By David Hargreaves
Whenever the Government says it's going to do something, inevitably those with a propensity to support the Government will say it's wonderful, while opponents will say it is not and cite variations on the theme that the new proposal is going to end civilisation as we know it.
The suspicion is often that both the pro and anti comments are made before anybody's digested the detail.
And I do recommend that anybody with an interest take some time to really digest the discussion document for the review of the Residential Tenancies Act.
Well, it's neither wonderful nor is it going to end civilisation as we know it.
Genuinely interested in your views, but I reckon people who really get their heads around what's being proposed are likely to form a similar view to me - that it's a fairly shallow series of tweaks that won't really change the renting environment in New Zealand.
I think we are long overdue a change in the renting environment or framework, if you will, in this country. Home ownership levels have fallen, and with a more mobile population, renting is here to stay. And we need to properly get our heads around that.
From my experience the renting environment in this country has tended to revolve around renters being wannabe house owners and therefore potentially having an 'attitude' about that, a defensiveness, while those who own and rent out properties are doing so looking for capital gains rather than rental yields. So, their tenants are very much peripheral in their thinking. They are the means to pay for the property till house prices go up enough to flick it on.
There's no maturity
Now, that's a sweeping generalisation, but that's tended to be a lot of my experience in the matter - and that's come both from extensive experience as a renter myself and from renting out my own property.
I think there's a lack of 'maturity' in the property rental market in this country and it's certainly not going to be helped by what the Government's proposing.
As I see it the main 'takeouts' from the discussion paper in terms of possible changes are:
- ending 'no cause' tenancy terminations;
- increasing the amount of notice a landlord must generally give tenants to terminate a tenancy from 42 days to 90 days;
- limiting rent increases to once a year;
- whether there should be limitations on the practice of ‘rent bidding’;
- 'encouraging' landlords to allow tenants to keep pets.
I will come back later to the last one, which I think is nuts.
Okay, let's look a bit at some of these other points first.
The ending of 'no cause' tenancy terminations is a non-event. Doesn't matter. Landlords will still be able to do things like say they are going to move into the property themselves as an excuse to get tenants out. I had that happen to me in Wellington years ago. All that happened was that once a month or two had passed the landlord simply re-rented the property again. It's an easy out.
Not trusting the landlords
And yes, there are some suggestions in the discussion document that maybe the landlord will have to produce evidence/justification that what they say they are going to do they will do - but frankly I find that approach offensive and fundamentally untrusting. What are you going to do? Actually make sure the landlord does move into their property and stay there, or you will hit him or her with a big stick? If that's the approach then it's going to lead to even more red tape and administration costs.
So, as far as I'm concerned, the 'no cause' thing is 'no issue'. Landlords will find justification for ending a tenancy. They will still be able to do it.
Okay, increasing the notice period from 42 days to 90 days. Well, maybe that's fair enough. But in the interests of fairness I think the same should then apply to tenants, who at this stage have to give just 21 days. The discussion document does raise this issue and whether the tenants' period in which they must give notice should be lengthened. These things cut both ways. If the tenant has to be given sufficient time to move and find a new place then the landlord should have enough time to get a replacement tenant. So, if it's going to be three months for landlords the same should apply to tenants.
Limiting rent increases to one a year I think is eminently sensible. Most reviews, whether it be your pay or whatever, are done annually. Okay, the argument has already been that landlords will try to get higher rents upfront than they might have if they know they can increase rents 'little and often' - but the market will decide at the time the property is being rented out. That's the time at which the would-be tenant has the choice. Once they are already in the property and having reviews foisted on them, less so.
Limitations on 'rent bidding' - well, you mean getting rid of a Dutch auction for rental properties? Hell yes. No brainer. It's a hideous practice. It's up to the owner of the property to decide what they think they can rent it for and then offer it at that rent. Okay, if they subsequently think they might have undercooked the rental they are to receive, they can adjust it at the next rental review, ahem, in a year.
Fixed term tenancies the way to go
To come back to the second point there about notice periods, remember this applies to 'periodic tenancies', effectively open-ended tenancies where neither side is committed to a particular period of time and therefore the agreement can be terminated at any time by either party.
As part of the 'maturity' aspect I was talking about earlier I would like to see far more attempts made to get fixed term contracts as the accepted standard for rental accommodation.
And the discussion document does go into this subject but, well, I feel rather half-heartedly. These questions are asked:
Do you think tenants should have the right to renew, extend or modify their fixed-term tenancy if their landlord has not raised any concerns with their behaviour or if specific termination provisions do not apply at the time the tenancy was due to be renewed? What effect do you think this would have on the relationship between landlords and tenants?
What do you think would be the impact of setting a minimum length for fixed term agreements? What do you think would be a suitable length?
I think this is an avenue that's really worth pursuing, but from the way it wasn't highlighted in the Government's announcement, you suspect it won't be. I say let's have minimum fixed-term tenancies of one-year that are renegotiable at the end of that time and if they can't be renegotiated then three months' notice is given.
To my mind this would help to 'normalise' rental activity more in this country.
Now, okay, there may be some people out there who do just want short term rentals and maybe there needs to be some better way to deal with that too, rather than the existing 'periodic tenancy'.
Years ago doing some OE in London I ended up renting a bedsit in South London from 'Dave'. He was a nice guy, Dave, but a bit suspicious. He would ONLY rent to people from NZ doing their OEs and he would type up a tenancy agreement EVERY month for, yes, a month, styling the accommodation as 'holiday accommodation'. Yes, a draughty bedsit in South London was where I 'holidayed' for a year.
No lateral thinking
That was a bit extreme, but if people do wish to have very temporary accommodation, then maybe there needs to be a new category devised. But again there's no sign of such lateral thinking in what the Government's put out there so far.
Now, to come back to the fixed-term deals, how might landlords be encouraged to go for these, instead of periodic tenancy deals that might encourage them to flick the property the minute Auckland prices start going up again?
Well, could there be, dare I suggest, some form of tax incentive given to landlords who go for these fixed term contracts? Yes, that is moving in the opposite direction to what this Government has been signalling, but applying an incentive that would be good for landlord and then ultimately the renter seems to make sense to me.
What I'm really saying is that the whole way in which our properties are rented out needs looking at. I think there are things that could be done to 'normalise' the renting of property in this country. But what's being planned is just a serious of tweaks that won't achieve much and won't lead to substantive change. And we do need to change the way we view renting property in this country.
Okay, and finally...the pets. Sombody seems to have a bee in their bonnet about this.
I think if there's anything truly offensive in the latest discussion document, then the bit effectively aimed toward forcing landlords to accept pets is it.
Your own pets are always wonderful
Look, nobody's cats and dogs ever make a mess and wreck a place, so the owners think. That's the prerogative of pet owners. It's NOT their pets. They are not bad! They behave! They are wonderful.
Yeah, well...I used to have a couple of cats that I kept both in rental property and then later in my own home. My memories are not so rose-tinted. If it's any consolation to the owner of the property I rented, can I say that the cats did far more damage to my home later on than they did the rental.
Anybody who has ever owned a Burmese-breed pussycat would or should know that:
- They are incredibly fun and rewarding pets to have.
- They can break virtually anything.
In the same way that a landlord can choose who they have as tenants, it should be entirely up to a landlord whether they want to risk having pets in their properties or not. For me it would be just not worth the risk.
But the Government's thinking is clearly at the moment to force landlords into a position in which the default situation is one where pets must be accepted unless jolly good reasons can be given, as these options in the discussion document show:
One option for clarifying the law in this area is to prohibit landlords from declining a pet request or from including a no pets clause in the tenancy agreement, unless doing so was aligned with specified grounds
Another option could be that a landlord must not ‘unreasonably withhold’ consent to a tenant’s request to keep a pet. This would be similar to how the RTA deals with a tenant requesting permission to sublet their rental property. Disputes about whether a landlord’s refusal to give consent to a pet request was unreasonable would be decided by the Tenancy Tribunal or resolved in mediation.
There is some mention in the discussion document of the idea of a 'pet bond', which would be additional to any other tenant bond, and which could be used for damage repaid. That IS a good idea anyway regardless of what else might be decided.
More tribunal tangles
I hope the Government can be talked out of heading down the 'you must accept pets' route though. The other point is that, if landlords are forced into a situation where supposedly they must accept pets unless they can come up with reasons why not, they will simply choose tenants that don't have pets. And then maybe tenants will wise up to this and not declare that they have pets. And then it will all get very messy and there will be red tape and tribunal hearings and all sorts.
Not necessary. Just let the landlords have the choice they have now. And let the landlords be able to advertise openly that they don't want pets. Going down the other path will cause trouble.
Okay, I've just managed to vent a bit about a part of the discussion document that is in many ways fairly trivial and a side-issue. But I guess in its own way that sums up what's wrong with the whole series of proposals as they stand.
Instead of looking at the whole way properties are rented out in this country and coming up with a new regime that properly takes us forward into an era in which, yes, less people do own homes and more rent, what the Government's trying to do is add a few bits on to the existing system.
That's disappointing and it won't take us toward the kinds of change in attitude that we need in this country toward property renting.