Life as a Landlord

[artemis]

Hmmm, have had plenty of tenants over the years, some long term (5+ years). Pretty sure not a one would be interested in such a proposal. Maybe there are a few out there in tenant land. Some might even be acceptable to the landlord as long term tenants.

There would be a huge benefit to landlords though - the security of tenure issue would die a death very quickly. But there would be a new issue - how are landlords going to recover the costs of tenant termination before the term is over, or the costs of remediating a rental left in an inadequate condition. Especially if the tenants now live in, say, Venezuela.

[Bobsyouruncle]

I'm with you Artemis, our tenants mostly stay pretty much forever. Why would they want additional cost. I only ever had high turnover in Rotorua, never in Auckland.
Flyers thoughts are good, but I can't see investors seeing the value in that concept. I want to be able to get a bad tenant out quickly when I have a million dollars tied up in an asset.

[Anthonyacat]

Why would they want additional cost? Who is to say there would be any? But even if there was, surely it's worth paying for a virtual guarantee that you won't be kicked out of your house at 90 days (or even 12 months) notice.

But I'd see a ten year tenancy from a potential applicant who stacks up to all the checks as a massively reduced risk, with massively reduced costs. I'd certainly be happy to offer them the property for less per week than I would on a 6 month agreement.

[Bobsyouruncle]

In return the tenant would be responsible for payment of all the overheads of the property (such as rates and insurance cover) in addition to their rent, and also would fit out the interior of the property with their own fixtures and fittings at the commencement of the tenancy.

Pretty self explanatory where the additional cost comes from. This might appeal to a tiny percentage of renters. Not enough to be of any interest to any investors that I can think of. But I am only talking about Auckland where vacancy is more or less unheard of.

[flyernzl]

I think the idea is pretty much guaranteed to work.

Why?

Shamubeel Eaqub is opposed to it.

http://www.stuff.co.nz/business/85782513/Landlords-to-offer-long-term-tenancies

[Bobsyouruncle]

Tenants would be allowed to fit out the house how they liked, have pets if they wanted to.

So it's just gone from being an OK idea to one I would fight against tooth and nail.

[Wayne]

In a society where long term tenancies is the norm I suspect tenants behave differently.
I could offer long term now but why would I?
If my situation changed I am generally stuck.
If the tenants situation changed they just stop paying rent. I'd evict them and they would be out of their predicament.
Either that or the TT will take pity on them and let them out of the lease.
So I get stuck by the contract but the tenant doesn't!
Why would I bother?

[flyernzl]

So it's just gone from being an OK idea to one I would fight against tooth and nail.

Why?
If the dog craps on the carpet you won't care - it's the tenants carpet.
If the cat scratches the wallpaper you won't care - it's the tenants wallpaper.

If the tenant has paid good coin to fit the place out with their own fixtures and fittings then they have a stake in the place and are much less likely to abandon it.

I'm not suggesting that this option replaces anything we can already offer, just that it is another option we could offer if we so chose.

[Bobsyouruncle]

I am sure you've either owned or seen homes that have had bad tenants in them. HNZ in particular come to mind. The damage is often never able to be undone. Unloved houses eventually get a layer of dirt and odour that a general renovation can't really remove completely. It's not the carpet it's all the stained urine soaked flooring underneath etc. It's just a terrible idea. Taking responsibility for looking after the home away from the landlord is untenable until tenants are able to treat homes better. So you could argue that this idea will promote that. But I have no issue with tenants now because I only have tenants in areas where you can get renters who will look after things.

So there is no benefit at all in this idea for me. Only loss of control and increased difficulty in getting some thing fixed or someone out if there is a problem. Not to mention the fact that for this to work you would have to get insurance companies to agree to waive the 3 month inspection as these new breed of tenants with rights of ownership won't stand for repeated invasion of their privacy will they?

Isn't this just another example of fixing a non existent problem? (Not saying it is Flyer, it's a genuine question).

[sidinz]

I would be very wary of locking in a ten-year tenancy in a climate where the banks can pull the shenanigans they currently are.
If they decided to call in a loan and an investor had to sell, they'd be hard pushed to sell a place that had (say) eight years to run on a tenancy.

[Learning]

Paying market rent plus insurance, rates, carpets, fixtures and fittings and then having to rip it all out and repaint at the end? I can't see many renters jumping at the idea.

[Learning]

Rents would have be fixed for the term or at the very least have capped increases. Imagine having just signed a 10 year contract to see a rental boom pushing up your rent 20% each year.

Also the exit clauses? At least when you're buying a house with a 30 year mortgage you have the house to recover some money if the brown stuff hits the wirly thing. But if a couple years into a 10 year contract with no asset to fall back on you'll have nothing but massive bills.

[Bobsyouruncle]

I don't think anybody who has ever been a landlord considers this a good idea Learning..........

[Wayne]

How does it work overseas?
Having people change house and move neighbourhood every year or so causes huge problems down track for the kids.
Lack of roots and lack of continuity are big issues.

[Bobsyouruncle]

Depends on the country. But of the nations I know anything about they are in the main generally slanted towards landlords because tenants are, again generally, not good at looking after homes. I think Europe is very different but countries similar to NZ, like OZ and USA are like NZ.