Property shift: Govt eyes law changes
Property is in the Government’s sights as it plans changes to the law governing 1.5 million tenants, as well as moves to block foreigners buying key infrastructure. Associate Housing Minister Kris Faafoi has announced wide-ranging amendments will be made to the Residential Tenancies Act next year.
Finance Minister David Parker outlined yet further changes to overseas investment, creating a new national interest test. Under current Overseas Investment Act rules, assets such as ports and airports, telecommunications infrastructure, electricity and other critical infrastructure are not assessed through a national interest lens, Parker said. He promised to amend that next year.
The most vocal reaction has been to Faafoi’s announcement. The response highlights the balancing act the Government must attempt in seeking to improve the security of tenure for 1.5 million tenants while protecting landlords’ interests.
Faafoi’s most contentious proposal is banning the 90-day eviction notice, except: when three antisocial acts are committed in three months; if rent is five days late three times within three months; the property was sold with vacant possession or used as business premises; or having extensive alterations or being demolished.
Rents could be increased annually only. Penalties for landlords in breach of the law could rise from $50,000 to $100,000 and landlords would have to give 90 rather than 42 days’ notice of an intention to sell or move family in.
NZ Property Investors Federation executive officer Andrew King raised the oft-dangled spectre of landlords deserting the market. He also says tenants-for-life scenarios could arise as well as the potential for landlords being unable to evict what he calls a small portion of anti-social tenants, estimated to number 7000.
But if the numbers are so small, why the worry? King says, ultimately, neighbours could be intimidated and it would be nearly impossible to remove a tenant once witnesses were threatened.
Stability of tenure is fragile: a 2015 survey found 46 per cent of tenants had moved in the previous two years and of those, 30 per cent were shifted because the landlord sold the house.
In Ireland tenants can stay up to four years once a six-month trial period is concluded. The Ministry of Housing concluded the existing act no longer provided enough protection, given the changing composition of the rental market.
The changes have been well-signalled. A discussion document was issued in August last year, five workshops were held and the ministry said a high level of interest was shown from tenants and landlords, with 4787 viewpoints received.
All of that led to the ministry proposals, which Faafoi then announced on Sunday, saying: “Our changes are balanced, providing certainty to both parties about their respective roles and responsibilities.”
It’s that balance of the interests, and where the weight actually falls and lifts, which will be watched closely when next year’s changes take effect.
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