Election countdown, rents stir and a post-election problem to fix

It was reasonably quiet on the media front last week, with all the big housing announcements out of the way. There was one story we featured in, about the policies being put forward by parties this election, covered in Interest.co.nz.  

Another article lists the policies being touted. The big one that’s missing is Labour’s plan for the Residential Tenancy Act. I haven’t seen anything on that this campaign period, which is unfortunate, to say the least. We assume they’ll remove 90-day no stated cause terminations, but what else are they planning? It’d be good to know. 

Advocacy in Action – an issue to tackle post-election 

I spotted this headline in the Otago Daily Times: Landlord ‘basically laughed at’ for requesting help from bailiff to boot out ‘extreme’ tenant. It’s paywalled so I can’t read the whole thing, but it’s about a Dunedin landlord who is frustrated he cannot get his problematic tenant evicted because the only local bailiff is away. 

This issue is like a few others which have been raised with us recently. Experienced landlords, dealing with very difficult tenants, who have been able to get orders from the Tenancy Tribunal, but got very little help with the actual enforcement. 

While these cases are the minority, they need to be handled properly in order for the rental system to work. If people can’t get rid of a really awful tenant, that raises the cost and risk of providing a rental home. It leads to good landlords leaving the sector, and is a disincentive to new people coming in. This is an issue we’ll pursue after the election. 

Some interesting numbers from Mike Jones, BNZ’s chief economist, in his latest missive. He’s looking at the latest numbers from Tenancy Services on new tenancy rents, which he sees as showing some signs of lift – not falling at least. 

He’s picking new tenancy rents to continue their “tentative recovery and grind up towards 1½- 2½% over the next 12-18 months.” The reasons he’s picking that is a slow down in supply (though Auckland and Wellington are still well supplied), an increase in population, albeit slow, and an economic upturn. 

That last one is key. People need to be earning more before they can afford to pay more in rent. 

One other positive for the rental market is that renting continues to be cheaper than owning, and that gap is starting to widen again as interest rates rise. His numbers on this are interesting, and worth a read. He only looks at operating costs, not capital gain or the intangible benefit you get from owning your own home. 

That comparison showed that owning a home cost about 35% of median household, while renting is only around 25% – with none of the hassles that come with owing a house. Plus, in this high-inflation environment, the fact that the value of your house is being eroded month by month. 

I think this is something people and policy makers don’t consider about renting. If the settings are right, the tax and regulatory framework, renting is a convenient and affordable way for people to live. The costs – like rates, insurance, maintenance – are tax deductible, making housing more affordable for the end user, the renter. 

This is a key benefit of the rental system that we should acknowledge more. Tax deductions are a normal business expense, and they help to keep the cost of housing as low as it can be. 

The Green Party in Victoria is proposing a Landlord Licence which comes with a three strikes policy – break the rules three times and you can’t be a landlord anymore. 

It will sound reasonable to some people, and it’s fair enough that people should be good landlords, but what are the consequences of a policy like this for the private rental sector? Will it lead to more rentals, or less? Will there be a similar rule for bad tenants? 

This policy isn’t law, but the reason I highlight it here is that this is the sort of thing that spreads. If the Green Party in Australia adopts it, I’ll bet you dollars to doughnuts that the Green Party here will have a look at it. Our Green Party is already proposing rent controls, a landlord register, building warrant of fitness and more. 

It is a shame, and a lost opportunity, for the Greens here and in Australian to, as Michael Yardney puts it, “consistently take an adversarial approach to private property investors.” So much more could be achieved if they worked with us. 

From nitpicky councils to no-cause evictions: Four housing voices on what this election’s housing policies get right and what they leave out

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