Nelson Property Investors April newsletter and meeting

[Glenn]

NELSON PROPERTY INVESTORS ASSOCIATION

APRIL 2014 NEWSLETTER

PO Box 198 Nelson

Our second meeting ofthe year is being held at the Nelson Suburban Club,Tahunanui Drive on Tuesday 8 April. The meeting proper commences at 7.30 pm with the ever popular meal at 6pm when you will have the opportunity to chat to other investors. This evening we are having a Landlord Buzz night. We will divide up into small groups and various industry experts enter into encounters of the close kind on: “Tenant Selection”, “Insurance valuations”, “Conflict resolution with difficult tenants”, “How to serve Legal Notices / Retaliatory action”, and “Benefits of using a Mortgage Broker”. If you are coming to the meal please email Glenn by return email. The Suburban Club reserves seats on the basis of my bookings.

POLITICS

Just in case you had forgotten it is election year again. I guess you have all heard the joke about politicians. How do you know they are lying? Answer: When their lips are moving. In the last few weeks my email in box has been bombarded with all sortsof ministerial releases. On 30 January I got one on Fasttrack. In May last year at a conference a MBIE senior manager described this wonderful new idea of theirs. The deal is landlords and tenants can make their own deals and send them off for approval within 48 hours. The officials said at that time it normally takes 10 working days from tribunal application to mediation. Two of us disputed that optimistic claim but they would not admit how bad it was. Well actually currently some applications are taking that amount of time to just acknowledge the applications. A recent application of mine took 8 days to have its case number allocated and a total of 33 days from application to prescheduled phone mediation for a simple serious rent issue. By that I mean rent redirection from WINZ stopped and never started up again leading to the eviction. From application to eviction the delay was 48 days. Others cases have been slow as well. However a couple of low priority ones did occur in 14 days.I had one where both the tenant and I had our own pre-agreement. I asked “how come I cannot have Fasttrack like the Hon Dr Nick Smith has promised in his 30 January media release”? The mediator agreed with me. He got someone fromAuckland to ring me. She seemed to know about the log jam in Wellington and how long applications were taking to be processed. Come on Minister Nick. Why not reallocate staff from the process naming department to the answering the phone and email department. The nasty side effect of these bureaucratic unpredictable delays are the properties get more damage and the neighbours become abusive and aggressive towards landlords. In some cases even the police and city council authorities get distressed and again often place pressure on landlords re noise, violence, dogs, and crime. Clearly something is broken and it needs to be fixed.
The Government initiative that is going to involve BILLIONS of tax money is the Social Housing Reform (Housing Restructuring and Tenancy Matters Amendment) Act. Currently there is a vote allocation paid directly to Housing New Zealand to permit them to provide income related rent. This subsidy was started up by Helen Clark when she was Minister of Housing. At that time HNZ were charging market rents and their tenants were having their rent payments assisted by WINZ. Many people have forgotten that HNZ were struggling to let many of their houses. The claim of the Labour Government of the time was as soon as Housing NZ rents come down private landlords would follow suit. Well actually the opposite happened because suddenly there was no incentive to overpopulate HNZ properties to meet rent commitments and a massive increase in the private market drove up rents. Well the plan is to extend the HNZ subsidy to Community Housing Providers (CHP). Being for ever the cheeky optimist, I wrote off to Paula Bennett in November last year asking what the rules were re becoming a community housing were. I advanced the argument that I already house many needy people who were just as deserving as her tenants. I expected to betold that CHP’s needed to be charitable not for profit organisations led by people who had high standing in the community. Well I was surprised to read what they stated in their letter. This is what is what the Manager, HousingPolicy Integration wrote. The frame work will be based on a risk-management model, with regulatory costs kept to a minimum. The framework will be centered round four principles, and organisations wanting to apply to become a registered CHP will be expected to provide evidence demonstrating that they have reached and can maintain standards around:
Governance and management
Financial viability
Asset and property management practices.

The letter continues and stated that once they have the regulationsin place they will begin taking applications. However some organisations will automatically qualify as registered CHPs for the first year of operations.
It is a mystery to me why they only list three standards to be met when they have said CHPs need to meet four principles. It is also a worry to hear that some organisations will not need to meet any sort of standard in the first year but they will still receive huge sums of public money. Without a doubt many private property management companies including my own could easy meet the stated standards and should be able to qualify as CHPs as well. I have sent a chaser to the writer and this is what they replied.
We would very much like to share the application information with you but.. In the meantime the process for approving regulations does not allow us to share the final performance standards.
So what does all this mean? Well I think the Government is determined to follow their dream even if the officials are creating all sorts of sensible obstacles that need to be jumped through. Money will be splashed around in time for the election even if the intended outcome falls well short of the desired targets. Generally new initiatives take a year or two to work. Just as the democratic process blossoms and more and more hands reach out to grab the money the cactus flower will bloom. The smell that always follows is terrible and some people will fall on the thorns.
Clearly the management model for social housing is socially and economically unsustainable.
The Minister is saying he wants far more social housing provided by Non-government providers yet at the same time his own government is preaching a policy of discouraging investment in rental housing.You cannot have a policy heading in two opposite directions without running out of rope eventually.
I wonder which Minister will have the rope around his orher neck when the rope goes twang.