January 28, 2021

Property Investment
Property Owners
Rental Property
Residential Tenancies Act
Residential Tenancy Act
By: metronz

Over the past years the owners of rental homes, the landlords, have faithfully followed the changes in government regulations aimed at providing safer and healthier homes to tenants. Landlords have installed insulation, heat pumps, have stopped drafts and are generally working towards making their rental homes compliant, sometimes out of fear of prosecution, but mainly, in our view because landlords see the benefit in providing better living conditions to tenants.

Focus on the property

Until now, the rule changes in the act have focused on the property. While there are costs to the landlord and in some cases inevitable rent rises, there has also been some tangible benefit to the owners of the properties. An improvement to property attracts better tenants and attracts higher rents. Any reticence by landlords has been relatively muted.

Focus has now shifted to the tenant

With the new law changes that come into effect in Februaly however, focus has shifted from the property to the tenant, and with that landlords are entering what is for many unchartered and shaky territory. Some of the laws allowing landlords to evict tenants are centered around vaguely defined and difficult to prove behaviour or circumstance. Failing repeated non- or late payment, the only other ways of evicting a tenant are:

  • Issuing the tenant three notices for separate anti-social behaviouf in a 90-day period.
  • Proof that the landlord will suffer greater hardship than the tenant if the tenancy continues.

Both of these are difficult to enact. One requires the (no doubt very reluctant) cooperation of neighbours and the other is near impossible to quantify. How much damage exactly has to be done to a property for the landlord to suffer greater hardship than the tenant if they were evicted?

The simple view that landlords should be tolerant to suffering hardship for making their property available to rent will likely cause some landlords to withdraw their properties. The risk will be too great, given that willful damage to a property or negligence can easily wipe out the rent equivalent of a number of years.

How landlords can protect themselves

We know from many years of managing the relationships between landlord and tenants, that where there is mutual respect, respect for both property and person, a property portfolio will be successful for all parties, tenant, landlord and property manager.

Careful tenant selection is now more crucial than ever and while the new law allowing tenancy re-assignment by the tenant may make this more difficult, it also re-enforces this advice.

The other obvious way of protecting yourself is to create some distance between yourself as a landlord and the tenant by working with a reputable property management company.

So why a step too far?

Sadly, there are a few bad apples amongst landlords and property managers. Likewise there are a few bad apples amongst tenants. The recent rule changes have singularly placed responsibility on landlords and none on tenants. By far the majority of landlords support the changes in the healthy homes act. Most landlords want to supply good livable homes and have them occupied by good and happy tenants. The one step that we believe goes too far is to legislate a hardship clause into the rule changes that expects landlords to absorb on-going costs (financial and stress) caused by tenants that cause willful damage, commit “anti-social behaviour” (defined as (a) harassment; or (b) any other act or omission (whether intentional or not), if the act or omission reasonably causes alarm, distress, or nuisance that is more than minor), or are negligent.

Why not far enough?

We believe that tenants should be subject to rules that protect the property and the neighbourhood. That should be another step in the rule changes and should, in our view, be specifically legislated in this rule set. The message that we’re getting now is that it’s really OK for tenants to damage property or to commit “anti-social behaviour” as long as this falls within a very vague set of boundaries that are very difficult if not impossible to quantify or notify the tenant of.  

The solution

We believe that there is a solution. We know that landlords and property managers in general don’t get a good rap. We see them regularly, those landlords or property managers that milk tenants to the max. The new rules are (in part) designed to stop that. We don’t think that any improvement will come through legislation and certainly not in the way that the new rules are worded.

If there were no private landlords then the government, with funds from the taxpayer, would have to provide the services that the landlords currently offer. It’s unlikely that this would in any way improve the reputation of the provider, or indeed place tenants in a better position. (Note that some of these rules specifically do not apply to Kāinga Ora housing.)

Reputable property management companies like Metro NZ Properties have long advocated for regulation in the property management industry. We believe that using this to weed out the sharks and the bad apples would work towards a better relationship between parties that really need to work together well.

Metro NZ Properties is a property management company with 20+ years of experience in New Zealand and Internationally.