Proposed changes to rental laws could discourage investment in New Zealand rental homes, a representative for landlords has said.
Otago Property Investors Association president Kathryn Seque said the rule changes were a shock for landlords and could result in as many as 900 owners selling up in Otago.
The number of "for sale'' signs could increase to as many as 100,000 rental homes nationwide, according to New Zealand Property Investors' Federation (NZPIF) estimates.
"The removal of private property investors' rights to deal with tenants undermines the landlord's ability to manage risk, so many would rather sell and walk away from the problem'', Ms Seque said.
She estimated that around half of the 1800 properties owned by OPIA members could be sold.
At issue are a raft of proposals to update the Residential Tenancies Act announced at the weekend by Associate Housing Minister Kris Faafoi, including restricted rental increases and the effective removal of fixed-term tenancies.
"Tenants can, in effect, force landlords to keep them on at the end of a contracted tenancy, forcing landlords to provide clear reasons for ending a tenancy and then proving it in front of the tenancy tribunal'', said NZPIF executive officer Andrew King.
He believed the removal of the current 90-day provision would increase risk to property investors "exponentially''.
The Real Estate Institute of New Zealand (REINZ) said while it "broadly supported'' the aims of the changes, it also had concerns around changes to the 90-day notice provision.
REINZ chief executive Bindi Norwell said in the vast majority of circumstances, landlords use "no cause'' termination notices as a way of bringing a tenancy to an end for issues such as non-payment of rent or anti-social behaviour.
"Competent landlords always prefer to have a property tenanted and would prefer to fix problems raised by tenants, so only use the 90-day notice as a last resort.''
Ms Norwell said the proposed changes could also incur huge administrative costs and the need for re-education and could deter property owners from leasing properties at all.
"Our preferred approach is to provide for higher exemplary damages to penalise landlords who abuse no-cause terminations.''
The industry was also concerned about proposed changes' effect on the tenancy tribunal's workload.
According to a Tenancy Services spokesman the current wait time in Dunedin was already between four and six weeks.
REINZ said increases to the wait could further damage to a landlord's property or create additional stress for neighbours.
Ms Seque also warned of potential implications for student accommodation.
"As you would expect student tenancies tend to change year to year.
"Under the proposals from next year tenants will have until 28 days before the end of a fixed term lease to advise of their plans, meaning that neither prospective new tenants or landlords would have certainty until the last minute.''
She said she was hoping to meet the University of Otago and the students' association to iron out a solution.
Both the NZPIF and REINZ said they would engage with the select committee in March in relation to the proposed changes, with a view to gaining clarity on the proposals ahead of the amendments to the Act.
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Comments
"Oh no, it's going to be harder to make money for doing nothing to my 3rd house because I refuse to maintain it". Sell them, and let people who want to make it liveable do so.
There are few hurdles to becoming a landlord. If you are a property investor, it is then assumed you are a landlord. The two are very definitely not the same thing, and nor should they be.
It is the height of arrogance to assume that because you can purchase a property to rent out to tenants to use as their home that you should have the right to kick them out at will. When you are talking about peoples homes, there is no doubt in my mind that a middle man is appropriate in managing this relationship.
New Zealanders have a strong desire to own their own home because renting is viewed as the lesser option due to insecurity and feeling beholden to the whims of a so called landlord. Tenants don't complain when their privacy is breached or when their home isn't maintained to an appropriate standard because they have no power and fear being "moved on".
In many nations there is no social distinction between renting and owning because there are no distinctions in terms of your privacy or stability being at risk. This law goes some way toward fixing that problem here.
If investors pull their money and invest elsewhere, good. We don't need them. The houses aren't going anywhere anyway.
Great! With an additional 900 homes on the market in Otago that will help bring the price down. Some of those renters will be actually able to afford to buy a house of their own.
Low rental availability in Dunedin, now this! Is it a push to make more homes available to purchase?
If it's not broken don't fix it.