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  1. #1

    Default Landlords - Will the state give up the ground it has taken?

    Will the state give up the ground it has taken?

    Kiwi property investors are living in “interesting” times.

    As a recent Economist article noted (26th March) “For believers in limited government and open markets, covid-19 poses a problem. The state must act decisively. But history suggests that after crises the state does not give up all the ground it has taken.”

    With little fanfare and seemingly even less debate the Government recently announced a freeze to residential rent increases and greater protections for tenants against having their tenancies terminated. This has been applied as law through the COVID-19 Response (Urgent Management Measures) Amendment Act.

    The Act was introduced to parliament on the 25th of March and received Royal Assent on the same day skipping the select committee and the committee of the whole house along the way. This is a nice way of saying the bill was unlikely to be subjected to a robust scrutiny process.

    Executed under the reasonable mantra that that tenancies should be sustained so that tenants do not have to face the prospect of homelessness during a global pandemic, the bill amends the Residential Tenancies Act of 1986 to freeze all rent increases and to protect tenants from having their tenancies terminated. Increases in rent are prohibited for the next six months for any reason. Landlords will be unable to terminate tenancies through the Tenancy Tribunal unless specific, justified reasons apply, such as substantial damage to the rental property. These termination protections for tenants will last for an initial period of three months. Both of these measures will be re-evaluated at a later date.

    The bill also “protects tenants” by preventing a landlord from evicting a tenant for the next three months on the basis of simply wanting to sell the property or if they just want to move back into the property themselves.

    The termination protections are for “an initial period” of three (3) months but the bill (now law) may on the recommendation of the minister be extended for a further 3 months starting immediately after the conclusion of the initial period.

    Questions Property Investors need to think about

    What are the chances of the rental increase freeze being extended?

    Given the COVID-19 lock down / isolation period is four (4) weeks a six month freeze on rents seems generous.

    Is it co-incidence that the six month period neatly takes us up to the proposed general election date? Given much of the policy the Labour party has introduced over its term including RTA, Healthy Homes, letting fees etc. have significantly increased rental costs for tenants – the prospect of using the rent freeze as a platform for campaigning as a champion for tenant’s right must be surely be tempting to employ as a broad brushed broom to sweep votes?

    Remember this; now the Act has passed into law sans the usual scrutiny process, the ability for it to be re-evaluated at a later date is simplified.

    If Labour is re-elected in the next election – a very strong possibility because it’s rare for “war-time” Prime Ministers not to be – do you see the rent freeze being extended?

    Are the revised circumstances under which a landlord can terminate a tenancy a clarion call for future RTA amendments?

    Well folks, the law has already changed; that is to say, the provisions relating to the outbreak of COVID-19 are already inserted as a new schedule into the Residential Tenancies Act 1986.

    In many respects its actually quite alarming that law which unduly trespasses on personal rights and liberties of land owners; for example, preventing them from retaking possession of their properties, should have so little debate or Parliamentary scrutiny. During the next three months and possibly three months beyond – tenants can’t be evicted because the landlord or family wants to move in.

    The question landlords need to think about is will there be the political will to go back and disallow, revoke and amend the urgent measures legislation – and what might the amendments look like?

    Another question is where does all of this leave submissions made on the Residential Tenancies Amendment Bill? One of the objectives of the review was to “modernise the Act” so as to increase the security of tenure for tenants who are meeting their obligations. Some important people may opine that this particular objective has already been suitably been achieved by the new schedule inserted into the RTA as part of the COVID-19 response. But, thank you for your submission!

    So, will the state give up the ground it has taken? Let’s hear what you think.
    Last edited by Perry; 01-04-2020 at 09:24 AM. Reason: formatting

  2. #2
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    They have snuck this in.
    Like the anti-smacking law and RMA - it won't be going away.
    Democracy and the rule of law is even more dead now.
    MMP and the bad luck princess is the worst thing to happen to NZ in a lifetime.
    The three most harmful addictions are heroin, carbohydrates and a monthly salary - Fred Wilson.

  3. #3
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    It has long been the view of more-than-a-few in society that gummints use real or engineered / manufactured crises to rush through laws without due process.

    I don't see the rent freeze aspect as a big deal. As many on this forum have said: annual increases are their custom, anyway.

    But given the abominable performance of Dhil Twitford and the total failure of the kiwijilt charade, Labour does need a strong distraction from that "epic fail." The opposition were likely to make significant capital from the disaster in the run-up to the elections.

    Quote Originally Posted by Sanya View Post
    Given much of the policy the Labour party has introduced over its term . . . has significantly increased rental costs for tenants Ė the prospect of using the rent freeze as a platform for campaigning as a champion for tenantís right must be surely be tempting to employ as a broad brushed broom to sweep votes?
    Very likely. I suspect die-hard Labour voters are easily duped and 'suckered' with empty promises and blandishments.

    I expressed a big concern of mine, here.

    Quote Originally Posted by Stuff
    Housing Minister Megan Woods said it was not giving tenants a free pass for bad behaviour. "It is not acceptable for tenants to abuse the current situation by refusing to pay rent when they have the capacity to do so, causing significant property damage, or significant anti-social behaviour. Tenants are still fully liable for their rent payments and any damage as we ensure that landlords do not increase the burden on tenants."
    That appears to provide tenants who do not have the capacity to pay rent, to stop doing so, with the Minister's blessing. A tortuous and protracted process through the TT would then have to be embarked upon by the LL.
    Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

  4. #4

    Default Covid-19 Amendment Act

    Quote Originally Posted by PC View Post
    They have snuck this in.
    Like the anti-smacking law and RMA - it won't be going away.
    Democracy and the rule of law is even more dead now.
    MMP and the bad luck princess is the worst thing to happen to NZ in a lifetime.
    To illustrate the answer with an ongoing example;
    After the reunification of east and west in Germany the govt introduced agencies to support eastern businesses (one of them called Treuhandgesellschaft). The outcome has been liquidation and unemployment. The govt introduced a time limited new tax (Solidaritaets Steuer) for rebuilding the infrastructure in east, and guess after 30+ years – that tax is still in place!
    Last edited by klauster; 01-04-2020 at 11:46 AM.

  5. #5
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    Quote Originally Posted by Perry View Post
    That appears to provide tenants who do not have the capacity to pay rent, to stop doing so, with the Minister's blessing. A tortuous and protracted process through the TT would then have to be embarked upon by the LL.
    This is a key issue. Worst case, it's going to be a 'right to housing' in a country with 25% unemployment.

  6. #6
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    This is really bad news. Is it time to get out of property? How does the property investor protect his/her wealth under a communist/socialist regime?

  7. #7
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    You can't, plain and simple.

    See here.
    Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

  8. #8
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    Quote Originally Posted by Perry View Post
    You can't, plain and simple.

    See here.
    Somebody must have some ideas of how?


  9. #9

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    Quote Originally Posted by propertyfinder View Post
    Is it time to get out of property?
    No. Property investors need to “keep calm and carry on”. Resilience is needed in the face of calamity.

    Besides, if one got out of property – what would one “get into” instead?

    Quote Originally Posted by propertyfinder View Post
    How does the property investor protect his/her wealth under a communist/socialist regime?
    You hang on until the socialist regime is no longer in power.

    Plan now. Rental income will dry up.

    I doubt the tenancy tribunal will permit eviction for anyone on non-payment grounds as the new Schedule 5 of the RTA, Provisions relating to outbreak of COVID-19 (3)(b)(i) notes the Tribunal may refuse to make an evict order if it is “satisfied that the tenant is making reasonable endeavours to pay rent”.

    The overriding Government concern is not landlord’s income or prosperity. Read that sentence again.

    The overriding concern is to sustain tenancies to the greatest extent possible and to protect tenants from becoming homeless at this time. Across the Tasman, Prime Minister Scott Morrison has announced a nationwide six-month ban on evictions of commercial and residential tenants who are struggling financially because of COVID-19.

    Landlords will need to draw down on cash savings to plug income vs. expense deficits. Landlords may need to defer loan payments or pay interest only for a period of time. To obtain cash, Landlords may need to create additional credit lines by tapping into equity accumulated as a result of past capital gain.

    There are solutions. Keep calm and carry on.
    Last edited by Perry; 06-04-2020 at 10:52 AM. Reason: formatting

  10. #10
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    Quote Originally Posted by Sanya View Post
    The overriding Government concern is not landlordís income or prosperity. Read that sentence again.
    And extrapolate it.

    Tenants vote for the socio- [promise of something for nothing, so long as you vote for us] commies.

    LLs don't

    Quote Originally Posted by Sanya View Post
    There are solutions. Keep calm and carry on.
    Oh? Do tell.
    Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!


 

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