A Tauranga landlord has lashed out at the government’s proposed changes to rental rules, saying the extra costs are unaffordable for both tenants and landlords.
Tony Cranston, who owns 13 rental properties around Tauranga, believes recent moves by the government to improve the quality of rentals will create extra expenses.
Among the examples Tony cites is insulation, which he says can cost ‘up to $3000 plus per house’, and which the government requires in ceilings and underfloors by July 1, 2019.
He also says the government is looking at rentals needing to have heating and ventilation.
“A couple of my properties have heat pumps that were installed when I bought them, but most use electric heaters, which I’m happy to provide if tenants want them,” says Tony.
“But if we have to install heat pumps it will cost $2700 per unit. That’s $10 per week for five years plus ongoing maintenance and replacement.
“If we are also forced to put in a home ventilation system (so tenants don’t have to open windows) that would be $4000 to $5000 per unit plus ongoing maintenance. That’s another $20 per week for five years plus replacements.”
He says these measures and other costs, including increases in rates and insurance, will only push up rents.
“Neither the landlords nor the tenants will be able to afford what the government wants to do. They have this great wish list of things they want to do, but they’re not taking the financial burden into account.”
He also cites a recent court case, in which tenants left a pot on a stove that caused a fire and thousands of dollars in damage to a property. The insurance company paid the landlord, and then pursued the tenants for the costs – but the court ruled the tenants weren’t liable.
“It’s created a situation where if tenants damage a property, they’re not responsible. If you accidentally damage a car you’re responsible, but not your landlord’s property,” says Tony.
He believes most landlords are benevolent people living on average wages.
“They won’t be able to absorb that level of expense. Expect rents to rise and the rental market to dry up.
“These are only some of the reasons many landlords are considering exiting the rental market. The result will be less properties to rent as people who would have sold to investors will hold or buy existing stock and new builds will slow down. Rental properties won’t mysteriously appear as Phil Twyford expects.”
Tony thinks most of the new legislation is unnecessary, as ‘any property which is substandard can be rectified by the tenant issuing 14 days’ notice to rectify’.
“If the landlord fails to comply the tenancy tribunal will step in giving exemplary damages, a legal requirement to rectify and possibly rent refunded and rent suspended till the repairs are done.
“Properties should be dealt with on a case by case basis by seeking help from the tribunal.”
HOUSING MINISTER: TENANCY LAWS ‘OUTDATED’
“Our tenancy laws are some of the most outdated in the developed world,” says Housing and Urban Development Minister Phil Twyford.
“With about a half of all New Zealanders now living in private rental properties, it is important that both landlords and tenants have laws which protect them and promote sustainable tenancies.”
He says the government makes no apologies for wanting to improve the quality of rental homes so they are healthy for families to live in.
“That’s why last year we passed the Health Homes Guarantee Act. It means rental properties will have to have adequate heating, insulation and ventilation to bring them in line with international standards for health.”
He says the majority of landlords operate with integrity and try to provide decent accommodation at a reasonable rent.
“We are not ‘attacking’ landlords, nor do we want them to leave the market. We just want to make sure those who have to rent, or chose to rent, do not suffer from substandard properties.
“We are banning letting fees because they are a service that primarily benefits landlords, not tenants, as they cover the costs of advertising a property, conducting open homes, and vetting potential tenants. Similar moves in Scotland did not result in landlords raising their rents.”
It is likely some landlords will face some cost to meet minimum standards that are being developed under this new law, says Phil.
“Landlords that have not routinely maintained or invested in their properties will likely face greater costs. Most landlords will not face significant costs because of the changes our government is introducing.”
Consultation on the minimum standards will take place later this year and landlords are encouraged to have a say through the submission process.
“Landlords will be given time to bring their properties up to modern standards for a warm, dry healthy home.”
He says there is no new requirement proposed for landlords to test for asbestos, and no proposals for a rental ‘warrant of fitness’.