Here’s a summary of my findings concerning the changes Labour propose to make to tenancy laws:
- extend 42 days notice periods to 90 days
- abolish ‘no cause’ terminations of tenancies
- limit rent increases to annually, from 6 monthly currently
- stop property managers charging letting fees
- introduce a landlord warrant of fitness
- include a formula for calculating rent increase in agreements
There’s nothing here that concerns me very much. My rental portfolio is well maintained, with new or renovated homes, so the warrant of fitness will just be an additional ‘maintenance cost’ that will need to pass on to tenants via increased rents.
We don’t usually increase rents more than once a year, so limiting increases to annually is fine and probably fair to tenants.
Removing property managers’ letting fees will mean they need to increase the management fee they charge landlords to cover their costs. The fee is typically 7.5% of the rent collected plus GST. If the management fees increase then this cost will also be passed on in the form of higher rents.
Abolishing the ‘no cause’ termination of tenancies will mean that tenants who have no or bad rental history will find it even harder to find homes, and if they are lucky enough to be offered a tenancy, it could well be on a short-term contract giving them little security.
As many tenants cannot afford the rent they are paying now, the Government (you and me, fellow taxpayers) currently spends $6 million per week on rental subsidies. The effect of Labour’s policies, if introduced, will simply mean increases in the rental subsidy paid out, and increases in tax paid by all New Zealanders.
John Kenel, Assured