Speaker: The problem of “horror tenants” is dwarfed by that of horror houses
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And in the Herald this morning ...
Landlords 'too lenient' when tenants go off rails
Say property managers ...
Landlords are too lenient when a tenant falls behind in rent or causes damage, property managers say.
Of the 39,808 claims lodged with the Tenancy Tribunal between July 13 and May 2014, 74 per cent were for rent arrears and 6 per cent were for damage.
Real Estate Institute of New Zealand property management group chairman David Faulkner said landlords needed to put in an application to the Tenancy Tribunal as soon as the tenant starting slipping behind in rent. A tenant is given 14 days to resolve a breach of the tenancy agreement before an application could be heard. The applicants could either first go to mediation or a hearing date - an average of 22.5 days after the application was made - would be set at the court.
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Chchch is a place where some pretty crap houses are being rented for large sums, too, and the short-term rental industry has attracted the IRDs interest..
Thousands of first-time landlords in Christchurch risk being snared by the tax department for failing to declare extra income from rentals.
More than 40,000 Cantabrians have been cashing in on the pressured rental market as rebuild workers flood into the city and families shift out for earthquake repairs.
With the number of people renting out spare rooms, sleepouts and furnished homes on a short-term basis on the rise, those unaware of their tax requirements could be hit by a significant bill if they fail to declare their rent as income. -
I am sure that part of the reason for NZ’s very high level of owner-occupied housing is that tenants here have so very little protection against the power of their landlords. The tenant can trash the joint and refuse to pay rent, but the landlord can put them on the street for any reason, or no reason, whatsoever; and make it nearly impossible to find another place to live, no matter how warranted or otherwise a negative reference may be. The “eviction without cause” provisions in tenancy law are odious and unfair, and it’s disappointing that neither Labour nor the Greens have a policy of doing away with this regime.
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I think this piece is as polarising as the Herald story that preceded it. Yes, much of our rental housing is unacceptably poor (the rental house WOF has much going for it). Yes there are greedy, uncaring landlords - but not all. And they don't, as Matthew Poole says, have the right to put tenants on the street for no reason. There is tenancy law and the 90 day notice. Landlords are not going to evict satisfactory tenants for little or no reason because good tenants are not easy to find. Not all landlords are grasping property speculators ripping off the poor. I describe ourselves as accidental landlords - we have one rental house that we do not wish to sell. It is in the middle of land we use and we hope one day one of the children might like to come home to that house. We could tell you about the good and bad of tenants. How about the ones who were setting up a P lab and got to pay off their debt to us at $20 a week over several years? How about the family where we ended up intervening in major domestic violence with the Mental Health Crisis Team and every other helping agency in town involved? That was when we found that insurance on rental houses has so many exclusions it is hard to see what we are paying for, short of 100% accidental loss. When we get good tenants, we certainly look after them well. Still the economics don't stack up without capital gains. $20 000 for a new bathroom and redoing the decking two years ago. That is a lot of rent. On average we recarpet every seven years. We have added underfloor insulation and upgraded the ceiling insulation. When I see sweeping generalisations about landlords, I feel just as defensive as tenants who are tarred with the same brush. It is not either/or in this debate and I don't think polarising and scapegoating either side helps. But after being a landlord, would I ever consider investing in a domestic property portfolio? Never in a month of Sundays.
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Matthew Poole, in reply to
And they don’t, as Matthew Poole says, have the right to put tenants on the street for no reason. There is tenancy law and the 90 day notice.
Uh, the 90-day notice is "no reason". Quoting from s51, Residential Tenancies Act 1986:
(3) Every notice to terminate a tenancy shall—
...
(ca) in any case where the tenant is given less than 90 days’ notice, set out the reasons for the terminationIssuing a 90-day notice requires no reason. It allows a landlord to terminate the tenancy because they're having a bad day and they feel like it and they can. So you can protest all you like that I'm misconstruing the situation, but it's there in the law in black-and-white. That particular clause was inserted by our benevolent National Party overlords in 2010, and I'm quite sure that it wasn't at the behest of tenants' rights groups.
ETA: Also courtesy of National, there is no limit on how much a landlord can increase rent provided it's not raised more often than once every 180 days. Yeah, so, about those powerless landlords.
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Ben McNicoll, in reply to
#NotAllLandlords ?
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Elinor Chisholm, in reply to
I agree that there are many great landlords who take great care of their properties - I've been fortunate enough to live in some of those properties. At the same time, we know for a fact that many rental houses are damp and cold, and injurious to health, and it's not ok. Damage by tenants is really awful, but we do have the courts to deal with that issue. What we lack is courts that can deal effectively with issues of quality, and what we need, as you say, is something like a WOF, which regulates for quality.
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Matthew Poole, in reply to
we know for a fact that many rental houses are damp and cold, and injurious to health, and it’s not ok. Damage by tenants is really awful, but we do have the courts to deal with that issue.
Precisely. A landlord whose property is damaged by tenants can seek a judicial remedy which is enforceable through the courts. A tenant who cannot afford a rental that’s not dangerous to their health is screwed, and if they complain too loudly the landlord can break out one of those lovely 90-day notices along with a bad reference and then the tenant is on the street.
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Abbie, in reply to
Agree there is a need to tackle sub standard rental housing stock. Which includes state houses - it is appalling that many of these remain uninsulated and without a source of efficient heating. Social housing should lead the way with basic standards, not be exempt from it. I do not share your confidence in the Tenancy Court process (which is there to serve the tenant as much as the landlord, of course) but at least we do have some strong tenancy law to protect all parties. These are separate issues and I wish we could separate discussion about the need for rental housing WOFS from unhelpful categorizing of landlords as greedies or tenants as destructive lowlifes.
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Lucy Telfar Barnard, in reply to
ETA: Also courtesy of National, there is no limit on how much a landlord can increase rent provided it’s not raised more often than once every 180 days.
Not entirely accurate.
If rent is increased beyond market rate, the tenant can apply to the Tenancy Tribunal for a market rent order. Adjudicators use Department of Housing, Tenancy Services data-based statistics to determine local market rents.s25, Residential Tenancies Act 1986
“Market rent
(1) On an application made to it at any time by the tenant, the Tribunal may, in accordance with the succeeding provisions of this section, on being satisfied that the rent payable or to become payable for the tenancy exceeds the market rent by a substantial amount, make an order reducing the rent to an amount, to be specified in the order, that is in line with the market rent. …
(3) … the market rent for any tenancy shall be the rent that, without regard to the personal circumstances of the landlord or the tenant, a willing landlord might reasonably expect to receive and a willing tenant might reasonably expect to pay for the tenancy, taking into consideration the general level of rents (other than income-related rents within the meaning of section 2(1) of the Housing Restructuring and Tenancy Matters Act 1992) for comparable tenancies of comparable premises in the locality or in similar localities and such other matters as the Tribunal considers relevant.” -
Danielle, in reply to
A landlord whose property is damaged by tenants can seek a judicial remedy which is enforceable through the courts.
That is true, but it doesn't guarantee that the landlord actually gets any money back. My grandfather's estate is still waiting for any repayment of the $5000 in back rent and damages (which included shit and urine stains on the floor of every room) from a... problematic... tenant. (His house was rented out to partly pay for his rest home care, so it wasn't exactly a money-spinning exercise in the first place.)
*On the other hand*, I rented some flats in inner city suburbs in my youth which were in pretty poor repair, and there were some really *weird* professional landlords floating about who didn't lodge the bond properly, never bothered fixing anything, and always seemed to turn up at the property without notice and lurk around suspiciously. The unequal power relationship didn't go unnoticed.
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izogi, in reply to
I agree that there are many great landlords who take great care of their properties
It’s not a certain thing, but generally our own experience has been that renting direct from owners is a much better experience than renting through property agents.
More often than not, we’ve found that agents are generally disinterested in the property, except for making sure they get paid. At best we’ve been treated neutrally and at worst we’ve been treated as potential criminals since the day we shifted in. If they’re the less professional sort, they also have a great idea of what they can get away with. From her student flatting days, my partner has multiple stories about agents (one major one in particular) completely abusing tenants rights, with actions like unlocking and walking into the property with zero notice, to show random people around. It “stopped” after a few complaints, but she was always worried she might be in the shower when this happened. After a while there were certain agencies which we’d immediately hang up on if their machine answered the phone when we dialed a number on an ad.
More recently, we’ve been outright lied to by agents about things like the number of people who recently rented a property and how long they stayed. (It says something when you’re getting mail for 10 different people over the following 6 months, I only wish we’d photographed all the envelopes.) You can complain about that type of crap to the tenancy tribunal, but what does it actually get you in the end when it’s something that’s already happened? If you’re that annoyed, it’s probably easier and less stressful to simply shift out and gamble on finding some place better.
In contrast when dealing with owners we’ve at least had mixed experiences, and we usually find that they directly appreciate the value of good tenants once they've found them. We had landlords a few years ago, in particular, who were a wonderful couple, and we got on well.
Anyway, we’re very fortunate enough to be renting more for convenience than because we absolutely have to. After our current lease is up (which was advertised as 100 sqm but we’ve since measured it as 70 sqm—some things you just don’t think to check in the superficial inspection that’s typically possible when renting), we’ll probably be out of here and aiming to buy. I, for one, am looking forward to actually being able to invest in all the little things for making our home liveable, which a landlord would never bother with, without having to worry about the risk that an owner might decide to boot us out for their own convenience as soon as the next year rolls around.
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Dylan Reeve, in reply to
Not entirely accurate.
If rent is increased beyond market rate, the tenant can apply to the Tenancy Tribunal for a market rent order. Adjudicators use Department of Housing, Tenancy Services data-based statistics to determine local market rents.But then there is the inequality of power issue. Sure you might be able to convince the court to have your rent brought in line with a fairer market rate, but it's hard to imagine in that circumstance that your future rental prospects in that property are very good.
And of course the old reference issue strikes again too - "Oh Joe Smith? He took me to the tribunal to force a lower rent" isn't a great reference for your next potential landlord.
What's legally possible and what's practical aren't always in line with one another.
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ChrisB, in reply to
A tenant who cannot afford a rental that’s not dangerous to their health is screwed
I think this comment demonstrates one of the flaws of the WOF proposal. Compliance costs for landlords (which will be higher the greater the standards set by the WOF) could drive rents up beyond the affordability of the very tenants who the WOF process is trying to protect. It also takes away an element of choice - when I started out flatting I was prepared to put up with a dingy flat with no insulation in exchange for more beer money.
I am in a similar position to some of the previous posters, owning a rental largely through circumstances than any deliberate investment strategy. For the amounts likely to be involved in the event of a arrears or damages dispute, I don't see a judicial remedy as a realistic option. I just hope for decent tenants, and look after them when I have them.
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Matthew Poole, in reply to
If rent is increased beyond market rate, the tenant can apply to the Tenancy Tribunal for a market rent order.
Which is almost as much use as nothing at all in Auckland and Christchurch. In areas with healthily-functioning rental markets, sure, it's worth something. In those two cities, though, especially Christchurch, the market is only very slightly more functional than "Whatever the landlord feels like charging today."
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What hasn't been mentioned is that tenants have to give only 21 days notice of termination compared with the landlord's 90 days. Until recently it has sometimes taken several months to find a new tenant. Tenancy arrears and damage are theoretically enforcable through the Tribunal or court systems but the rule of thumb is that tenants will not pay the last $300 or so, figuring that it isn't worthwhile for the landlord to chase the final amount. We have had many fantastic tenants and only a few ratbags, but those few have proved expensive and they are the reason we now generally consider only mature individuals or couples with no children, pets or bad habits. We've tried to do the right thing by low income families but have been bitten. Been there, done that, had the hassle and got the bill.
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Lucy Telfar Barnard, in reply to
I agree entirely that the landlord-tenant power relationship is heavily imbalanced, in favour of the landlord. I also agree that the option to take a matter to the Tenancy Tribunal is not exactly a simple solution, and was just this afternoon having a conversation with Eli (whose office is down the hall...) about how interesting it would be to do research on whether tenants who take things to the TT have difficulty renting in future, even if they're in the right.
My point was that there IS law which limits landords in how much they increase rent, not just how how often they increase it. Whether the law is accessible is a different issue.
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Matthew Poole, in reply to
What hasn’t been mentioned is that tenants have to give only 21 days notice of termination compared with the landlord’s 90 days.
Yes, and one of these is probably accompanied by having somewhere to go whereas the other may or not have the same accompaniment. Pardon us for not considering it to be much of a compensation that tenants get to leave on their own terms in less time than they can get forced to leave on the landlord's terms. It's just about the only real "power" that tenants have that can't come back to bite them with the current landlord.
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RBentley, in reply to
The 21 day notice that tenants need to give is not "compensation", neither does it give them "power". It is simply an arbitrary figure based on the assessment that it is easier for a landlord to re-let than it is for a tenant to find alternative accommodation. That is no doubt true in Auckland and Christchurch at present, but it was not true a few years ago, certainly not where I live. There are good and bad agents/landlords just as there are good and bad tenants. Foaming at the mouth is not going to change that. Building more houses, controlling immigration, settling Christchurch claims and problems and encouraging growth outside Auckland will all give better balance.
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Chris Waugh, in reply to
ETA: Forget what I just wrote. Seems I misinterpreted your comment. Sorry.
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Lucy Telfar Barnard, in reply to
Eli's point, though, or one of them, is that landlords had a choice about whether or not to invest in real estate. Even if you are an "accidental" landlord, renting out your house because you're somewhere else for a while, or because you couldn't sell it for the price you wanted for it, you had a choice about whether or not to put your money into property. Landlords must be aware of the possibility of selecting bad tenants, and therefore factor in the possibility of losses arising from bad tenants in their decision to invest. If they don't, they can hardly complain about it later, any more than people who gamble on the stockmarket can complain if the stocks they choose lose value.
Tenants, on the other hand, seldom have a choice about whether or not they rent. Their choice is renting, or homelessness. That's a very different choice from "to buy a property, or not to buy a property".
Also, I don't see anyone foaming at the mouth. Elinor was very careful to recognise that there are good landlords. The biggest problem is not bad landlords, but bad rentals, coming from a legacy of poor quality housing, and an ongoing view that it is acceptable to let out houses in poor condition. -
Lilith __, in reply to
I've had great landlords and awful ones, most are somewhere in the middle.
But bottom line, if landlords get ripped off, they still have somewhere to live. Landlords can make tenants homeless. NZ does not offer tenants the legal protections given in some European countries.
With that possibility hanging over tenants, is it any wonder we don't fight for our legitimate rights when we are shortchanged? It's like asking the boss for better conditions when they can fire you at will.
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Also worth noting that the usual 90-days’ notice to vacate can be reduced to 42 days if the house is sold or is wanted by the landlord for a family member. This is not uncommon and is a panic-inducing situation for the tenant.
The Residential Tenancies Act does not cover tenants living alongside the landlord, whether they are “boarding” or flatting. In this situation, which is common, the landlord is not required to give the tenant any notice at all to vacate, except they must wait for the rent already paid to expire. (ie. if you’ve paid a week or a fortnight in advance, that time must elapse)
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We own our house now (well, nearly 20% of it), but we had very mixed experiences when renting.
We were the sort of tenants who believed in leaving things in better shape than we found them, and taking care of small problems ourselves if it was easy enough to do.
We had three separate runs of great landlords over about 10 years. Stayed in most places for around three years and never moved unless we really had to. None of our landlords ever increased the rent during the time at each house. I think they appreciated that we took good care of their house and we always paid the rent on time. None made us sign on for a fixed term.
Then we moved to a house that had a property manager, who refused to rent to us unless we signed on for a fixed term. We still had the same philosophy, to begin with, but when we couldn’t fix things ourselves the property manager would argue over who should pay. They put the rent up from $330 to $400 while we were there (not always with the approval of the landlord, we found out later), and refused to subtract a week’s rent the owner granted us for painting a room (fortunately we kept the landlords Thank You card!). I’m pretty sure the property manger considered us bad tenants. It’s not hard to imagine her telling people about how argumentative we were.
The owner ended up cancelling his contract with them after we told him about our experience.
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Stephen R, in reply to
With that possibility hanging over tenants, is it any wonder we don't fight for our legitimate rights when we are shortchanged?
We rented a house that was being used as a squat when we tried to move in - although we never met whoever was living there, we put their stuff in the garage and it disappeared that night.
We lived in it for a couple of years, and then the landlord came back from the UK or other foreign parts, and gave us 42 days notice. Then they wanted to keep our bond because the owner's new wife thought the house was a mess. I actually thought that the house was marginally better than it had been when we moved in, but without pics we couldn't prove anything, and the agent wasn't going to argue our case. In the end, we decided it wasn't worth the time to recover $100 each. (Yes, this was back in the days when the rent was about $100 per room)
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