Editorial: Government trying to shift balance of property rights in changes to tenancy laws

Kris Faafoi announced changes to tenancy law. Photo / Mark Mitchell

Editorial

Property is in the Government's sightline as it plans changes to the law governing 1.5 million tenants, as well as further moves to block foreigners buying key infrastructure.

On Sunday, Associate Housing Minister Kris Faafoi announced wide-ranging amendments will be made to the Residential Tenancies Act next year.

On Tuesday, Finance Minister David Parker outlined yet further changes to overseas investment, creating a new national interest test. Under current Overseas Investment Act rules, assets such as ports and airports, telecommunications infrastructure, electricity and other critical infrastructure are not assessed through a national interest lens, Parker said, and he promised a bill to amend that next year.

Of the two proposed law changes, by far the most vocal reaction has been to Faafoi's announcement. The response only highlights the balancing act the Government must attempt in seeking to improve the security of tenure for 1.5 million tenants while simultaneously protecting landlords' interests.

That is the challenge the Government is facing and so far it appears landlords have found themselves on the higher side of the coalition's scales.

Faafoi's most contentious proposal is banning the 90-day eviction notice, except: When three anti-social acts are committed in three months; if rent is five days late three times within three months; the property was sold with vacant possession or used as business premises; or having extensive alterations or being demolished.

Rents could be increased annually only, not six-monthly. Penalties for landlords in breach of the law could rise from $50,000 to $100,000 and landlords would have to give 90, rather than 42, days' notice of an intention to sell or move family in.

Understandably, NZ Property Investors Federation executive officer Andrew King is critical of the proposed changes, noting risks to landlords would increase and raising the oft-dangled spectre of landlords deserting the market. He also says tenants-for-life scenarios could arise as well as the potential for landlords being unable to evict what he calls a small portion of anti-social tenants, estimated to number 7000.

But if the numbers are so small, why the worry? King says, ultimately, neighbours could be intimidated and threatened, and it would be nearly impossible to remove a tenant once witnesses were threatened.

Four years ago, Shamubeel and Selena Eaqub wrote Generation Rent, a bombshell book from articulate long-time renters, pointing out New Zealand had some of the world's weakest tenant protection systems. They called for longer-term leases to give tenants more security.

Families with children need stability, they argued, and more people such as this make up tenant ranks. Many landlords were "amateurs" and the couple urged New Zealand to look to Germany and Switzerland for better models.

A Ministry of Housing and Urban Development document, Residential Tenancies Act Reform: Improving fairness in the Act, argues similarly. Maori, Pacific people and the disabled are disproportionately represented in the rising rental population, it says.

Stability of tenure is fragile: a 2015 survey found 46 per cent of tenants had moved in the previous two years and of those, 30 per cent were shifted because the landlord sold the house.

The document cited the situation in Ireland where 2004 changes mean tenants can stay up to four years once a six-month trial period is concluded. The ministry concluded the existing act no longer provided enough protection, given the changing composition of the rental market.

The changes have been well-signalled. A discussion document was issued in August last year, five stakeholder workshops were held and the ministry said a high level of interest was shown from tenants and landlords, with 4787 viewpoints received.

All of that led to the ministry proposals which Faafoi then announced on Sunday, saying: "Our changes are balanced, providing certainty to both parties about their respective roles and responsibilities."

It's that balance of the interests, and where the weight actually falls and lifts, which will be watched closely when next year's changes take effect.