End of cheap rental near, landlords say
Rental property rule changes could mean landlords end up offering tenants better quality homes than they live in themselves, a group representing investors says.
Stop the War on Tenancies has been founded to tackle the Government’s plans to overhaul the rental property sector.
Standards are being worked on that will set out the rental property insulation and heating requirements of the Health Homes Guarantee Act.
The Government is also working through a proposed revamp of the Residential Tenancies Act (RTA), to boost tenants’ rights.
Stop the War on Tenancies spokesman Mike Butler said it was likely rental properties could end up at a higher standard than some of the homes of those who owned them.
Investor Lily Leung agreed some tenants would be living in ‘‘far better’’ conditions than their landlord’s own home.
‘‘But that’s not the concern. The concern is that owners are being forced to waste money on things that are not even necessary in most cases . . . fixed heaters tenants won’t even use, certain standards of insulation that will make no difference.’’
Andrew King, executive officer of the New Zealand Property Investors Federation, said his organisation’s biggest worry about the Healthy Homes
Investor Nick Gentle
changes was the suggestion that heat pumps could be mandatory.
He said they were expensive to install and maintain and such a rule would lead to rent rises.
‘‘[The Government] wants them because they are more efficient to run, but by the time the rent goes up to cover the cost, it kind of negates that argument.’’
Investor Nick Gentle said there would be unintended consequences. ‘‘What I don’t understand is why it isn’t being extended to all housing,’’ he said.
‘‘Property owners facing an upgrade now have two choices – spend the thousands required to meet the new standards, or sell.
‘‘If they sell, a homeowner can buy without being concerned about standards because they don’t apply. So this creates two markets, and one buyer has an extra large cost to consider that the other does not and has to factor that into their price.
‘‘All things being equal the property will stay out of the rental pool until someone who owns it makes the upgrades.’’
He said, for people in bigger cities, the cost of upgrading a house would be a small percentage of its value. But elsewhere, the cost could be 5 per cent of the price of the house and would take years to recover.
He said he expected to see the end of the ‘‘cheap rental’’.
Claire Leadbetter, a policy manager at the Ministry of Housing and Urban Development, said it was not possible to predict the reforms’ exact market impact.
‘‘It is possible that some landlords could increase the rent they charge a tenant to offset the costs . . . If rent is increased to a level that substantially exceeds market rates, a tenant may apply to the Tenancy Tribunal for a reduction. The RTA reform looks at options to improve this process.’’
‘‘What I don’t understand is why it [reform] isn’t being extended to all housing.’’