Rent arrears reforms, Labour talks and why property is back in the headlines

Rent arrears pilot 

Last week Tenancy Services formally announced a trial to prioritise rent arrears cases at Tribunal. The possibility of a trial was mooted earlier this year and was discussed when we met the Principal Adjudicator, Brett Carter. We’re pleased with this trial, as finding a way to get rent arrears cases is something we’ve been pushing for some time. 

We commented in the story on this by RNZ, which had a bit of a focus on it being bad news for tenants. But as Brett Carter said at the time we met “the longer the process takes, the more cost and debt is racked up by the tenant – better to get a quick decision and cut the losses.” It’s a positive move for everyone, and we hope it works well. 

RMA progress 

President Peter Ambrose was interviewed for a Stuff story about the RMA last week. It’s behind a paywall, but a key focus of it was on the uncertainty created by waiting for the change to take place. Some, including Peter, had a more positive view, although with some concerns: “He said the proposed system appeared to give property owners more flexibility and could make it easier to convert older buildings into housing. 

Ambrose wanted to demolish an old building and replace it with seven or eight one-bedroom apartments but said requirements under the existing system made that difficult. 

“The reforms are more commonsense, and they give more control to the property owner,” he said. “But there are still issues around infrastructure, particularly water, and council contributions won’t change, so the costs involved won’t be remedied.”” 

Is it still worth investing in property? 

One story line which seems to have captured the zeitgeist is the question of whether it’s still worth investing in property. This question applies equally to home ownership, as well as owning rental property. This story from Janika ter Ellen in June is a good example. In it, she asks if she’d be better off financially if she hadn’t bought a home. To her surprise, the answer is yes. 

Her highly discussed analysis seems to have hit a nerve, as it challenges New Zealand’s cultural focus on property ownership and because it’s based on personal experience shared with many of her generation. Most recently she’s appeared on Frances Cook’s popular Making Cents podcast to discuss the issue, which is a good quick listen. 

Is it still worth owning your own home? Of course, as Janika herself points out, the emotional and social benefits make it worth it. But as a home, not as a financial investment. I talked last week about our current housing market being this generation’s ‘1987 stock market crash’. Stories like this reinforce my view that that’s happening. 

Talking to the Labour Party about Tax 

Next week we will be meeting with Labour’s revenue spokesperson Dr Deborah Russell to talk about tax policy. This is our opportunity to lay out our argument about why interest denial (removing interest deductibility) would be disastrous for the rental property sector, especially for tenants. 

We will cover other areas of tax, including Labour’s proposed capital gains tax. We have an hour for this meeting which is positive – politicians have packed diaries, so a half hour meeting is the standard. 

Do I expect Labour to do a U-turn on interest deductibility because of this meeting? No. They’ve invested far too much political capital attacking the government about ‘tax cuts for landlords’. What I want is to make them understand the impact on tenants and perhaps give them pause for thought after the election, if they win. 

Plug-in solar has been in the news recently, as the Greens have come up with it as an election policy. The Greens are proposing a “renters’ right to solar, and legalising plug-in solar.” Although perhaps a bit too late as Minister of Regulation David Seymour has had officials looking at it already and hopes to get the rules changed before the election. 

This story by 1News has a bit more detail on what plug-in solar is, and is worth reading. But the key point is this. Plug-in solar was illegal because the older systems were not considered safe. Now they are, and they are widely used worldwide. Personally, I’d be happy with my tenants having plug in solar, but I know that some of you are concerned about the look of panels hanging off balconies and potential risk that might remain. 

I think the key thing will be to talk with tenants about this, set some ground rules, especially if installation involves any minor modification to the property. Overall, I think this is a positive move which will reduce tenants’ costs. That’s a good thing on its own, but it might also mean some tenants struggle less to pay the rent. Win-win. 

Long-time readers will know I like the Ipsos Issues Monitor, which looks at how Kiwis are feeling about various issues and which politicians they think are best able to deal with them. Things like health, the economy and cost of living. The way voters feel about how these issues will determine how they vote. 

The latest version is out, and if it’s right then it’s pretty bad news for the current government: Labour is considered the party most capable of addressing the five most important issues facing New Zealanders – inflation/cost of living, health, the economy, housing and unemployment. I like this survey and have trusted it for some time, but this result has me questioning that. 

Do I live in a bubble or have Kiwis really forgotten the high inflation/cost of living under the last Labour government? Or is Luxon the problem? That link is to an editorial in The Post. It’s paywalled, but if you read it, remember who just got appointed as its editor: Matthew Hooton. He’s an inveterate stirrer – but he’s smart and the editorial does make some excellent points. You decide. 

If you can’t access it – and I do recommend paying for good journalism if you can – then here are the key points. It is excoriating of Luxon, saying he’s “never managed to master the art of connection and communication” and “has never adjusted to leadership of a nation of small and medium-sized businesses rather than corporate monoliths.“ 

It then talks about his “clunkiness last week when speaking to Rotorua mum-and-dad businesses” and says the transcript of Luxon’s “analysis of New Zealand business culture will read more like the gibberish of corporate bureaucrats than the language of the entrepreneur and businessman he described himself to be.” Brutal. 

The editorial ends with this. “A number of credible polls and important economic data are expected in the next fortnight. If, having considered that information, National MPs are certain Mr Luxon is the best of their number to beat Mr Hipkins, then their judgment must be respected. This month is their last chance to assure themselves of that again.“ 

PMG Funds is hosting two free events with former Deputy PM Paula Bennett this week:  

• Lunch (11.30am – 2pm) at the Royal New Zealand Yacht Squadron in Auckland’s Westhaven Marina on Wednesday August 5. 

• An evening event (4.30 – 7pm) at Tauranga’s Trinity Wharf on Thursday August 6. 

A light lunch / canapes and drinks will be provided at both. 

As a supporter of both Auckland and Tauranga Associations, PMG is delighted to invite all NZPIF members to register to come along for a light-hearted but informative look at the intersecting world of property and politics – with Paula and a glass or two of pinot. 

Register here for either event, with tickets available on a first come first served basis. 

Not as in Healthy Homes is finished – but are curtains going to be a new requirement under this legislation? That’s what Labour MP Helen White wants to happen. She’s put forward a private members Bill which would require landlords to install insulated curtains or blinds, or similar into all rental properties. 

Will it happen? The Bill won’t get passed before election day; there isn’t time. Which means that it will be up to the next Parliament to decide. I’d say it’s certain to pass if Labour leads the next government and would be 50:50 under a National-led regime. 

Is it necessary? I don’t know. I think most landlords already provide curtains, though perhaps not always insulated ones. In some homes they may not be necessary, and the Bill provides a “where practicable” opt-out for those of us with weird shaped or inaccessible windows. 

Personally, I’d rather see a tax incentive to make it easier for landlords to afford to install double-glazing. Like being able to fully expense the cost of double glazing in the year that the work is done. What do you think? Let me know.