Labour reveals its rental plans as investors retreat from the market

1. I think we’ll get a good turnout. If nothing else, people are talking about this election and see it as pivotal.

2. I think the strategic voting campaigns will work. Initially I thought only the Māori seat strategic voting campaign would work, because it’s a small group of electorates with an easily reached audience who appear to have got the idea quickly. Now I think the right-bloc campaign will work as well.
   It started out as a fringe idea, but the Māori seat campaign legitimised it, the media fanned the flames and now it’s an out-of-control fire with a life of its own. Everyone is talking about it, and right leaning people are totally into it.

3. Some big-name MPs are going to lose their seats. I can’t see how Nicola Willis can get back in if strategic voting is widespread. Same for Speaker Gerry Brownlee and Justice Minister Paul Goldsmith. National appears to be panicking about this. Ironically Housing Minister Chris Bishop is probably in a better position now if strategic voting works, which is good for our sector.

4. No matter who wins, the sun will come up the next day, it looks like the economy will keep improving, and property investors will continue to find ways to make money. We’re good like that. 

Last week, shortly after finishing Media Links, Labour released their rental policy. It was thin on detail but pretty much what we expected. There was no new radical policy in there, which seems to be Labour’s approach to this campaign, don’t scare the horses. Still lots to worry about in there though, so read the full policy. 

Of all the policy ideas, the one that was most expected was their promise to put a stop to 90-day no stated cause terminations. That one policy took up most of the airtime in the discussion I had on TVNZ’s Breakfast with Tova O’Brien and Luke Somervell from Renters United. If you want to watch this interview, be quick, TVNZ only leaves them up for a week, so you’ve got til this Thursday to watch it. 

TVNZ only allows you to watch the episode, not a clip, but the interview started at 7:07am, so just fast forward til you see that time on screen. 

One thing we need to accept is that Labour will take away 90-day no stated cause terminations next time they are in office, whether that is this year, or after some future election. There is no doubt about this at all, which determines how we should approach the topic. It’s not a matter of trying to stop them, it’s about working with them to get some measures in place which help landlords deal with problematic tenants. 

One of the ironies of their recently released policy document is that Labour wants to require landlords to “act on serious anti-social behaviour,” which is exactly what the 90-day no stated cause terminations provision helps with. Labour will need to come up with something to make it easier to deal with anti-social behaviour. 

They also need to put more resource put into the Tenancy Tribunal to cut wait times, and into making it easier to enforce determinations. Lots of work to do in that area. 

Remember, if you want to have someone in your corner fighting for better policy, please join your local association or donate to our advocacy fund. 

As for the rest of the policy, it’s an odd basket of things. Requiring “proper curtains or blinds,” in rentals, whatever ‘proper’ means. Set clear rules for property managers, but we don’t know if that means bringing back their property manager regulation bill or something less comprehensive. Better oversight of boarding houses, but again, no detail. 

Another is stopping insurers from requiring more than six-monthly inspections. We’ve argued that creating a rule for this is neither necessary nor wise. Some insurers do it already, but there’s a good argument that more frequent checks help nip problems in the bud, which helps landlords and tenants. If it ain’t broke, don’t fix it. 

The real question about this policy is not what’s in it, but what would be added to it if Labour goes into coalition with the Greens, who have a far more radical programme. Including rent control. Most of you reading this will instinctively know rent control is bad, but often it’s hard to find data to back that up. This handy little reel from the FT is based on actual research and lays it out well. Have a look. 

The big house buying story of this year has been the strength of the first home buyer sector, which has been hitting record highs around the country. I don’ think that’s in debate, but what’s more interesting is why and what’s driving this. This article by b2bnews has had a deeper look at the numbers.  

Across the whole NZ market, first home buyers made 29.5% of purchases in the September quarter. In some areas, for example Wellington, their share was even higher – a remarkable 37%! So far, so normal for the reporting, but b2b looked deeper. 

They found that “Reserve Bank figures released on 27 October show first-home buyers borrowed $1,530m in new mortgages in September, slightly down from $1,572m a year earlier. Investor lending, meanwhile, fell from $1,735m to $1,335m. That is a 23% drop, the steepest of any borrower group.“ 

Why have investors stepped back? Well, the obvious things that we all talk about. Rents are flat (in most areas) while costs have risen, so it’s harder to make the numbers work. There are also changes to how investing in property is viewed by younger people, many of whom prefer the ease of investing in things like shares. 

What I liked about this article, as well as the look behind the headline numbers, was their analysis of what this could mean for people in the rental business, so I’ve copied it in full below: 

“For landlords and the rental market, the retreat is the longer-term worry. Every rental sold to a first-home buyer is one fewer property for tenants. With rents flat and listings high, nobody is feeling that yet. Once the surplus clears, private rental supply could tighten quickly, and investors would want clear, stable tax settings before returning. Election-year uncertainty doesn’t help. 

The record share is good news for the people buying. It is not proof that housing has been fixed. Investors have stepped back, and the more important question is what happens to rents when they’re needed again.“ 

All businesses go through cycles, including ours. When times are tough and the numbers don’t work, more businesses fold and the sector shrinks. At some point the market reaches an equilibrium, or even overshoots. We need to be ready for when that happens.