Changes mean end of cheap rentals: landlords
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 give tenants more 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. Homes are often not damp – it’s the way the tenants live that’s the issue.’’
Andrew King, executive officer of the New Zealand Property Investors Federation, said his organisation’s biggest worry about the Healthy Homes 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’’.
Butler pointed to proposals that the Healthy Homes standards require landlords to provide heaters able to maintain a temperature of either 18C or 20C.
‘‘But most people have lived in a wide range of temperatures and have done for years and have lived healthy lives,’’ he said.
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.
She said a cost-benefit analysis had been conducted to inform the development of the discussion document on the Healthy Homes standards, which included the temperature suggestions.
‘‘Heating devices would need to be capable of achieving a minimum indoor temperature in rooms covered by the heating standard. This would not be a requirement to heat to those temperatures.’’
‘‘What I don’t understand is why it [reform] isn’t being extended to all housing.’’ Investor Nick Gentle