Landlords will put up rent with or without law changes - Renters United

A renters group says it's "disappointed" with how some landlords have responded to new legislation aimed at making lives easier for renters. 

The Residential Tenancies Amendment Bill passed into law on Wednesday. Among the changes are limiting how often the rent can go up, preventing landlords from kicking out tenants without a good reason and letting renters hang pictures. 

In a private Facebook group for property investors, landlords reacted furiously, calling it a "class-hatred Labour ambush" and "not good for society as a whole". Screenshots of their complaints were uploaded and shared on web forum Reddit. 

One said "successful and hard-working" landlords were being punished with "typical socialist incompetence", and another complained they'd have to "suck up" the costs of the change allowing victims of domestic violence to terminate their tenancy with just two days' notice. 

"Can only hope that intelligent people don't vote for these mongrels," said one. "Problem is the percentage of intelligent people has been decreasing for years as the non-intelligent group has been breeding faster for years," replied another (a study in 2018 found it was in fact the other way around).

"What kind of rent increase are you guys thinking now?" asked one landlord.

Some more of the comments.
Some more of the comments. Photo credit: Supplied

Earlier this week Ashley Church, former head of the Property Institute of New Zealand and the Auckland Property Investors Association, said Jacinda Ardern was leading "the most anti-landlord Government probably in the history of our nation", while Mike Butler, spokesperson for landlord lobby group Tenancies War, called the changes "unworkable and vicious"

Perhaps more politely, the Real Estate Institute of NZ (REINZ) has warned of "unintended consequences" of the new laws.

"In a recent survey around half of landlords and investors (46.3 percent) said it is likely or highly likely they will sell their rental property if removal of the right to issue a 90-day notice went ahead," said chief executive Bindi Norwell.

"Given we already have a shortage of quality rental stock across the country, this is problematic as it will further reduce the pool of rental properties available and likely push up rents even further."

Robert Whitaker, organiser for Renters United, said he's not concerned about that.

"Rents are going up regardless anyway, and we don't think this will make a massive difference to the number of rentals out there in the market," he told Newshub.

"If landlords do decide to exit the market - which we don't think is that likely - it's likely they'll sell to other landlords or owner-occupiers. The houses are not going to disappear - we don't think it's going to have a big bearing on rent." 

Since coming to power in 2017, the Labour-NZ First coalition Government (with support from the Greens) has introduced legislation to improve the country's rental stock, despite warnings from landlords they'll have to increase rents to pay for it. 

Data from the Ministry of Business, Innovation and Employment (MBIE) suggests it hasn't had much effect. Rents flatlined in the wake of the global financial crisis, but between 2011 and 2017 the median rent rose an average 4.9 percent a year, from $300 a week to $400. 

Between September 2017 and June 2020, the median rose to $460 - an annual increase of 5.2 percent, only marginally higher than under National. 

At the same time, the official cash rate - which affects how much property investors and homeowners have to pay on their mortgages - has only gone down. It's currently at a record low 0.25 percent, and hasn't gone up in five years. 

Despite that, rents have continued to rise. MBIE data shows the median price of a residential property in New Zealand has been on an eight-year upward trend, from $363,000 in mid-2012 to $639,000 this month - up 7.3 percent a year. Over that same time, inflation has averaged 1.2 percent a year according to the Reserve Bank.

 "We're a little bit disappointed about how landlords have talked about these changes," said Whitaker. 

"They are very measured - the Government has done a lot of consultation and listened to the concerns of landlords around anti-social behaviour and put things in place. What the Government decided to do was balance those things and make them fair." 

REINZ said another unintended consequence could be renters struggling to find a new place, with landlords having to go to the Tenancy Tribunal to get rid of bad tenants, "extending the average timeframe to resolve claims and extending backlogs further". 

"Both REINZ and the New Zealand Property Investors' Federation who represent a significant portion of landlords across the country have warned this would be a likely outcome as landlords and property managers seek to take a more risk averse approach to selecting tenants," said Norwell.

REINZ did see some good in the new laws, however.

"There are a number of positive things in the new legislation, such as banning landlords from seeking rental bids, limiting rent increases to once a year and making rental properties safer and more liveable by enabling tenants to make minor changes to the property, such as installing child-proofing, hanging pictures, or earthquake-proofing," said Norwell.

"We're also broadly supportive of the changes introduced at the last minute including allowing victims of family violence to end a tenancy with two days' notice, to allow landlords and property managers to terminate tenancies with 14 days' notice if a tenant physically assaults them and the extension of the time the Tenancy Tribunal can hear cases via phone/video conference."