Consultation on proposed RTA changes

[artemis]

Supply / Demand. Major factor in setting rent. The landlord can choose tenants that are Ok to pay whatever the rent is set at.

[Perry]

Hypothetically Speaking . . .

I don't recall that has ever happened. You're saying that someone currently paying $400pw wouldn't be able to rent another place for $400pw?

Perhaps not somewhere suitable, such as job proximity.

It's currently happening in Wellington - rents have jumped up, every property has a queue of applicants. You can't beat the market.

The problem I see is that your hypothesis is not what you refer to as the market.

It describes a theoretical, arbitrary and collusive rent increase and a 'what might happen' scenario that followed. That's when I suspect that your next hypothesis would occur:

Let the market decide - no tenant in 3 weeks, drop the rent.
Big queue of applicants - raise the rent.
Pretty simple really.

[Don't believe the Hype]

How long would it be necessary to wait for that someone to come along?

we’re testing the high end of the market in our area with value add services like lawns and bins on top of full tidy up reno’s (cosmetic stuff) a year ago $350 was the top of the market where average prices were closer to $300 there were queues down the street, today we’re at $450/wk and the queue’s are still there.

In this example there is demand for our product. If the demand wasn’t there due to either an oversupply or housing or us providing a product that the market doesn’t need then we’d have to review our pricing.

[Bob Kane]

The problem I see is that your hypothesis is not what you refer to as the market.

It describes a theoretical, arbitrary and collusive rent increase and a 'what might happen' scenario that followed.

lol
You and Wayne have been preaching on about the landlord doesn't set the rent, the tenant does.
I've shown an example which proves you wrong.
Carry on believing what you want.
The market currently matches what I say.
Or more correctly, I've watched the market and just explained what is currently happening.

[Perry]

OK
- let's say all tenants are paying the max rent that they can afford.
- let's say that all landlords decide to increase the rents they charge by $100pw - if not immediately then on the next rent review opportunity.

I've watched the market and just explained what is currently happening.

Oh? So you assert that you are watching the market and what is currently happening in the market you're watching is:

- all landlords have increased or are increasing or are proposing to increase rents by $100pw.

Tell me, where in 'the market' that you say you've been watching, is this phenomenon actually happening?

[Keys]

If the demand wasn’t there due to either an oversupply or housing or us providing a product that the market doesn’t need then we’d have to review our pricing.

And there, everyone, is the true reason for rents being what they are today, tomorrow or indeed, any time.

[Bob Kane]

Oh? So you assert that you are watching the market and what is currently happening in the market you're watching is:


Tell me, where in 'the market' that you say you've been watching, is this phenomenon actually happening?

Well, I do believe I said at the beginning:

Ok - why don't you predict what would happen in the following scenario:

- let's say all tenants are paying the max rent that they can afford.
- let's say that all landlords decide to increase the rents they charge by $100pw - if not immediately then on the next rent review opportunity.

So that is the scenario I posed - and I deliberately stretched the points to stress test what would happen.
I could have said a $30pw rent increase but I suggested $100pw to push the limits.
And I think my explanation of what would happen under exaggeration circumstances holds up.
Landlord could get their $100pw increase and all existing tenants would not pay any increase in rent.
And where in the market is this actually happening?
Wellington actually.
Rents have gone up.
Tenants are still as poor as they always were.
This shows that every rental can have a tenant.
And if the rent increases, there will still be a tenant for that rental.
It's the size of the queues lining up for a rental that determine the amount of rent charged, not the amount of loose change in the tenants back pocket.

[Perry]

I understood your hypothesis.

However, starting with an extremely unlikely and collusive premise and then referring to what the present, actual market conditions are or would do is a stretch too far.

If something extraordinary like your premise occurred, it would likely prompt equally extraordinary reactions.

E.g. The present comic opera coalition gummint would hastily rush through residential rent control legislation.

My understanding of market price is the price at which willing buyer (tenant) and a willing seller (LL) agree on a price (rent) provided that they are not subject to inordinate external pressures / conditions within or beyond their control.

When those "inordinate external pressures / conditions" prevail, the market adapts accordingly. When those conditions revert to normal, the buyer-seller-price market again adapts accordingly. Supply and demand.

We all seem to agree that the present shortage of supply is distorting the market, but in this case, that distortion is no more than a market adjustment. If supply exceeded demand, would the reverse not apply?

Let's say that all landlords decide to increase the rents they charge by $100pw - if not immediately then on the next rent review opportunity.

And where in the market is this actually happening?
Wellington actually.

At what date did all W'gton LLs increase all residential rents by $100 a week? I saw no mention of it in the media.

[Learning]

At what date did all W'gton LLs increase all residential rents by $100 a week? I saw no mention of it in the media.

$50/wk is common. A friend has received notice of a $55/wk increase and I've heard of a $70/wk notice being issued.

[Perry]

For Bob's hypothesis to work, it must be all LLs AND $100.

The W'gton situation is an interesting one. Well, not for would-be tenants.

It's a university town and the start-of-the-year student accommodation scramble is an annual event.

Why is this year worse than earlier ones?

Is this year worse than earlier ones?

Or is it media hype with prickly seeds sown by Dhil Twitford's spin doctors?

[Perry]

Fuel for Bob's fire

Tenants feel Wellington rent crunch: 'We were so devastated'
14 Feb 2019

"In 2019, due to the demand of rentals in Wellington, and to align the price of our flat with the price that other flats are being advertised for, our rent has been increased to $720 per week. Our landlord does what's required of him when we need something fixed, and keeps the surrounding gardens tidy, but he's doing it to make a living.

"We were so devastated. Of course there was the ability to turn down the price and decide to move out when our lease expired mid January, but due to the stories we heard about lack of rentals and the significant increase in rental prices anyway, we have decided to stick it out."

[Bob Kane]

At what date did all W'gton LLs increase all residential rents by $100 a week? I saw no mention of it in the media.

You're confusing my scenario with reality.
No matter.
Wellington rents have risen.
Salaries haven't.
Something that you and Wayne claim doesn't happen.

[Perry]

You're confusing my scenario with reality.

Precisely - therefore the conclusions are unrealistic.

Wellington rents have risen. Salaries haven't. Something that you and Wayne claim doesn't happen.

Where did Wayne or I say that?

There is no doubt that rents are rising significantly in some places. Perhaps even many places? There is also little doubt that wages / salaries across middle NZ are woefully out-of-touch with costs of living in the NZ economy.

The comic opera coalition's minimum wage charade will solve nothing as prices will move up to recover those increased employment costs. Or people will be made redundant.

It may be more accurate to say that neither LLs nor tenants set the rent.

"The market" does.

What is potentially scary is possible arbitrary gummint intervention, such as I posited, back here:

If something extraordinary like your premise occurred, it would likely prompt equally extraordinary reactions.

E.g. The present comic opera coalition gummint would hastily rush through residential rent control legislation.

[Perry]

More Rain & Hail on Dhil Twitford's Parade

Public housing waitlist cracks 10,000, with more families waiting for longer for housing
19 Feb 2019

National housing spokeswoman Judith Collins said Twyford's multiple reforms to private rental market - both enacted and promised - had driven up rents as landlords were selling up and leaving the market in droves. The Government in its steps to attack landlords has actually sent a whole lot of people out of that market and that means that there is now more people wanting public housing.

They are selling up and they are selling to people who might put two people or one person in a house rather than five or six.

Finally! Someone has not just noticed, but mentioned what's been painstakingly obvious, for so long.

As for LLs selling up - according to Dhil, that was just scaremongering.*

Twyford received advice last year from officials saying rents could rise as the result of his reforms to tenancy laws thanks to landlords feeling like they were under assault and selling up to owner-occupiers.

Hang on! Twitford said that the advice was "only a scenario" and he "wasn't assuming that is going to happen."


* "National saying that landlords are selling up is simply scaremongering," he told NZME. "Corelogic data shows that landlords purchased 38 percent of properties in October, which is consistent with the last two years - there has been no change in landlord activity."

Dhil thinks buying and selling are the same thing.

[Perry]

Evidence-based ‘healthy home’ standards already in force

Evidence-based rental standards would require ceiling insulation to the 1978 standard, no subfloor insulation, and nothing more, Tenancies War spokesman Mike Butler said today.

Advice to the Government obtained under the Official Information Act (See .. ) shows no support for the claim that heat pumps, extra insulation, extractor fans, draught-proofing, and moisture-proofing soon to be imposed under the Healthy Homes Guarantee Act would keep 10,800 children out of hospital each year.

The World Health Organisation never recommended a minimum indoor temperature as the discussion document claimed and the Building Research Association of New Zealand found that only 2.7 percent of renters thought their dwelling was cold and damp, which is hardly a crisis, Mr Butler said.

We already have standards for rental property and if Housing and Urban Development Minister Phil Twyford followed advice, the standards he would confirm under regulation would be thus:

• Heating: A tenant should be able to use whatever he or she chooses to plug in so long as it is safe. Both fixed and portable heaters can deliver sufficient warmth. Housing New Zealand installed 15,000 fixed heaters that a number of tenants would not use because they were not what they were used to. The high price of electricity is the greatest barrier to poorer people turning on the heater, not the presence or absence of a heater. Wood-burners are useful for those who prefer a fire. The World Health Organisation has no minimum healthy temperature standard as the discussion document alleges.
• Insulation: Ceiling insulation to the 1978 standard of R1.9 for most of the North Island should be the standard because it has the greatest impact and anything over that has diminishing cost-effectiveness. Underfloor insulation is a waste of money because it hardly reduces heat loss. Owners forced to install it should be compensated.
• Ventilation: Windows that may be opened is a basic standard of ventilation and have been required since 1947 under the Home Improvement Regulations. There is no solid evidence that mould is a serious issue in rental properties.
• Draught-proofing: Residents will protect themselves from draughts when they need to. Requiring draught-stopping tape in gaps greater than 3mm in 588,700 rental properties is absurd.
• Moisture-proofing: No evidence has been offered to prove all rental properties suffer from rising damp. The evidence is that 2.7 percent are perceived as cold and damp. Dampness problems are remedied by discussion with the owner or through the Tenancy Tribunal.
• As part of this round of regulation, the outrageous $4000 dob-in-your landlord incentive imposed by the previous government should be dropped, he said.

The attempt to blame housing-related hospitalisations of 10,800 children annually on the condition of 588,700 rental properties while ignoring 1.1 million owner-occupied properties and not accounting for overcrowding is deceitful, he said.

We found that up to $7000 of extra spending per property may be required if every rental property required a heat pump, extra insulation, extractor fans, as well as the suggested draught-proofing and moisture proofing and this would have little benefit, Mr Butler said.

The money for extra compliance can only come by way of a rent increase from the tenant who is in effect being forced into buying extra appliances and building material without necessarily wanting it, he said.

A more-effective way ahead should be driven by owners and tenants in which any issues with heating, insulation, ventilation, draught and moisture proofing could be sorted out by agreement, he said.

Stop the War on Tenancies is a group that - since last October - has been highlighting the evidence that successive governments have ignored while creating problematic rental property policy.

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Contact:
Mike Butler 27-277 7295
[email protected]