Tweet
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.
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.
Comment