Many losers as rents rise

Striking a balance between the rights of tenants and landlords is crucial. The wellbeing of so many is at stake.

The housing market seems to pump out record figures with regular monotony these days. Latest data from the Real Estate Institute of New Zealand (REINZ) show the median house price now sits at a record $640,000. That’s an increase of $80,000 in 12 months.

It comes on the back of another record, with news that the average rent nationwide is now $480 – up from $460 in 2019. Only Christchurch bucked the trend, recording a year-on-year fall, according to Ministry of Business, Innovation and Employment figures.

Housing has been a major focus of the Government, including improving the lot of renters. The Residential Tenancies Amendment Bill was introduced to Parliament in February and aims to improve the wellbeing of the 609,700 households living in rented homes. Associate Housing Minister Kris Faafoi says the reforms will modernise rental laws and create a fairer and more secure market for tenants and landlords.

The National Party, somewhat predictably, disagrees. Its promise to make a ‘‘bonfire’’ of unfitfor-purpose regulations if elected to power includes putting a torch to the proposed tenancy rules. Less red tape and fewer regulations for landlords are what’s needed, National leader Simon Bridges says – a sentiment that will undoubtedly appeal to property investors.

Certainly, Bridges’ message will have struck a favourable chord with the New Zealand Property Investors’ Federation, which has been a vocal critic of the tenancy law reforms, saying it will make it harder for landlords to get rid of problem tenants. It also points to the increase in rents as the unintended consequence of new rental rules, such as compulsory smoke alarms and insulation.

Others, such as Infometrics senior economist Brad Olsen, have pushed back against this narrative, saying a shortage of rental houses is the main cause of higher rents.

There’s no doubt, however, that some landlords have been spooked by the proposed reforms. Chief among their concerns is the plan to get rid of landlords’ ability to give tenants 90 days’ notice without due cause.

A recent REINZ survey found 71 per cent of landlords oppose ditching the no-cause 90-day notice. Interestingly, the same survey found 45 per cent of tenants were against ending the 90-day notice, supposedly because of fears about problem tenant neighbours.

Just this week, a Hamilton real estate boss said landlords, with an eye on the reforms, are becoming extra cautious when it comes to taking on new tenants. The big losers, according to Lugtons Real Estate managing director Simon Lugton, are would-be renters lacking good references. ‘‘Tenants have to really sell themselves and present themselves well and, if they don’t, that’s when they struggle to get a property. I think we’re already seeing a little bit of an unintended consequence, which is not what the Government wants to happen, but it’s just people acting to protect their own interests,’’ he said.

Landlords will no doubt make their case to Faafoi about how the reforms should land. Hopefully, tenants will be afforded the same voice.

Striking a balance between the rights of tenants and landlords is crucial. The wellbeing of so many is at stake.