much easier for tenants to own pets, with landlords possibly required to give a reason why a pet is not allowed.

This would still let landlords ban possibly disruptive or damaging pets, but would give tenants more even footing if they wanted to argue their case.

Two options are being considered to end so-called 'rent bidding' - where prospective tenants offer to pay more rent in order to secure a property.

One would prohibit landlords from asking for rental bids while the other would prohibit landlords for asking and even accepting unprompted bids from tenants.

Boarding houses would also see greater regulation, with a licensing scheme proposed.

Twyford said it was a 'small minority' of landlords giving the whole sector a bad name but rental law reform was still needed.

'It's about rebalancing the relationship,' Twyford said.

He said New Zealand rental laws, which date back to 1986, are some of the most archaic in the world.

Twyford said he didn't expect rents to increase thanks to the reforms, and had studied experiences in other countries to prove this.

He expected some landlords would get out of the market in response - but if they did they would sell their properties to either a more responsible landlord or a first-home buyers, both of which were fairly good scenarios, he argued.

Green Party co-leader Marama Davidson, who was at the announcement and is a renter, said secure tenancies were good for both landlords and tenants.

'The mean tenancy length is a year - a lot of renters are changing homes every year. A lot of children are having to change schools,' Davidson said.

Green Party co-leader Marama Davidson, herself a renter, says secure tenancies are good for both landlords and tenants.

She said a school in her area of South Auckland had a roll that was up to 60 per cent transient.

The Government is consulting for eight weeks on the proposals.

These reforms come on top of a law currently in Select Committee that would ban letting fees.

National's Judith Collins said the changes would just force rents up and wouldn't solve any problems.

'By limiting rent increases to once a year, landlords will be forced to raise rents higher and sooner, meaning tenants will actually be paying the same or more in the long run,' Collins said.

'If a landlord now wants to sell their property, they will have to wait 90 days, meaning settlements of sales will be extended by double.'

'It is important to strike a good balance between landlords and tenants but so far Mr Twyford's decisions seem to result in both parties losing out.'

Renters United organiser Robert Whitaker said the changes of greatest significance were those improving security of tenure.

'I think renters' biggest problem is that they don't feel secure. Fixed-term contracts have become increasingly popular in Auckland, Wellington and Christchurch, which has caused a lot of stress and insecurity.

'They should become rarer and become available only for legitimate reasons, like a fixed-term employment contract.'

'It's about constant turnover for the property manager or landlord, which can be stressful to the renter'.

Whitaker said the group would be making submissions in the consultation process, particularly lobbying for the regulation of property managers.

National MP Judith Collins: 'Landlords will be forced to raise rents higher and sooner, meaning tenants will actually be paying the same or more in the long run.'

'Property managers are an important part of the property sector. Why are they excluded from regulation?'

Property Investors Foundation Andrew King said he disagreed with most of the reforms but 'could live' with things like setting rent increases at once per year.

The thing he was most worried about was the possible end to no-cause terminations.

'That would just make managing a property extraordinarily difficult,' he said.

Often anti-social behaviour couldn't be proved because worried neighbours were unwilling to put their concerns in writing, he said.

King also believed that moving eviction times up to 90 days was too long and could bring down prices of property being sold as new buyers could not move in for so long.

'Six weeks is more than enough time to find a new property,' King said.