Not a single landlord will vote for TOP

The Opportunities Party’s policy to create greater security of tenure for renters is praiseworthy. New Zealanders are now renting for longer periods or indefinitely, finding they are unable to buy their own homes.

And tenants should be able to stay in their homes until they choose to leave them.

The common objection that renters would prefer to keep the ‘flexibility’ of the current law makes no sense, given that secure tenancies always allow tenants to give notice and move out.

Mr Morgan’s Opportunities Party (TOP) wants to adopt Germany’s regime for security of tenure. Tenants would be allowed to remain indefinitely. The landlord could terminate a tenancy only for legitimate reasons, such as if the tenant stopped paying rent or damaged the property. Selling the property would not necessarily be a legitimate reason. Even if there were a legitimate reason, the tenant could have the tenancy reinstated if termination would cause them hardship. Rent increases would be limited to the prevailing market rate, and would be ‘slowed’.

The major difference in the New Zealand market when compared to “Germany’s regime”, is that most of the rentals in Germany are council-owned.   In New Zealand, the bulk of rentals are people having just a handful of investments that they need to manage as part of their own personal portfolio.  

There are uncertainties – for example, what does it mean to say that the landlord selling the property is not necessarily a legitimate reason for termination? Are there other reasons for termination? What will ‘slowing’ of rent increases look like?

Further, other political parties will need to support any reform of tenancy law. A longer conversation is needed, examining what the right balance is between the rights and obligations of tenants and landlords. The German model of secure tenure may not be best: there are many ‘levers’ that can be placed at different settings to alter security of tenure.

For example, should the length of the secure tenure period be a set number of years or indefinite?

You can see how that is going to scare small investors out of the housing market.   Tenants already can have the house sold while they are not able to be moved out as long as they have a contract in place.  The new buyer needs to buy the house with the tenants in it.

As the risks for private landlords keep increasing, more and more will drop out of the market, causing even more pressure on finding affordable rentals.  The road to hell is paved with good intentions, and the kinds of socialist intentions that give tenants perpetual rights to stay in a rental property sounds nice, but it needs a total overhaul of the New Zealand market.  Just changing legislation is going to cause serious harm to renters and landlords alike.

 

– Mark Bennett, RNZ

 


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