Renters really are toast

We’ve been talking about this on Whaleoil for a long time, but now the heavy-handed policies of this government towards landlords are finally showing some serious results. While the Bright Line Test was introduced by the previous government, it only applied for 2 years, not 5, as it is now. The previous government stopped the ability to claim depreciation on buildings, but never threatened a capital gains tax. While they were putting in place rules around insulation, this government has taken it to extremes, forcing landlords to provide tenants with houses that are often in much better repair than their own… all so the tenant can cook meth in the house and get away with it.

RNZ  reports: quote.

Napier families who are desperate for housing are applying for flatshares and one-bedroom units.

A Napier landlord who posted an advertisement for a one-bedroom unit on TradeMe got more than 900 inquiries within 24 hours.

“We pulled it because we got 946 replies… I honestly couldn’t believe there were that many people wanting a place.”

The one-bedroom unit in Tamatea was available for $285 a week.

Several applicants were families who simply could not find anywhere else to live, he said. end quote.

Yes. You read that right. Families are so desperate to find somewhere – anywhere – to live that they are applying for one bedroom units or even flatshares. Families. quote.

“We put in the ad that it was not suitable for families or children, but they were quite willing to say the kids can sleep in the bedroom and we’ll sleep in the lounge.” end quote.

This is absolutely tragic. I know from my own experience that huge numbers of landlords have sold up, or are contemplating selling, and on a still hot property market, it usually means they will walk away with a tidy capital gain which, at the moment, is tax-free. It doesn’t make up for the years of grief of being a landlord and having to support the rentals with their own money, but hey – it certainly helps. quote.

Another Napier man searching for two flatmates to share his Ahuriri home said he was getting dozens of calls and texts each day – and many were from families.

On four different occasions he had families turning up to sign a tenancy, when he was expecting a single person to show up.

Hawke’s Bay Properties director Dee Penno was not surprised.

“There is just absolute desperation out there,” she said. end quote.

Oh and don’t forget, Phil Twyford has a whole new raft of tenancy reforms that have not been put in place yet, such as allowing pets in rental properties (even if the landlord doesn’t want them), ending ‘no cause’ tenancies and allowing only one rent increase a year. So, let’s just say that things are not going to get better for landlords anytime soon. quote.

A lot of landlords had sold up over the last 18 months, because of the buoyant market in Hawke’s Bay, she said.

And she predicted it would only get worse, if stricter requirements for rental properties came into force. end quote.

Yup. I have a lot of landlords feverishly asking me about the likely impact of capital gains tax. I can give them almost no reassurance that it all will be okay. It probably won’t.

But here is something included in the article that I hadn’t mentioned… and I think it is very important to note: quote.

Most of those [900 who applied for the same property] who inquired were unwilling to fill in an application form asking for reference checks and a police check.

This helped the landlord whittle down the list to about 50 people, who were invited to view the property at an open day, he said.

“Even then you could tell some people were desperate, a couple of them had tears in their eyes when they were talking to us.” end quote.

So people who are a bad risk are now finding it impossible to find a house. All those tenants who trashed the house, who didn’t pay the rent, who brought the media in to photograph the mould instead of buying a bottle of bleach and opening the windows… now, these people can’t find accommodation. Only good tenants who have a good credit history and a clean criminal record can become tenants and even then, competition is fierce.

But what this means is that large numbers of people cannot find anywhere to live, and are probably applying for state housing. But guess what? There are not enough of those either. Nowhere near enough.

The trouble is, even if the government reversed its landlord bashing policies tomorrow, it is unlikely to change anything. Many landlords have been spooked out of the market, and they are taking their tax-free capital gains with them.

When you have over 900 people applying for one rental house in a regional town like Napier, you know things are becoming dire. Just think about the motel costs the government must be running up giving all these people temporary accommodation? If only someone had shown some vision and used some of that money to give landlords subsidies for insulation or other upgrades for their properties, instead of threatening fines if they don’t comply. If only someone in the halls of power had recognised the important public service that private landlords have provided, at virtually no cost to the government. But no. Landlords are ‘rich pricks’ who deserve to be hammered.  Well, as this government is now discovering, in general, you reap what you sow.

 


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Accountant. Boring. Loves tax. Needs to get out more. Loves the environment, but hates the Greens. Has been called a dinosaur. Wears it with pride.

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