Otago Property Investors Association Inc

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09-10-2017

Security of tenure for tenants

Many will likely be wondering why I'm not writing about the election result in this article. That is because, as I write this, the election has unfortunately not taken place yet.

However in the lead up to the election, the NZ Property Investors' Federation undertook a survey of rental property, which lead to some interesting information .

One of the election topics within the housing realm was security of tenure for tenants. There is no doubt that it is difficult for tenants when their rental property is sold. It can be upsetting and disruptive.

However calls from a new tenant lobby group for renters to be given control of how long they stay in a property is one sided and unreasonable. It is likely to backfire as many rental providers could conclude "to hell with this" and sell up. That wouldn't be good for anyone.

However the problem of tenant security, while devastating  on an individual basis, may not be as widespread as it is made out to be.

In our survey of 816 rental property owners, 49% had no intention of selling and would like their tenants to stay in the property for a very long time. A further 13% would like their tenants to stay for at least the next 10 years after which they may start thinking about selling the property.

The results indicate that if tenants want security of tenure, then nearly half of rental property owners would be willing to oblige right now. If it is important to them, then tenants should establish their prospective landlords intentions so that their expectations for the length of the tenancy are aligned.

The result also shows that a majority of rental property owners may be willing to enter into a new and more formal arrangement that further protects tenant’s security.

Many people are talking about replacing our system with the German model, however this is unlikely to work in New Zealand. In addition to their system being developed after the devastation of a world war,  German tenants have to provide a lot of their rental properties fixtures and fittings, such as carpets, curtains and even kitchens, meaning there is quite a cost involved. New Zealand tenants may be reluctant or even unable to afford this.

 However a new system doesn't necessarily have to completely replace our existing system of periodic and fixed term tenancies. A new system could provide a third option.

Any new option would need to be fair on both parties to be workable. It would also need to address problems such as a tenant can just stop paying the rent in order to break a long term commitment. Perhaps a high cost for the tenant breaking the agreement would be an answer to this.

The NZPIF would welcome discussions with all political parties and tenant groups to see if we can come up with a balanced solution that provides better security for those tenants that want it, without taking away the rights of the owner or disadvantaging them in the process.

With a common goal to make it work for both parties in the agreement, combined with good and robust communication, I'm sure a suitable solution can be achieved for the good of everyone.

Tags: federation reports - tenants

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