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90-Day Notice Dilemma

90-Day Notice Dilemma

Andrew King argues the case for keeping the 90-day notice provision in place.

By: Andrew King

28 February 2019

Unfortunately I am having to write this just before the Tax Working Group recommendations are released, which is a shame. But fortunately (or perhaps unfortunately) there are many topics affecting our industry that I can write about.

One issue is the total lack of knowledge of some tenant advocates on how the rental market works. My attitude is that we – tenants and landlords – are in this industry together and we need to work together for the betterment of everyone. I’m not totally naive of course. I realise that we are going to have differences of opinion on what needs to happen, but there should at least be an understanding of each other’s point of view.

I was at a working group recently discussing the merits of the 90-day notice. A tenant advocate said it was an unjust law, that it discriminated against tenants because home owners couldn’t be issued a 90-day notice, that tenants had a right to know why their tenancy was ending, and of course the obligatory argument that it wasn’t fair.

In defence of retaining the 90-day notice provisions, I shared the case of a Motueka street that was terrorised for two years by aggressive and obnoxious Housing NZ tenants. Although Housing NZ and the police were frequently called over that two-year period, nothing was done to help the other residents of the street by evicting the state tenants. After a hit-and-run incident involving the Housing NZ tenants, the residents grouped together and appear to have intimidated the offending tenants into leaving.

After finishing the story, the tenant advocate was incensed, saying that Housing NZ should have been forced to issue a 90-day notice and protect the street residents. I was almost speechless. How could someone passionately argue for the removal of the 90-day provision one minute and then say the provision should be forced on a landlord the next? I just couldn’t believe what I was hearing.

Tenure For Tenants

Some tenant advocates also claim that security of tenure is the main concern for tenants. I believe it is for the advocates and that there are improvements that could be made to the system, but there is no way it is the main concern of most tenants.

From my experience and talking to other rental property providers, most tenants want a reasonable place to live for the cheapest amount they can pay. So it was to my dismay that many tenant advocates are seeking to have private ownership of rental property reduced in favour of financial institutions taking over the provision of rental property.

The reasoning behind this is that financial institutions would be less likely to sell their rental properties and therefore security of tenure for tenants would be greatly improved.

There could be an element of truth in this, however it was also the finance industry that wiped out many people’s life savings, causing the Global Financial Crisis and earning a regular percentage of their customers’ assets even when they lost their customers’ assets. Do everyday tenants really want these organisations to own and manage their rental accommodation?

American rental institutions are profit focused and quick to sell or gentrify at the expense of tenants if the numbers add up.

Another aspect I don’t understand is many tenant groups agreeing with ringfencing of rental losses. I asked one of them directly what benefit tenants could expect from such a policy and he very honestly said none really, but that rental property owners have had it way too good for too long and need to be taken down.

With prevailing attitudes like this, it is extremely unlikely that these groups are going to achieve what most tenants really want. A reasonable rental at a reasonable price.