Life as a Landlord

[mrsaneperson]

Guide or law: it's indicative of a 'mentality.'

Just another example of anti-LL hate speech, really.

Well put.

Flyer very well written have you considered posting a copy to the Privacy Commissioner for his enlightenment?

[Keys]

Apply to whom? I'd offer a refund on the unused portion if they vacate early if they weren't contracted to a fixed term.

To the TT. They may offer 52 weeks, give you 52 weeks and sign that they are happy with that but, once moved in, they can ask for all but 2 weeks back. You are then stuck with them for the remainder of their FTT.

[Don't believe the Hype]

Yeah I know. I'm kinda joking.

Just making the point that we won't stop credit checking unless we are in a position of not providing credit. The only way we're not providing credit is with full yr rent paid upfront (which is as likely as catching a glimpse of the tooth fairy)

[Perry]

They may offer 52 weeks, give you 52 weeks and sign that they are happy with that but, once moved in, they can ask for all but 2 weeks back.

You've got me worried, now, Keys.

I thought your position was that: while a LL cannot ask for more than two weeks in advance, that same LL did not breach s23, if a tenant volunteered (say) a month in advance and the LL accepted that.

[artemis]

Yeah I know. I'm kinda joking.

Just making the point that we won't stop credit checking unless we are in a position of not providing credit. The only way we're not providing credit is with full yr rent paid upfront (which is as likely as catching a glimpse of the tooth fairy)

Had a tenant pay 6 months in advance, 6 months fixed term at their request. Actually parents paid, we gave them a discount. Completely trouble free tenancy.

[eri]

^

how dare you accommodate foreigners

when kash-less kiwis in akomodation krisis

it's like you're running business!

[Keys]

You've got me worried, now, Keys.

I thought your position was that: while a LL cannot ask for more than two weeks in advance, that same LL did not breach s23, if a tenant volunteered (say) a month in advance and the LL accepted that.

Yip, that is correct Perry. The tenant offers and the landlord accepts. That protects the landlord from being taken to the TT for asking for more. However, once paid and the tenant in place, the tenant can ask for it back. Not something I want to test at court. Not an incentive for me to take on a tenant.

[artemis]

As far as I'm concerned a prospective tenant doesn't have to provide any information but the more information they offer up the better their chances of getting accepted.

I'm also happy to not ask for their permission to do credit check where no credit is required. 52 weeks rent paid in advance should remove the need for a credit check.

The Privacy Commissioner has withdrawn the guidelines for the time being, as there were complaints that they were confusing, contradictory and produced without industry consultation.

A fail then. Those highly paid bureaucrats should be embarrassed.

Though they have said the guidelines will only be tweaked and they will be doing a spot of consulting this time.

Will Tenancy Services update their application template to indicate the guidelines? And will it make any difference IRL?

[Don't believe the Hype]

The Privacy Commissioner has withdrawn the guidelines for the time being, as there were complaints that they were confusing, contradictory and produced without industry consultation.

A fail then. Those highly paid bureaucrats should be embarrassed.

Though they have said the guidelines will only be tweaked and they will be doing a spot of consulting this time.

Will Tenancy Services update their application template to indicate the guidelines? And will it make any difference IRL?

Thanks Artemis.

[flyernzl]

The past month has given us the not entirely unexpected sight of two of our Lords and Masters laid low.

Firstly, the Privacy Commissioner has had to ‘temporarily withdraw for review’ his guide to the information that landlords may require from prospective tenants, and what he believed should not be required. This exemplar appeared to adopt an idealistic stance, where privacy concerns overrode all other considerations. Implemented, it would have made tenant selection a hazardous process. Fortunately, sanity quickly prevailed and the document has now been removed from the public’s view.

The second, and much more agonising, fall from grace is the now open and public admission that Kiwibuild is a dog. A dog with fleas, as one commentator put it. Anyone with housing industry knowledge gained from practical experience rather than from textbooks and ideology knew this right from the start. Unfortunately, the political chattering classes and blinkered academics were so firmly convinced that they knew better than the real world what the real world wanted that it has taken many months of wasted time and resources before the futility of creating houses few want or could afford in places where they prefer not to live could be publicly admitted.

As the Greeks pointed out so many years ago, after Hubris comes Nemesis.

So we now have what is being called Reset Time, presumably time to think about the next move. Some options have already been openly discussed, Rent-to-Own and Build-to-Rent. Of course, any program to advance these alternatives will also run into exactly the same constraints as have hit Kiwibuild – the problems of lack of land availability, scarcity of labour, high material costs and festoons of red tape.

Within the Kiwi psyche property developers have been so vilified and maligned that the word ‘greedy’ is automatically prefixed to their occupation. Thus any attempts to create new housing on a substantial scale is instantly met with strident protests, sit-ins, sabotage, land claims and raucous accusations of ecological devastation. Look at what is happening right now at the Fletcher Building Otuataua Stonefields development. Really, who needs to suffer those indignities? Unfortunately, without property developers you don’t actually have any new properties. Hence the belief that only the Government could do it better, cheaper and more quickly.

Meanwhile, the war against private residential landlords continues. Last week the Taxation (Annual Rates for 2019-20, GST Offshore Supplier Registration, and Remedial Matters) Bill was given the Royal Assent, the final stage for it to become law. Snuck in quietly, overshadowed by Minister Twyford’s downfall, and completely ignored by the media, this Bill will prevent private landlords from offsetting any loss they may make from their rental business against their other income for tax purposes. You may make a loss from growing herbs, breeding dogs and, yes, running a motel and quite legally offset that loss against other income, but not if you rent out a house. Yet another specific targeted penalty for and only for residential landlords. Interestingly, it does not seem to occur to the zealots that the most likely reaction to a landlord facing a loss that they can no longer offset will be to eliminate that loss by increasing the rents they charge. Has that thought not occurred to anyone?

Yet Build-to-Rent proposals are being promoted as the solution to the lack of rental housing at the very same time as private investors are being forcefully expelled from the market. Apparently it is quite OK to be residential landlord if you are a large corporate owning a substantial number of rentals, but not if you are Ma-and-Pa owning just a few. Again, the political think-tanks and parliamentary claque are blindly following some idealistic will-o’-the-wisp off into a seductive and delusional never-never land.

The bottom line is that residential landlording in New Zealand is and remains a low-return high-workload activity. I have seen a number of corporates grow enthusiastic over the idea of building a large portfolio of rentals, but then they have faded quietly away once the harsh light of economic reality sets in. The large-scale Hobsonville development was going to incorporate a substantial number of brand new long term rentals, but again I have not seen any further mention of that particular idea over recent years.

Sure, the concept works in some overseas jurisdictions where the laws and customs around renting are quite different from those in place here. Transferring their operations into New Zealand, how will these property ownership companies feel about:
- tenants being able to freely damage the property, and then have no responsibility for the resultant, often substantial, repair costs as long as they claim that the damage was 'accidental';
- being obligated to act as an unwilling and unpaid debt collector for Watercare;
- being bound to keep housing their tenants until the expiry of any fixed-term lease, but the tenant in reality being able to leave at any time they wish;
- having to give a tenant the exclusive possession and occupation of a property worth many hundreds of thousands of dollars but only being able to legally to extract a security bond of four weeks rent – probably somewhere around 0.003% of the property value?

The reality is that these ownership companies will only enter and remain in the market if they can make and continue to make a profit. Given current building costs, they are almost certainly going to require substantial initial grants of either taxpayer money or Government land to be able to construct their buildings. Having done so they will then need to set their rents at a level to allow for the cost of professional management, trade costs on all maintenance, and still have enough left over for a dividend for the shareholders. Thus it is likely that even more subsidies will be required to make the project fly and prevent further Government shame.

So once again the dreamers and the schemers in the halls of Government seem to be courting the delusional pie-in-the-sky of Build-to-Rent while at the same time ignoring any advice from those of us out there in the real world, those of us who have survived for years in the heat and dust of the market, those of us who already own around 540,000 homes housing some one and a half million of our fellow citizens. We could be the solution to the problem.

This combined knowledge is available. Landlords are willing to offer it, but have never been asked. Occasionally, we have been offered limited choices between pre-packaged opinions. Otherwise we are at best ignored and at worst abused oppressed and blamed. Without a healthy dose of reality, all that Beehive dreaming and plotting comes to nothing. Wasted time, wasted effort, wasted resources.

[artemis]

Interesting to see if rent-to-buy is part of the reset and if so how it will be managed.

Shared equity has been mentioned, possibly building on government land under some sort of suspensory loan arrangement.

Rent-to-buy was quite common in the recent past, and had a bad rep, not necessarily deserved. Tenant / buyers who entered these arrangements had little or no deposit, a red flag in itself, and not all kept up their side of the deal.

There were some widely publicised cases at the time where the arrangement was cancelled and people lost their home and their 'buy' contribution. Although legal, some cases were pitched by the media as taking advantage of vulnerable people, despite in most cases having independent legal advice.

Many households fall behind on house payments - rent or mortgage or rates - or decide to move. In a rent to buy scheme, defaults mean end of the arrangement sooner rather than later unless the taxpayer or someone else steps in.

The amount of time and effort following up on these is very very significant.

[eri]

this will be it exactly

people will promise and sign anything

if they believe that a well-being gov will give them a new, high quality, free home (worth $850,000)

and all have to do is complain about circumstances and unfairness

[Perry]

Meanwhile, the war against private residential landlords continues.

Chatting with someone a while ago and they mentioned a Nat govt policy of long ago. Despite lots of searching, I have not found any corroborative information.

The gist of what I was told is the very antithesis of the present crop of W'gton woodenheads.

Supposedly, the gummint of the time noised abroad that private LLs were more efficient than the gummint, so they were to be encouraged.

Quite the reverse of disparaged - as in the present climate.

Any PT forumites know more about that era?

[artemis]

Not sure about that policy, Perry, but I do know that when the Accommodation Supplement was introduced it applied to all rentals (state and private) as well as to owner occupiers with mortgages. The reasoning then was basically housing problems were income related rather than supply related. Rent-wise, no distinction based on rental ownership and certainly landlords were seen as part of the supply chain.

In that era I went with a family member to see if they could rent a state house. They were offered one on the spot after a simple application. They actually turned it down due to location and lack of public transport and rented privately instead with the AS.

Labour changed the AS rules removing AS from social housing and replacing it with income related rent. Immediately the rental market was distorted and remains so to this day. Average AS subsidy $107 pw. Average IRR subsidy $275 pw. Easy enough to see why state housing became more desirable and private housing / landlords less so. Start of a slippery slope?

[Davo36]

We just need higher wages in this country.

As part of this we need to a) Stop importing tens of thousands of low skilled, poor people each year and b) Improve our productivity.