Real Estate Institute of New Zealand welcomes new plan to overhaul tenancy laws

The Government announced proposed changes to rental rules today. Photo / Doug Sherring

A proposal to beef up tenants' rights could backfire if landlords walk away from ownership of rental properties, the real estate industry has warned.

"If landlords feel this disincentives them too greatly then it could cause a reduction in rental property stock, but it's important that tenants are not facing unnecessary price hikes in their rent," Real Estate Institute of New Zealand (REINZ) chief executive Bindi Norwell.

Housing Minister Phil Twyford announced a reform of tenancy laws yesterday in an effort to "make life better for renters".

He said New Zealand's tenancy laws were outdated and didn't reflect "the fact that renting is now a long-term reality for many of our families".

In a discussion document released by Twyford, he outlined a number of proposals of change to the Residential Tenancies Act, including:

• Limiting rent increases to once a year and scrapping bidding for rental properties
• Ending cancellations of tenancies without cause while ensuring landlords can still get rid of rogue tenants
• Increasing the notice period a landlord must give tenants when ending a lease from 42 days to 90 days
• Provide better processes for landlords and tenants to agree on pets or minor alterations to homes

The Government will seek feedback on Twyford's proposals.

Norwell agreed with Twyford but said striking the right balance would be critical.

"It's important that we get the balance right between protecting renters and protecting landlords to ensure that we maintain a healthy stock of rental properties for tenants to choose from around the country," she said.

Norwell raised concerns about the extension of the notice period landlords must give from 42 days to 90 days which would make it less attractive for investors to purchase rental properties, warning that this could ultimately cause a reduction in rental stock if landlords walked away.

It was important that tenants were not left facing unnecessary rent hikes, she said.
Norwell believed if the Government wanted to help renters it needed to better regulate the property management industry.

"Every week we are hearing more and more concerning stories emerging about tenants living in unsatisfactory conditions," Norwell said.

"Making the industry regulated would ensure there is a consistent standard to ensure that the industry, consumers and landlords all have adequate protections and clarity in place."

Announcing the proposed shake up, Twyford said about a third of New Zealanders rent and an 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.

"We want to strike a balance between providing tenants with security of tenure and allowing them to make their house a home, while protecting the rights and interests of landlords.

"As people rent for longer, they want to be secure in their homes and put down roots in their community," he said.

"That's why making life better for renters is an important aspect of the Government's housing plan."

Property Investors Association president Andrew King told the Herald tenants would be no better off under the proposed changes and "bad tenants could be protected".

He also told TV3's AM Show that some renters like letting fees, because paying them gives them an advantage over other potential tenants.

"A lot of tenants ironically actually like the letting fee. At the moment around about 50 or 60 percent of properties available for rent don't have a letting fee. You don't have to pay a letting fee if you don't want to.

"But if you are a tenant and you want access to 100 percent of all the properties available and you're willing or able to pay a letting fee, you can get that access."