A Delicate Balancing Act
The housing policies brought in by the new coalition government will need to find a balance of fairness for both landlords and tenants, writes David Faulkner.
30 December 2023
We anticipate significant changes in 2024 as the new coalition government is set to hit the ground running, particularly in reversing various housing policies.
The National Party’s housing plan focuses on boosting supply by promoting build-to-rent as an asset class, reinstating interest deductibility, and reducing the bright-line test to two years. Additionally, they plan to revise tenancy laws to encourage investor participation in the rental market.
One change with a lot of support from landlords and many property managers is returning to a 90-day no-cause termination. This was well-documented in the campaign leading up to the election, allowing landlords to give notice without reason.
They argue that vulnerable tenants are being squeezed out of the private rental sector because landlords are no longer willing or able to give them a chance. The fear is landlords will end up having a tenant who is antisocial and may cause damage to the property. While understandable, swift termination should be straightforward for tenants causing willful damage, falling behind on rent, or disrupting the community.
Landlords leaving due to rising compliance costs and tenant-friendly laws is another key factor to consider. As landlords move on, tenants may face a housing crunch with limited affordable options. Under a Labour-led government, the social housing waitlist has unquestionably surged. In just six years, from October 2017 to September 2023, the social housing register increased from 5,844 to 25,2842, a staggering increase of over 330 per cent. Compelling reasons support a return to previous legislation, granting landlords the ability to serve notices.
However, when you become a landlord there is a social contract that goes beyond a pure monetary measurement. Tenants require more security than landlords, as being a landlord is voluntary. Of the approximately one-third of the population that rents, many would prefer to live in a home they own. Rising prices in the past decade have denied many tenants the chance to own a home.
They are condemned to the rental market for life. There are also broader implications for our communities. Rising family transience, beyond their control, may lead to a surge in wider societal issues. Family upheaval during and after Covid may disrupt schooling, impacting children’s mental health, a concern some view as the new pandemic. Constant school changes could negatively impact our children’s education and well-being, leading to long-term productivity challenges.
With landlords able to give a 90-day notice without reason, many tenants may also fear exercising their rights when there is a legitimate reason to do so. I know tenants can seek the Tenancy Tribunal for retaliatory notices, but proving it is challenging.
It is, therefore, a delicate balancing act. The country needs a solid private rental sector, and landlords provide a valuable housing solution. Making it too complex leads to a rental stock shortage, increased rents, and an explosion of people waiting on the social housing waitlist. Returning to a 90-day no-cause termination may not address the issue. Our priority is ensuring tenants feel safe and secure in their homes.
We should offer landlords better protection by making it easier to remove antisocial tenants. Some of the laws introduced by the previous government around antisocial behaviour need to be revised. As things stand, removing an antisocial tenant is only possible on a periodic tenancy. This makes no sense. Then you have to do the following.
- Send three separate occasions within 90 days of how the tenant has displayed antisocial behaviour.
- Each time, the landlord must provide a notice specifying the antisocial behaviour and the time and location.
- They also need to state how many notices they have sent.
- The landlord must also apply to the tribunal within 28 days of the final notice.
There needs to be greater flexibility within the law. Antisocial behaviour severity varies and specifying notice numbers limits adjudicators in ordering termination when necessary.
Keeping the termination notice as is and making the legislation more landlord-friendly regarding dealing with antisocial tenants is the best solution.
David Faulkner is the General Manager of Property Management for Property Brokers and is recognised as one of the leading experts in the New Zealand Property Management industry. He has been involved in the industry developing robust policies and procedures, training, and consultation services for many years.