Bash the LL Bill

[McDuck]

I agree with you. I think Mr. Faafoi's heart is in the right place.



From my perspective, the law changes have increased business risk. My response will be as follows ........While it is deeply regrettable that tenants will face increased costs, the additional risks must be offset.[/LIST]

But you fail to see the big picture.
Mostly you fail to see you are involved in moving game of chess.

Your move will be met by a counter move, and so on.
You are playing a sentient opponent, not a frozen situation.

If the office of "private landlord" is to be tolerated and encouraged under law, it must perform its task in a reasonable, timely, affordable fashion.

If it does not, it will dissolve in what is known as "the tragedy of the commons".

The legal niche for landlords has been allowed and created under law.
The hope was that: private individuals would be able to provide the "public good" of shelter.
Thus freeing up the Government's attention and coffers to attend to other matters.
This is your job.
If, as a collective, that promise fails, another approach must be found.

I believe the term, don't shoot the goose that lays the golden egg, is appropriate .

[Don't believe the Hype]

From my perspective, the law changes have increased business risk. My response will be as follows and I'd be interested to read the response of others

1. More stringent vetting of tenants. Prior to the RTA reform I was willing to take a risk on some marginal tenants. Such tenants, often really nice people, unfortunately now can't be considered.
2. A re-balancing of the investment portfolio. While the emergency housing I provide indirectly to the Government will remain (this housing is for vulnerable people to stay short term and ironically has more favourable RTA terms than standard rentals) I will look to sell properties in lower socio-economic communities and re-invest proceeds in more upmarket ones. While the potential ROA of such an action is reduced I am happy to exchange that for reduced business risk and lower maintenance costs. Unfortunately the move is likely to displace tenants. I will accept the best purchase offers and these usually do not come from other rental providers as they need the lowest purchase prices possible in order to generate an acceptable return on investment.
3. Increased rents across the board. Changes to the RTA mean additional compliance costs arising from increased disputes and increased business risk by the removal of the no-cause termination. These together with other considerations must be factored into the rent. My accountant is helping me look into this but I suspect annual rental increases will be at least twenty per cent higher than what they have been prior to the tenancy reform package. While it is deeply regrettable that tenants will face increased costs, the additional risks must be offset.

Well articulated - this business risk is something that fairy dust and photo op don't seem to understand. With increased risk in an open market comes a requirement for a higher return. This higher return will manifest as higher rents from the POV of the asset owner.

The immediate impact for me working to smooth out rent increases to my tenants who for a long time had been under market and happily flying under the radar as we go to 'reset' their homes to HH standard to balance we will also 'reset' their rents to market.

If there is a gap of $50/wk we were planning to increase $25/wk now and $25/wk in 6 months. This legislation if now forcing me to increase $50/wk now - which will be a shock for my tenants and over the 26 weeks between what was planned as $25/wk increase will be a real added cost of $650.

Somehow fairy dust and photo op think an annual increase will save tenants money. I guess this starts in a flawed belief that in a rising rent market people paying market rent won't see their rent increase for 12 months from the beginning of a tennancy.... i can only guess it assumes that Landlords all set a calendar note every 183 or so days to jack up the rent so that all tenancies are sitting at market.

It fails to consider the huge majority of renters who have been in a tenancy for a decent period of time paying under market rent and the impact on these folks when it comes time to increase the rent to or at least closer to market.

[flyernzl]

Many landlords are saying : "I'm going to be more stringent in vetting my tenancy applications".
That's a good move, but not the entire answer.
People change.
Someone who has their life together can be made redundant, be involved in matrimonial strife, become addicted to gambling, alcohol and/or drugs, or otherwise fall off the wagon.
Then you, as the landlord, are now very much handicapped in how to deal with that problem.
(I know, it happened to a tenant of mine).

Also, those who are saying "rents will rise to cover the costs" should be aware that the tenant groups are already starting to bring pressure to bear for rent control to be imposed.

[Keys]

Have looked into THIS a little.

ATM I am considering asking for permission to do a full Police Check. Yes, it takes about 6 weeks but the willingness of applicants to fill out the forms (or otherwise) will give good indications on their background.

As for people changing? Yes they do. If, however, there is an applicant with a bit of history who has "changed" the state can house them IMHO.

[Sanya]

[...]

Also, those who are saying "rents will rise to cover the costs" should be aware that the tenant groups are already starting to bring pressure to bear for rent control to be imposed.

There are already rent controls in the sense that rent can only be adjusted annually and if a landlord is charging a lot more than is being charged for similar properties in the area, the tenant can apply to the Tenancy Tribunal. The Tribunal could make an order for the rent to be reduced.

Furthermore we’ve just been through a period of rental freeze.

But yes, this is not enough for some who’d like to see rental increases limited (for example) to a maximum of the rise of the Consumer Price Index, just like we do with pricing of every other service in New Zealand….

The problem with rent control is that it doesn’t do anything about the reason that rents are rising, i.e. insufficient housing supply, the price of land, the cost to build, increases in council rates, massive increases in insurance costs, the inability to depreciate buildings etc. etc. Rent controls also reduce the incentive to supply rental housing. If you force the price of something below an acceptable level of return, people will supply less of it and be less able to invest in maintaining it.

[crashy]

"In order to be considered for approval to access the Police Vetting Service (on the basis of an individual’s consent), New Zealand agencies should meet one or more of the following criteria:


Is a government agency.The agency has functions which involve community safety and security – for example, the care, protection, education or training of vulnerable members of society such as children, young persons, elderly and the disabled.The agency is a government department, ministry, state-owned enterprise or state-funded agency involved in national security.The agency has a legislative or other obligation to obtain a Police vet - for example, ‘fit and proper person’ checking for registration or licensing of teachers, taxi drivers, security guards, or educational facility checks for trainees in nursing, social work, etc.The agency is a law enforcement agency responsible for security at certain special events – for example, volunteers or employees at major international sporting events, or accredited staff during a VIP tour.The agency seeks a Police vet for NZ immigration or foreign consular/visa purposes"

So you could safely lease to some people who's employer already carried out a police check.

[McDuck]

Well articulated - this business risk is something that fairy dust and photo op don't seem to understand. With increased risk in an open market comes a requirement for a higher return. This higher return will manifest as higher rents from the POV of the asset owner.

Is this a correct statement?
Landlords are in a very special semi-business situation.
Landlords provide a public good.
That good being shelter.

[Perry]

I wonder if there is a business opportunity in this, for someone?

[flyernzl]

But yes, this is not enough for some who?d like to see rental increases limited (for example) to a maximum of the rise of the Consumer Price Index, just like we do with pricing of every other service in New Zealand?.

Ay??
First I have ever heard of this limitation?
I am sure that my lawnmowng man and my window cleaning woman are not limited to "a maximum of the rise of the Consumer Price Index" when they increase their prices to me. Local Council rates are certainly never limited in that way.

Where did you dream this up?

[flyernzl]

Is this a correct statement?
Landlords are in a very special semi-business situation.
Landlords provide a public good.
That good being shelter.

How far would you extend that logic:

Supermarkets are in a very special semi-business situation.
Supermarkets provide a public good.
That good being food.

Dentists are in a very special semi-business situation.
Dentists provide a public good.
That good being healthy mouths.

And so on.

[Sanya]

Ay??
First I have ever heard of this limitation?
I am sure that my lawnmowng man and my window cleaning woman are not limited to "a maximum of the rise of the Consumer Price Index" when they increase their prices to me. Local Council rates are certainly never limited in that way.

Where did you dream this up?

I was being facetious.

Of course the lawn mowing man, the electrician, the utilities provider, the local council etc. are not constrained by CPI when setting pricing increases.

For example, The Wellington City Council had initially been looking at a rates increase of 9.2 per cent for 2020/21 year. It claimed its costs were rising faster than inflation. The same is true for many landlords.

Rent controls would reduce both the quantity and quality of rental housing available.

[Don't believe the Hype]

Is this a correct statement?
Landlords are in a very special semi-business situation.
Landlords provide a public good.
That good being shelter.

How is shelter a public good any more than the provision of food or clothing.

[Don't believe the Hype]

One thing our friendly socalists have not considered is the number of properties that don't need rental income to pay the bills.

In my case I could leave up to HALF of my properties empty and cover costs of the properties and my living requirements. I'm sure I'm not alone.

If the choice is a risky tenant or no rent for an extended period of time I'll take the no rent.

Socialist Cindy and Photo Op farfoii think this is a binary option - rent the house or sell it... I think they'll be surprised at the number of empty houses that pop up in the next 6-12 months.

[flyernzl]

This possibility has already been discussed and a Vancouver (Canada) vacant property tax proposed. Theirs is a tax on properties vacant for 6+ months of the year at 1% of property value - for a million dollar house that's $10,000 !!

[Perry]

Just more and more, evermore, symptom chasing.

It's probably fair to say that if socialist Cindy et al had 'magiced-up' 30,000 affordable houses as they promised, then these legislative measures would be solutions in search of problems.