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Home / Rotorua Daily Post

Covid 19 coronavirus: Fears landlords could go bankrupt, increase rents after lockdown

Zoe Hunter
By Zoe Hunter
Bay of Plenty Times·
2 Apr, 2020 04:00 PM4 mins to read

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Mike Hosking talks to Chief executive of the New Zealand Ministry of Health Dr Ashley Bloomfield on how the lockdown may have affected the spread of Covid-19.

New rental rules during the four-week Covid 19 lockdown will protect tenants facing financial hardship against rogue landlords, a property expert says.

But leaders in property investment fear there could be a surge in rental prices as landlords demand back what they lost during lockdown and many landlords could go bankrupt.

The government has put a freeze on rent increases during the lockdown to ensure renters would not suddenly become homeless, without somewhere to self-isolate.

OneRoof editor Owen Vaughan said the new regulations would provide certainty for the rental market in a volatile and uncertain time.

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"Renters facing financial hardship can be reassured they aren't going to be penalised as a result of the lockdown and the new rules offer them protection against rogue landlords.

OneRoof property editor Owen Vaughan. Photo / File
OneRoof property editor Owen Vaughan. Photo / File

"Landlords have a framework with which to work in. Secure tenancies will protect their investment in the long term."

However, Rotorua Property Investors Association president Debbie Van Den Broek feared many landlords would go bankrupt or vacate the rental market once lockdown was lifted.

Van Den Broek said one landlord was owed $8000 by a tenant who was issued an eviction notice for prior to lockdown.

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"They can't move out and they can't pay rent. The debt will be over $10,000 by the time we can get a bailiff in there ... It will never be paid off," she said.

Rotorua Property Investors Association president Debbie Van Den Broek. Photo / Supplied
Rotorua Property Investors Association president Debbie Van Den Broek. Photo / Supplied

"During the lockdown people can't move and that is fair, but if they just pay that little bit of rent it will be a lot fairer on that owner too ... Everyone is in the same boat, even landlords have lost their jobs."

On the flipside, Van Den Broek said some landlords had offered tenants rental decreases.

"I have one man whose wife is due to give birth during lockdown and I gave him the week off rent," she said.

Professionals McDowell Real Estate general manager of property management Callum Razak said the new rules meant tenants could keep costs relatively consistent and the potential for them to fall into arrears could decrease.

However, he feared there would be a surge in rental prices as landlords demand back what they had lost if there were no strict rules after lockdown.

Professionals McDowell Real Estate general manager of property management Callum Razak. Photo / Stephen Parker
Professionals McDowell Real Estate general manager of property management Callum Razak. Photo / Stephen Parker

"There is going to be a handful that still need to see money coming in and we have had a flurry of rental arrears ... some tenants have taken advantage and have just stopped paying rent.

"That is one of the challenges. But this is going to come to an end and they are only putting themselves at risk."

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Razak was also concerned the rules stating tenancies would not be terminated during the lockdown would give rogue tenants a free pass and posed challenges at the other end.

However, he said the new rules had highlighted homes that were compliant with Healthy Homes Standards and those that needed more work.

Tremains regional manager for Rotorua and Taupō, Angie Winiata, said landlords had been understanding of tenants who had been affected by job losses and many had reached out to help their tenants.

However, Winiata said financial pressures would be felt a little more during the second week of lockdown.

Hospitality New Zealand accommodation sector Bay of Plenty chairman Tony Bullot said a rent increase freeze would make no difference to the commercial sector.

Hospitality New Zealand accommodation sector Bay of Plenty chairman Tony Bullot. Photo / File
Hospitality New Zealand accommodation sector Bay of Plenty chairman Tony Bullot. Photo / File

Bullot said it did not mean a restaurant with no business did not have to pay rent.

However, he said some leases had clauses that said rent needed to be adjusted accordingly if a business could not operate.

"That is more useful for businesses."

• Covid19.govt.nz: The Government's official Covid-19 advisory website

Key changes for landlords and tenants:

- There is now a freeze on rent increases.
- A rent increase notice from a landlord will not have the effect of increasing a tenant's rent, unless the rent increase has already taken effect.
- Tenancies will not be terminated during the lock-down period, unless the parties agree, or in limited circumstances, regardless of when notice was provided.
- Tenants will still be able to terminate their tenancy as normal, if they wish.
- Tenants will have the ability to revoke termination notices that they have already given, in case they need to stay in the tenancy during the lock-down period.

Timeframes:
- The measures took effect by March 26.
- The rent freeze applies for an initial period of six months.
- The protections against terminations will apply for an initial period of three months.
- At the end of both initial periods, the Government will evaluate whether they need to be extended.

Source: Tenancy Services

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