Notice change may see landlords sell

Landlords say they plan to sell their properties – or focus solely on the high end of the market – if their ability to end their tenancies with 90 days’ notice is removed.

At the moment, tenants can be evicted without the landlord having to offer a reason, if they are given 90 days’ notice. But the Government wants to change that as part of its proposed rental law reforms, designed to give tenants more security of tenure.

Economist Tony Alexander’s latest quarterly survey showed landlords were not impressed. ‘‘Owners are not just saying they will raise rents to reflect various cost rises, but will actively weed out any existing bad quality tenants they might currently have before the legislation becomes effective and it becomes near impossible to remove them,’’ he said. ‘‘Once in place many owners plan only selecting proven good tenants. Tenants not in work, tenants with bad credit histories, tenants with young children and, solo mothers, amongst others, will now not be considered.’’

He said it would mean there was some pricing power for ‘‘good’’ tenants. ‘‘But in an environment of worsening rental property availability this will throw even more people at the mercy of state housing services – if they can get them. By lifting the average quality of New Zealand rental stock, government policy will price it out of reach of many is a key underlying theme.’’

One respondent to the survey said it was very off-putting for landlords of lower-end properties.

‘‘If tools are taken away from us landlords, I’ll be selling a few properties and the Government can deal with these problem tenants and I’ll just focus at the top end rental market.’’

Another said it would mean they were shifting from providing ‘‘tidy, average rental properties at median rents to top-grade rentals at upper-quartile rents’’.

‘‘This means I am minimising the risk of anti-social tenants that I can’t get rid of, and only taking top tenants with great references and no credit problems. In order to do this I have sold two properties as too difficult to upgrade for my desired market, upgraded two properties at $50,000 each, and am demolishing one property and rebuilding new. The advantage to tenants is that they will be getting lovely as-new properties. The disadvantage to tenants is that they will face a much higher bar to get in and be facing higher rents.’’

It mirrors a recent survey by the Real Estate Institute, which found 80 per cent of respondents did not agree with the removal of no-cause 90-day notice periods.

The institute polled 2800 landlords, property managers and tenants. It found 82.1 per cent strongly disagreed or disagreed with the removal of the 90-day notice option. Only 40.9 per cent of tenants supported the move.