Long-term renters may get stronger protection in law

[Austrokiwi]

Xris
If you are in Hamilton I have a fair idea who you might be confusing me with.... I'm a one eyed mainlander!!!!!

Any way my maths is different to yours but lets not argue over numbers...... My main point is if tenants are going to gain more protection then landlords should receive more protection as well! I'm not renting my family home to provide social support to someone else. and for weeks bond doesn't go far this days.............. and the tenancy tribunal often is worth going to!!!!

[Austrokiwi]

I forgot to add prices in Austria have not doubled since 2000 they might have gone up 9-15% in 8 years. Housing is very stable in Austria.....the only way to make money is renovate!!!!

[Austrokiwi]

One more quick reply bond in NZ terms = $9600.00

[CJ]

Maximum bond in UK is 6 weeks rent and in every place I stayed I was asked for the maximum.

Interestingly, until recently, the bond went to the LL and to get it out of them (if they refused) you had to take them to court. They have just started something similar to our bond centre.

[flyernzl]

I am given to understand that there is some similar legislation in India. If a tenant stays more than 12 months, they acquire permanency rights.
Thus there is now one day of the year when all residential tenancies expire, and all tenants move out and into the next apartment. Sort of a mad-hatters tea party effect.
The law of unintended consequences.

[Glen]

I am given to understand that there is some similar legislation in India. If a tenant stays more than 12 months, they acquire permanency rights.
Thus there is now one day of the year when all residential tenancies expire, and all tenants move out and into the next apartment. Sort of a mad-hatters tea party effect.
The law of unintended consequences.

I can just imagine it! A national day of utter chaos! This should be in the funnies!

[One]

huh?

"Leasehold agreements would give a right of occupation over many years at an agreed rent, with regular rent reviews and would mean the tenant would be able to make capital improvements and sell their leasehold."

This was the sentence that worried me. Sell their leasehold? To whom? And who'd decide the price?

[Austrokiwi]

Whoah!!

If that is correct the government is looking at leases to be the same as commercial property. Scary idea, certainly I feel uncomfortable about it. I suppose it might work, but it would need a major shift in Tenants attitudes to make this work. My biggest concern is whether tenants would actually maintain the property and if they don't how would compliance on a long term lease be enforced. NZers are very migratory and a long term lease would not be attractive to those who plan to move.
I read a blog this morning (before work) that suggested property prices might not start climbing again till 2018; if that ends up being accurate then perhaps leasing would work. Any one know whether there will be an automatic conversion to a lease after a number of years; meaning if a tenant stays in a house for 3 years they can convert lease hold rights automatically?

[janhains]

NZPIF sees downsides to proposed long term leases

“We welcome the aim of the Minister for Building and Construction to ensure that the proposed long-term leases are a win-win situation for both landlords and tenants. But we can see some downsides and are keen to have these addressed for the members we represent,” said Martin Evans, President of the New Zealand Property Investors’ Federation.

Mr Evans said that many tenants are very pleased to be offered a fixed term tenancy to guarantee their tenure for a period of time. However, when this period is extended to 15-33 years, as the Minster has asked the Department of Building and Construction to investigate, clarification is required regarding how these will operate in practice. For example, what powers will a landlord have to evict a tenant if the tenant fails to pay the rent, breaches the tenancy, upsets neighbours or causes damage during a long term lease of this nature? A tenant can end any tenancy at any time by stopping rent payments and a landlord similarly needs to be able to end a tenancy if the situation becomes unacceptable.

“We will need to look at exactly how workable such leasing arrangements are in other countries, but in principle, long term leases sound like an idea well worth exploring,” said Mr Evans.

The Minister is quoted as saying in his press release on Monday that long-term leases may be tradeable. “Our members would like to know the procedure for determining the value of such leases and what happens if a tenant decides to sell their lease to another tenant,” said Mr Evans. “Another side of the question is how difficult will it be for a landlord to sell a property occupied by a long-term tenant.”

It was suggested that tenants with long-term leases may welcome the opportunity to take over the fit-out and capital developments of the interior of the space they are renting without any cost to landlords, but landlords will want to know that they have the ability to control the extent of these. Landlords will also want to know how the Government will regulate maintenance schedules for these properties.

“We have already had talks regarding long-term tenancies with the Department of Building and Housing and the Government team amending the RTA. However, we will be seeking a time to have further discussion on these matters with the Minister as soon as possible to ensure that the new model delivers the desired benefits for both tenants and landlords,” said Mr Evans. “We will certainly work cooperatively with the Minister in looking at and investigating these issues.”

[xris]

“We welcome the aim of the Minister for Building and Construction to ensure that the proposed long-term leases are a win-win situation for both landlords and tenants. But we can see some downsides and are keen to have these addressed for the members we represent,” said Martin Evans, President of the New Zealand Property Investors’ Federation.

Mr Evans said that many tenants are very pleased to be offered a fixed term tenancy to guarantee their tenure for a period of time. However, when this period is extended to 15-33 years, as the Minster has asked the Department of Building and Construction to investigate, clarification is required regarding how these will operate in practice. For example, what powers will a landlord have to evict a tenant if the tenant fails to pay the rent, breaches the tenancy, upsets neighbours or causes damage during a long term lease of this nature? A tenant can end any tenancy at any time by stopping rent payments and a landlord similarly needs to be able to end a tenancy if the situation becomes unacceptable.

“We will need to look at exactly how workable such leasing arrangements are in other countries, but in principle, long term leases sound like an idea well worth exploring,” said Mr Evans.

The Minister is quoted as saying in his press release on Monday that long-term leases may be tradeable. “Our members would like to know the procedure for determining the value of such leases and what happens if a tenant decides to sell their lease to another tenant,” said Mr Evans. “Another side of the question is how difficult will it be for a landlord to sell a property occupied by a long-term tenant.”

It was suggested that tenants with long-term leases may welcome the opportunity to take over the fit-out and capital developments of the interior of the space they are renting without any cost to landlords, but landlords will want to know that they have the ability to control the extent of these. Landlords will also want to know how the Government will regulate maintenance schedules for these properties.

“We have already had talks regarding long-term tenancies with the Department of Building and Housing and the Government team amending the RTA. However, we will be seeking a time to have further discussion on these matters with the Minister as soon as possible to ensure that the new model delivers the desired benefits for both tenants and landlords,” said Mr Evans. “We will certainly work cooperatively with the Minister in looking at and investigating these issues.”

Hello Jan/Mr Evans,

Let us see.

Long term tenancies. There is already provision for fixed tenancies up to five years in the RTA. a fter that it becomes a little murky. A simple amendment to the RTA would clarify and extend the ability to do this.

The LL's interest could be protected by writing into to TA rent revision dates, say once yearly. Again this is already available in the current legislation, so no need to change it.

The LL can, at any time agree that the tenant does maintenance on the property at the tenant's expense. This might need an addition to the RTA, such as in the so long awaited upgrade, just so that the tenant cannot come back at the LL with a bill for maintenance. (This is an obvious point that our friends at GBI do not understand.)

So, all these objectives of the government and, apparently, of the NZPIA can easily be acheived by

a/ Doing nothing except reading the RTA, understanding it, and using it.

b/ Altering the current act in two minor ways.

I have given up wondering why the govt spends years and countless tens of thousands of dollars trying to draw this same conclusion but I am puzzled as to why the NZPIA is falling straight into their lap by trying to emulate their endlessly circular deliberations.

Basically there is no need for anything but the most minor of changes to the current act. Do you or Mr Evans have any thoughts about this?

(The RTA is online if needed.)

xris

[janhains]

Current objective of NZPIF involvement

Martin Evans confirms that representatives of the NZPIF have already had talks with DBH and the Govt team amending the RTA regarding
long term tenancies. We understood that this issue was to be revisited at some stage with all parties. The current objective is to ensure we have further dialogue with the Minister, DBH and Government team involved in the amending of the RTA so that the needs of our property investor members are fully understood by these parties.

[brendan]

This was the sentence that worried me. Sell their leasehold? To whom? And who'd decide the price?

I was wondering about that too. Also, if they can sell it, does that mean they have to buy it too? As a landlord can i set the price of the leasehold agreement i'd like to sell?

[brendan]

If that is correct the government is looking at leases to be the same as commercial property.

I wonder would the lease-hold holder be responsible for
- Rates
- Water bills (billed directly by metro water or council)
- House Insurance
etc

Would be nice to pass those costs away. But what happens if they don't pay. The council would probably go after the landlord, not the poor tenant.

[spurner]

If it's not broken, don't fix it.

What's wrong with the current system. If a landlord is happy with a long-term tenant, and a tenant wants a long-term tenancy, then what's wrong with signing up on a 1-2 year fixed term tenancy and renewing the tenancy every 1-2 years. Why is it suddenly necessary to force long-term tenancies? Too many tax dollars paying too many people to think up things to play around with.

It seems so obvious that Labour is merely trying to push through extra protection for tenants, extra hurdles for landlords to jump through, under the guise of a "win-win situation" for landlords. Where is the "win" for landlords - that they have a long term tenant? Well if that tenant was truly a long term tenant who stays for many years then there's nothing wrong with agreeing on a 1 year tenancy, which can be renewed annually every year for 10-15 years.

I think a lot of it has to do with the type of property. Some places like blocks of flats are only ever going to be suitable for rental accommodation, so regardless of whether the property is sold or not, the tenants are still going to stay on. Whereas when a house sells, it is quite likely to be sold to an owner-occupier in which case the tenants would have to vacate.

I love long-term tenants, infact right now I have 10 tenants who have lived in their flats for more than 5 years, some for 15 years. As a generalisation, they tend to be slightly more mature, easy to get along with, impeccable in paying their rent, get along with their neighbours, look after the place, don't complain as much as others (especially about trivial issues), and are generally very happy and likable people. I have respect for these people, that they are good people, they are very humble, they are a lot older than me, they have lived in these places longer than I have owned them, longer than I have even been investing for.

But all of these tenants are on fixed-term tenancies for a period of 1 year, renewable by mutual consent upon expiry. I am very happy to continue renewing their leases in perpetuity so long as they remain reasonable people and pay their rent. But I would be very weary about assigning any of them a right to occupy the premises for 5 or 10 or 20 years. It is very obvious whose benefit this kind of lease arrangement is going to be for.

[exnzpat]

The whole thing sounds ghastly. If it goes into effect, count me out of the landlord game in New Zealand.

Here is one point the government, and you, the property owner, should all dwell on: RATES.

Tenants can be a scourge to a community. The reason for this is that they are using public services such as trains, busses, sewage, water treatment, electrical infrastructure etc., and are not paying for them. It is you, the landlord, who is footing the bill for almost all the services that tenants take for granted.

If long-term tenancy is encouraged either directly or indirectly by government legislation, it will create higher costs for basic public services and that cost will be passed onto the home owners (in that local area) and landlords alike. It already costs an arm-and-a-leg to live in New Zealand, surely all of you can see that this type of idiotic legislation will increase your costs and reduce your profits!

I personally see no need for any kind of government legislation in rental arrangements; including the current system. These types of protectionist laws are nothing but a burden to free commerce.

A simple contract between two parties, and a strong legal system to back that contract up is all you need. This protects both the tenant and the landlord.