PROPERTY NEWS

Political property promises

Recent months may have seen the return of Covid-19 and lockdown 2.0 but, for many involved in the property game, it’s news of election promises which have been of most interest.

BY MIRIAM BELL

It’s been all about political promises on the property front in recent weeks. That’s because the long, drawn-out election 2020 campaign has been winding up in intensity as D-day approaches. And that means thorny issues around housing, and the different ideological approaches to dealing with them, have re-emerged.

National was the last of the main parties to release its housing policy, but it includes elements with a lot of appeal to landlords. Along with scrapping the Resource Management Act (RMA) and building more housing, the party is pledging to fix New Zealand’s broken rental market.

The party’s housing spokesperson Jacqui Dean says they would do this by simplifying recently introduced unwieldy rental regulations so that it is easier for landlords to comply. That would involve removing ring-fencing of rental losses for tax purposes, cutting the bright-line test from five years back to two years, and repealing the Residential Tenancies Amendment Act.

While the party does support the Healthy Homes standards, which aim to ensure everyone has a warm, dry home, it would simplify the requirements to make it clearer and simpler for landlords to comply. “This will stop good landlords from fleeing the market due to cost, bringing down the cost of rents and ensuring there are enough rental properties on the market to meet demand.”

In contrast, the Labour Party’s housing policy – which also has a heavy focus on increasing housing supply and repealing the RMA – intends to build on the policies they implemented in their first term. Those policies include their tenancy law reforms, the Healthy Homes standards and tax changes.

Prime Minister Jacinda Ardern says they firmly believe that all New Zealanders have the right to live in warm, dry, healthy homes, whether they rent or own their homes. “We will continue to ensure tenants and landlords have a fair deal by regulating property managers, following our work setting basic health standards for rental properties.”

To that end, if re-elected, Labour would introduce the regulation of property management services to ensure they meet professional standards and a Code of Conduct. This is something that multiple groups, including Consumer NZ, REINZ and the Property Council, have been calling for for years.

Meanwhile, the Green Party – which has a detailed “Homes For All” policy – have announced some policies that are not at all appealing to many landlords.

So they want to “make renting fairer” by requiring landlords to be registered with the Ministry of Housing and Urban Development and by extending the current regulatory framework for real estate agents to include property managers.

They also want to introduce a Warrant of Fitness (WOF) for rental properties as an enforcement mechanism. This would require all rental properties to be independently assessed for compliance with the Healthy Homes standards.

Back or scrap

Reactions to the various policy announcements have been mixed, with some property industry and housing groups welcoming aspects of some policies and others taking different views.

For example, National’s plans to roll back the government’s new Healthy Homes standards and tenancy law reforms prompted Barfoot & Thompson to co-sign a letter with a wide range of organisations calling for them to rethink that policy.

In the letter, the signatories say that backing the standards would ensure more New Zealanders live in warm, dry, healthier homes – and that would save the economy millions every year. “Scrapping the Healthy Homes standards would leave Kiwi taxpayers to otherwise pick up this multi-million-dollar bill.”

For that reason, backing the standards would be good news for the economy, for taxpayers, and for New Zealand’s international obligations, they say.

NZ Property Investors Federation president Andrew King says that Barfoot & Thompson’s position probably represents the view of most rental property owners.

“We want our rental properties to be warm, dry and performing well. We want our tenants to be living in good conditions. As such, we support most of the requirements in the standards. But we don’t agree that there are noticeable benefits in topping up the insulation to current standards in rental properties that are already insulated and having heat pumps in every single rental property.”

He says the issues the standards are trying to address are more complex than the standards assume, with tenant income being a factor – which is why the NZPIF has always backed the idea of the winter energy payment.

That means the NZPIF agrees with the National Party that some of the standards should be revisited, but they don’t agree that all the standards should be removed.

However, Stop the War on Tenancies spokesperson Mike Butler describes the Barfoot & Thompson letter as naïve.

“The letter-writers should provide evidence that shows implementing the standards in rental properties will keep the 700,000 New Zealanders with respiratory disease out of hospital. People with respiratory disease live in owner-occupied homes as well as rental properties, and there are 1.1 million of those that are not required to meet the standards.”

Butler says the standards will have little real impact and will simply increase the costs involved with rental property. “Barfoot’s support for the costly and unnecessary compliance standards is actually deepening a problem for both owners and their tenants who end up having to foot the bill.”

ComCom rent warning

In a development unrelated to the election, it has emerged that landlords thinking of discussing rent increases on social media should tread carefully. That’s because the Commerce Commission recently issued a warning to landlord representatives about doing just that.

Some exchanges in online forums for landlords included some online posts asking what others planned to do when the government’s rent increase freeze ended on 26 September. This prompted a complaint to the Commerce Commission which then wrote to landlord representatives to alert them to their concerns.

That’s because the discussion included comments suggesting that the whole group could band together to increase rents – and, if any such attempt was to occur, that could constitute price-fixing under section 30 of the Commerce Act 1986.

A Commerce Commission spokesperson says landlords can be in competition with each other for the supply of rental properties and can be carrying on a business in trade. “Landlords should make independent pricing decisions about rent and rent increases to avoid breaching the cartel prohibition.

“Cartels deprive consumers and other businesses of a fair deal. A cartel is where two or more businesses agree not to compete with each other. This conduct can take many forms, including price-fixing, dividing up markets, rigging bids or restricting output of goods and services.”

Not only are the penalties for cartel conduct very hefty, but from April 2021 cartel conduct will be a criminal offence, punishable by a jail term of up to seven years.

The Commission spokesperson says they did not open a formal investigation or issue warnings to the parties concerned. “But we chose to alert industry representatives to the risks of this sort of conduct to increase awareness amongst property investors that they are subject to the Commerce Act.”

Landlord representatives were stunned by the warning but have taken it on board. Nick Gentle, who is an administrator of one of the online groups, says rhetoric can get very heated, but he doesn’t think anyone would seriously collude against tenants.

“However, we’ve told our members that posts which ask what rent you should set for a particular property and/or suggest a rent movement in response to something won’t be allowed.”

Administrator post-approval will be kept on, and they are asking members to report any comments on posts which breach that guideline. “It’s frustrating because the group is for the purpose of helping one another, but that is how the law works,” he adds. ✚