NZ First votes for bash-a-landlord bill, the real reason for changes to the RTA, warehouse space booming and 16 other insights in property news this week…
Property news this week is dominated by reactions to the latest anti-landlord legislation, with the first 11 items all devoted to different aspects of the Residential Tenancies Amendment Bill passed this week.
After that, things get much more upbeat. Grab a cuppa and enjoy this week’s edition of Property News This Week…
- NZ First votes for bash-a-landlord bill
- Residential Tenancies Amendment Bill passes
- Sweeping reform of tenancy laws tips scales in favour of tenants
- How the Residential Tenancies Amendment Bill will affect tenants and landlords
- Property investors say tenancy changes ‘unworkable and vicious’
- Sad day for tenants and landlords
- 45% of tenants don’t want the 90-day provisions changed
- Rent arrears make up 65% of all Tenancy Tribunal applications
- Tenants told: brace for rent increase notices in coming weeks
- Auckland rents to rise under new tenancy laws – expert
- The real reason for changes to the RTA
- House trashed by nightmare tenants who left ‘urine saturated’ carpet
- Here’s what residential property investors are switching to
- Warehouse space continues to attract ‘robust demand’
- Property market thriving, says industry executive
- If Covid-19 stays controlled, property is ‘out of the danger zone’
- Young Kiwis ‘bearing the brunt’ of economic downturn
- How likely are house prices to fall?
- How likely are interest rates to jump up in the near future?
Now that you know what you’re in for, grab that cuppa and enjoy our curated property news this week…
NZ First votes for the bash-a-landlord bill
NZ First just lost the votes of 274,000 landlords by voting for the bash-a-landlord bill.
The controversial Residential Tenancies Amendment Bill was passed under urgency on Wednesday night (see next story for details), supported by New Zealand First. This comes on top of NZ First’s shameful Resource Management Act betrayal that I wrote about 3 weeks ago.
Winston Peters likes to portray New Zealand First as a handbrake on the government, “ensuring common sense prevails in decision making” and saving us from the nanny state. In his own words…
“We’ve used common sense to hold Labour and the Greens to account. We’ve opposed woke pixie dust. We’ve defended socially conservative values, like the right to believe in God. We’ve focussed on the wisdom of sound economics.”
Winston would have you believe that if it wasn’t for NZ First, we’d be lumbered with poor policy from Labour and the Greens.
And yet here we are once again being lumbered with poor policy that Labour promoted, NZ First voted for, and the Greens are crowing about.
According to the latest polling by Colmar Brunton, support for NZ First has plummeted to 2% and – unless it wins an electorate seat – the party could be consigned to history in the general election.
Now that NZ First has been outed as an enabler of woke pixie dust, let’s hope they’re consigned to the dustbin next month.
Interestingly, the same Colmar Brunton poll found support for the Greens has dropped one percentage point to 5% and ACT has increased two percentage points to 5%.
It should be noted that ACT voted against both the Residential Tenancies Amendment Bill yesterday and the Resource Management Act Amendment Bill at the end of June.
With 5% of the vote and one all-but-guaranteed electorate seat (Epsom), ACT would have six MPs in Parliament. Perhaps ACT would be a more effective hand brake than NZ First’s dear leader?
Residential Tenancies Amendment Bill passes
A bill that reduces landlords’ rights passed its final reading in Parliament last night.
The Residential Tenancies Amendment Bill does away with 90 day no-cause terminations, removes rental bidding, and allows landlords to increase rents only once a year.
The National Party has dubbed the bill the “I Hate the Landlords” bill – and is warning it will have the unintended consequence of driving up rents.
Political reporter Yvette McCullough watched the debate and filed an audio report.
Sweeping reform of tenancy laws tips scales in favour of tenants
The Government has banned rental bidding, limited rent rises, and ended no-cause evictions of tenants with a sweeping reform of tenancy laws passed under urgency on Wednesday.
The Residential Tenancies Amendment Bill passed its second and third reading on Wednesday almost two years after the reforms were first announced, with just hours of parliamentary time in the term left.
The new law increases the power of tenants over landlords in several key areas.
It will end “no-cause” evictions whereby a landlord is able to end a tenancy for any reason with 90 days of notice, or 42 days if they are selling the property.
Under the new law landlords will have to give a reason to end the tenancy – including selling the property, changing how it is used, repeated rent arrears, or for a new “anti-social” behaviour clause which will be ruled on by the Tenancy Tribunal – and the notice period will be 63 days, up from 42.
Rent increases will be limited to once a year instead of once every six months.
“Rental bidding” will be banned, meaning landlords will have to stick to the rental price offered in an advertisement.
Landlords will be required in most instances to permit the installation of ultra-fast broadband and allow other minor alterations to houses such as hanging pictures, or securing furniture to walls.
National leader Judith Collins has promised to repeal the law changes if elected, saying that the changes will drive up rents and the Government was “bashing landlords”.
“It’s really really hard to be a landlord right now,” Collins said.
“All the things that the Government have pushed onto landlords, they have forgotten someone pays, and that’s tenants.”
The Government made some last-minute changes to the bill following its select committee process.
Victims of family violence will be able to end a tenancy with two days’ notice.
But NZ First obviously think tenant-on-landlord violence is more acceptable because a tenant who assaults a landlord will be given 14 days grace, with landlords only able to terminate their tenancy with 14 days’ notice.
[Two days notice for a tenant to terminate following tenant-on-tenant violence; 14 days notice for a landlord to terminate following tenant-on-landlord violence. Nice one Winnie.]
The National Party’s minority review during the select committee opposed the bill, in particular the end to no-cause evictions.
“In principle National is a party of private property rights. Landlords are not a social service,” social housing spokesman Simon O’Connor said.
How the Residential Tenancies Amendment Bill will affect tenants and landlords
Associate Housing Minister Kris Faafoi said times had changed and renters deserved the security of having a place to call home, and to put down roots.
“This bill aligns New Zealand’s rental laws with the present-day realities of renting in New Zealand. It ensures that there are appropriate protections in place for both tenants and for landlords”, Faafoi said.
[You be the judge on whether there are any protections for landlords in the new bill.]
The bill bans landlords from seeking rental bids, and limits rent increases to once a year.
It also allows tenants to make ‘minor’ changes to properties – such as baby proofing or hanging pictures and it stops landlords giving tenants 90 days notice with no reason.
Instead, landlords will only be able to terminate tenancies for a short list of specified reasons, and must supply evidence to justify their termination request.
Property investors say tenancy changes ‘unworkable and vicious’
On Monday, property investor and commentator Mike Butler said proposed changes to the Residential Tenancies Act would be ”unworkable and vicious” if they went through.
Butler said Section 55A of the act would effectively allow tenants to get away with two weeks of unpaid rent every 90 days.
And another part, Section 36, would allow two separate instances of anti-social behaviour every 90 days because the law required three separate incidents before the Tenancy Tribunal could step in, he said.
Butler said he was concerned people would game the system by persistently remaining under the three instance rule.
He had known “numerous instances of people who have just stopped paying rent. They know it’s going to take a while and in the meantime, they will live rent-free”.
“Vetting would get tougher and landlords would feel like they could only get out of bad tenancies by moving in, renovating or putting their property on the market.
“If the costs outweigh the benefits, they just sell.”
The implications for those in emergency housing were severe.
“If this change comes up, this problem will get much worse. And that is what the current housing minister … refuses to consider.”
Sad day for tenants and landlords
The Property Investors Federation says the Residential Tenancies Amendment Bill has some major changes for both tenants and landlords alike, and none of them are good news.
“A primary concern is the removal of the 90-day no-cause termination where a tenant can no longer be given a notice to move out unless the landlord has received evidence of anti-social or disruptive behaviour on 3 separate occasions within 90 days.
“Tenants and neighbours who live beside a disruptive and anti-social tenant will not be able to ask the landlord for help or rely on them to ensure their peace and quiet enjoyment of the property.
“These neighbours will have to provide the evidence to be given to the Tenancy Tribunal which would then be able to rule that the landlord can remove the tenant from the property. Providing this required evidence puts the identified complainants at risk.
“This new law will give security of tenure to the small number of anti-social tenants but not to the good [neighbouring] tenants who will probably look for new properties to rent.
“It is possible that more areas will turn into slums as good tenants move out due to the [anti-social] behaviour of their neighbours, and marginal tenants will take over.
“Landlords will have to give tenants an increased notice from 42 days to 90 days if they want to place the property on the market or move into the property themselves.
“It is expected that about 20% of rental property owners will leave the industry, with many already exiting an over-regulated market.
“At present, there are close to 17,000 on the emergency housing waiting list. This list will now continue to rapidly increase as tenants without impeccable tenancy records find it challenging to rent a property from private rental property owners.
“The Coalition Government believe this Amended Bill will balance the power between rental property owners and tenants. Instead there will now be an imbalance favouring tenants.
“The risk of placing an unsuitable tenant into a property without the ability to remove them will be more than some rental property owners will be willing to take.
“Fewer properties available for tenants will unfortunately mean that rents will probably rise. There will be increased competition to rent a property in some areas.
Tenants who are perceived as risky will not be able to find a private rental property owner who is willing to give them a chance and there will not be enough state and social housing to provide accommodation for these people.
“The only way to correct this situation is to have policies which encourage an increase in the supply of rental properties. The passing of this Bill will not achieve this solution.”
45% of tenants don’t want the 90-day provisions changed
Andrew King, president of the NZ Property Investors’ Federation, says that 45% of tenants don’t want the 90-day provisions changed as they are meeting their obligations but fear living next to antisocial tenants.
In his speech, the Associate Minister of Housing Kris Faafoi admitted that only 3% of tenancies are ended each year through a ‘no stated cause’ notice. He said this means that the majority of tenants and landlords will not be affected by the change.
If security of tenure is unchanged for 97% of all tenants, then why was it introduced when it could have a serious effect on the safety and quality of life of neighbours living next to antisocial tenants?
A press release that Faafoi issued on Wednesday night following the passing of the Residential Tenancies Amendment Bill said that, “the Government would be improving compliance by introducing a range of tools for the Regulator (MBIE) to respond to people who are not meeting their obligations.”
However, Andrew King points out that the regulator uses government lawyers and funds to protect tenants, but neighbours living next door to antisocial tenants must fend for themselves.
NZPIF also questions why the Government exempts itself from the 90-day changes. [Kāinga Ora, previously Housing New Zealand, and social housing providers will still be able to end a tenancy without having to give a reason.]
Is it one law for themselves and one for the private sector?
“Good tenants do not fear a 90-day notice,” says King. “The cost and risks of providing a rental property will increase because of this Bill, which can only make it harder and more expensive for tenants to secure a home.”
Rent arrears make up 65% of all Tenancy Tribunal applications
The Associate Minister of Housing Kris Faafoi says the RTA reforms got the balance right in reflecting the need to modernise residential tenancy law and correct problems in a way which was proportionate, placed reasonable requirements on both landlords and tenants, and would endure changing market characteristics.
The President of the NZ Property Investors’ Federation Andrew King challenges this statement and says it is false.
“If there was balance then Government would have introduced measures to assist landlords with rent arrears, which make up approximately 65% of all Tenancy Tribunal applications.
“They would have made tenants responsible for damage they cause to their rental properties.
“They would not have changed the law so that tenants have the power to continue living in a rental at the end of a mutually agreed term even if the landlord doesn’t agree.”
Tenants told: brace for rent increase notices in coming weeks
A new law limiting the frequency of rent increases is likely to lead to a flurry of hikes in the coming weeks.
The Residential Tenancies Amendment Bill was passed on Wednesday night. Among the changes it introduces is a limit on how often rent can increase, to once per year. That takes effect on 27 September, at the end of the Covid-19 rent freeze.
Property managers are warning landlords to start issuing 60-day notices nows if they want to start their annual rent hike review cycle as soon as possible.
If landlords set up a rent increase for 27 September, that means they can increase again on the same day in 2021 – the earliest possible date for an increase next year, under the new rules.
“We imagine a number of landlords will be issuing rent increases over the coming days and weeks, but to come into effect from September 27,” said Bindi Norwell, chief executive of the Real Estate Institute, which also represents some property managers.
“This is likely to be especially pertinent to those landlords who had planned on a rental increase during lockdown, but were unable to issue it due to the emergency legislation that was rightly put in place as a result of the financial impacts of Covid-19.”
“Going forward, landlords will only be able to increase rent on an annual basis.”
It is expected that many landlords will issue more significant rent increases every year as a result of not being able to issue more modest increases twice a year.
Auckland rents to rise under new tenancy laws – expert
Changes to tenancy laws that aim to improve the balance of power between landlords and tenants will drive up the price of Auckland rentals, according to an expert.
Associate Housing Minister Kris Faafoi is at odds with a leading property voice over whether the Residential Tenancies Amendment Bill will lead to an exodus of landlords from the rental market and higher rents for tenants.
Real Estate Institute of New Zealand chief executive Bindi Norwell said some changes will have unintended consequences and cause more harm than good.
“The proposed removal of the 90-day notice will be problematic in that landlords will potentially have difficulty in removing tenants who are causing damage to their property, who are acting in an anti-social manner or who have got significantly behind in rental payments,” she said.
Under the new law landlords are required to prove tenants have been anti-social at least three times in a 90-day period if they want to use that as a reason to evict them.
The previous law required only a single incident of anti-social behaviour.
Norwell said a REINZ survey found that nearly half of investors and landlords said it is likely or highly likely they will sell their rental property if the proposals became law.
“Given we already have a shortage of quality rental stock across the country, this is problematic as it will further reduce the pool of rental properties available and likely push up rents even further,” she said.
“In our larger cities, such as Auckland and Wellington, this will make it even more unaffordable to rent and make it even harder for people to be able to think about purchasing their own home down the track.”
National party social housing spokesperson Simon O’Connor said the law changes undermine the rights of landlords while disadvantaging tenants.
“They’ll be fewer rentals as there’s a high likelihood private rentals will exit the market. Rents will go up and become more expensive,” he said.
“It’s just going to make matters worse for the rights of landlords and the reality for tenants.”
The real reason for changes to the RTA
Green Party Co-leader Marama Davidson has revealed the real reason for changes to the Residential Tenancies Act.
In a speech during the debate on the Bill in Parliament this week, she said the Bill “will incentivise property owners to move out of owning property for rental purposes”.
While it has always been suspected, this statement confirms that the socialist strategy of the Green Party, and possibly of Labour as well, is to drive individuals out of providing rental accommodation for tenants.
This is a strategy high on ideology but lacking in common sense. New Zealand currently has a rental housing crisis. There are not enough homes to meet the needs of all the tenants requiring accommodation.
Despite building more state houses since the 1970s, half of which were started under the previous Government, the wait list for public housing has increased from 5,000 to 18,000 within this Government’s term.
The cost to house tenants in state properties is far greater than private rental homes.
At a time when we need Government to spend money and prop up our covid-ravaged economy, we should not be wasting borrowed money and tax payers’ funds to pursue ideological ideas on rental property provisions.
House trashed by nightmare tenants who left ‘urine saturated’ carpet
A South Auckland house trashed by nightmare tenants needed five-year-old carpet replacing after it was “urine saturated” beyond repair.
In a stark decision just released by the Tenancy Tribunal, the full extent of the wrecked house has been laid out, with much of the damage being ruled intentional.
It tells how the pair left the kitchen and laundry sinks blocked, removed a chain fence that cost $2,000 to replace, damaged the toilet so badly it needed replacing, along with other damage to the shower, hand basin, external vents and skirting, a gate, spouting and another fence. There was a hole left in the hallway.
In the most shocking evidence, the tribunal heard that the house’s carpet was new in October 2014 when the couple moved in.
But when they vacated the premises, the carpet and underlay had to be replaced because, in the words of the carpet installer, there was “urine saturation making them beyond repair or recovery”.
Here’s what residential property investors are switching to
Over the past year we have met with an increasing number of property investors who are selling down their residential property portfolios and looking at the alternatives.
With the current government’s war on landlords, they see the writing on the wall.
They see landlord rights being eroded beyond belief, something that has taken a major turn for the worse with this week’s passing of the Residential Tenancies Amendment Bill.
They also face significant costs to bring their properties up to a higher standard than many owner-occupied houses.
They understand property and prefer investing in tangible ‘real’ assets where prices are not subject to the vagaries of investor sentiment – the sharemarket is volatile and paper investments can vaporise.
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Warehouse space continues to attract ‘robust demand’
Warehouse space continues to attract robust demand in most Asia Pacific markets, led by e-commerce related platforms, according to latest research from CBRE.
CBRE’s Asia Pacific MarketView Q2 2020 research report shows retail and office suffering while industrial stays strong.
Retail vacancy increased across the region as the quarter saw a wave of store closures, led by right-sizing and market exits by several global fashion brands. Pre-leasing activity in new supply was weak amid subdued overall demand.
Rents fell by 2.3% on last quarter, with most markets registering a rental correction, and are now down 7.5% on last year.
Capital values declined by 3.5% on last quarter and are now down 12.5% on last year.
Asia vacancy rates increased further in Q2 2020, bringing the total for the first half of the year to its worst in a decade. Occupiers remained in wait-and-see mode or opted for renewals rather than moving owing to the absence of capex budgets.
Grade A rents fell by 1.8% on last quarter and are now down 2.5% on last year.
Capital values declined by 2.7% on last quarter and are now down 4.7% on last year.
The quarter saw a mild improvement in industrial sentiment along with the resumption of industrial activity. Warehouse space continued to attract robust demand in most markets, led by e-commerce related platforms.
Rents and capital values were largely unchanged.
Property market thriving, says industry executive
The return of thousands of New Zealand citizens and residents is fuelling a boom in the property market with demand greater than supply, says a real estate industry executive.
Shane Prasad, northern regional manager for Harcourts, said the return of close to 50,000 New Zealanders was a key driver of the lift in the property market, which was showing no signs of slowing amid the Covid-19 pandemic.
“We haven’t seen any evidence to say the housing market is going to crash,” Prasad told Radio Tarana in an interview.
“A report during the week said 50,000 people have come back to the safest place in the world right now, and we’ve seen a huge amount of sales transactions have come into the market in the last two months,” Prasad said.
Low interest rates, coupled with “cashloaded” returning Kiwis fleeing Covid-19 overseas, was leading to record property listings and sales – with July transactions topping the the year so far.
“During July we’ve had the biggest number of listings, auctions, and sales in the past 12 months,” Prasad said.
Prasad said that low interest rates were also driving the property market and drawing in a lot of first home buyers as well.
If Covid-19 stays controlled, property is ‘out of the danger zone’
The property market seems to be out of the “danger zone”, as long as New Zealand can keep a second wave of Covid-19 at bay.
That’s the analysis from economist Tony Alexander, while taking part in the OneRoof Property Panel.
When the lockdown was announced at the end of March, some were predicting property price falls of between 10-15%.
But the economy’s unexpectedly fast recovery is showing in the latest OneRoof Property Report, which shows property prices so far have flattened to a 0.5% increase nationally since lockdown.
In the panel discussion, Alexander said as long as we avoided a second lockdown we were now through the main danger zones of the March and June quarters.
“I’ve been inviting people to remember that New Zealand is a primary-sector-based economy, and the demand for our primary sector products … is good, it’s holding up well.”
He said that while tourism and education had been hit hard by the border closures, other areas were already surging back, which would support stability in the housing market.
“I’m still definitely of an optimistic bent on this. It would have to be, I think, an outbreak in New Zealand and a new lockdown to greatly disturb me from that optimistic scenario.”
Young Kiwis ‘bearing the brunt’ of economic downturn
Young people have been hit hardest by job losses as New Zealand continues its economic recovery against Covid-19.
Infometrics senior economists Brad Olsen and Alistair Schorn presented at a Marlborough Chamber of Commerce event on Monday.
Olsen said young people were “bearing the brunt of this economic downturn”.
“If you’re over 30, you’re starting to regain jobs not too bad. If you’re in the under 30 bracket, you’re in a pretty hard place,” Olsen said.
“They’re [young people] trying to get on the job ladder, trying to start a family or get on the property market, but they’re losing their jobs left, right and centre.”
Olsen said it was tourism, retail and hospitality industries being hit hardest. “What we’re finding is that it’s tourism or not,” he said.
“If your industry is very focused around tourism, that is going to be very hard to recover from. If you’re in anything else, especially food-based primary production, that is going to put you in a much stronger position moving forward.”
How likely are house prices to fall?
Tony Alexander answers a first-home buyer’s question: Will house prices fall away and make me lose wealth in the short-term?
“In Queenstown maybe yes, Invercargill potentially as well.
“But outside of that, in locations of any reasonable size and turnover, the chances are high that prices will creep higher during 2021 with no clear direction apparent for most places for the remainder of this year.
“The country is not over-supplied with housing as happened in the United States, Ireland, Portugal, Spain, and a few others ahead of the Global Financial Crisis.
“The ban on foreign buyers had zero noticeable impact on prices.”
How likely are interest rates to jump up in the near future?
Will interest rates jump up any time soon? No, says Tony Alexander.
“Rates are at record lows and if you’re worried you can lock a rate in for 5 or 7 years if you like.”
“But mainly, the world economic outlook is weak, inflation is quiescent, and even before Covid-19 there had been structural changes in our economies suppressing inflation and delivering a sustained low interest rate outlook.”
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Congratulations on reaching the end of Property News This Week! You might need a lie down now, LOL.
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