Sweeping rental law change proposals announced

The Government has announced its proposed changes to the rules around rental properties, saying it's keen to hear the opinions of both landlords and renters before making them law.

"Our tenancy laws are antiquated and don't reflect the fact that renting is now a long-term reality for many of our families," Housing Minister Phil Twyford said on Monday morning.

"Insecure tenure can force families to continually move house. This is particularly tough on children whose education suffers when they have to keep changing schools."

Among the proposals are:

  • ending no-cause tenancy terminations, while ensuring landlords can still evict "rogue" tenants
  • increasing the notice a landlord must give tenants to terminate a tenancy from 42 to 90 days
  • limiting rent increases to once a year
  • better equipping both tenants and landlords to reach agreement about pets and minor alterations
  • introducing new tools and processes into the compliance and enforcement system.

The Government also wants to look at:

  • whether changes to fixed-term agreements could improve security of tenure
  • whether there should be limitations on the practice of 'rent bidding' (asking tenants how much they can pay, then renting to the highest bidder)
  • whether the obligations that tenants and landlords have remain fit for purpose
  • whether further controls for boarding houses are needed.

"As people rent for longer, they want to be secure in their homes and put down roots in their community," said Mr Twyford. "That's why making life better for renters is an important aspect of the Government's housing plan."

The proposals to amend the Residential Tenancies Act 1986 were widely expected, and line up with what Labour promised ahead of last year's election.

The Government says when it was introduced in 1986, only 26 percent of children lived in rental homes - it's now 43 percent. Nearly 600,000 households now rent - the highest it's ever been.

Fifty-seven percent of Maori and 67 percent of Pacific people live in rental housing.

Letting fees are already on their way out, with the Residential Tenancies (Prohibiting Letting Fees) Amendment Bill at select committee already.

Public consultation will last eight weeks, ending 5pm on Sunday, October 21. Any changes that result are likely to come in force in 2020.

Rents will go up - landlords

Andrew King, head of the Property Investors Federation, told The AM Show on Monday - before the proposals were revealed - they are likely to drive up rents.

"Government officials have actually said it will add $10 a week to rents just from [getting rid of] letting fees. Basically if it's added on to the cost for the landlord, the landlord then will pass it on to the cost of the rent.

"That's what we keep on saying. People keep saying, 'You'll always say the rent goes up,' but the fact is that it does. We do [say it] because it always does. If they make it harder for us to provide rental properties, it's going to make it more expensive for tenants."

He says the changes will push up rents about $20 a week.

National Party leader Simon Bridges held a similar view, telling The AM Show the changes are well-intentioned but will ultimately hurt renters.

"The Government has already done a bunch of well-meaning things in terms of healthy things, taxes and the like on landlords. What do the landlords do? I'll tell you what they do - they pass the cost on to the poor old renter. So by being kind, they're being cruel."

A discussion document detailing the proposals in full is available on the MBIE website.