Nine ways to fix New Zealand’s broken rental market

Mar 27, 2017 | Uncategorised

As part of the Spinoff’s rent week series here’s the latest article on private rental housing and the nine things Dr Elinor Chisholm says we can do to help fix these problems.

1. Make renting more secure

We need to make sure the Residential Tenancy Act supports renters to have a stable home and plan for the future. This could include allowing current tenants the first right of refusal when their lease expires, extending the amount of notice landlords are required to give tenants, and supporting landlords to offer long-term leases.

2. Extend Warm Up New Zealand

One way to improve existing housing is to extend the Warm Up New Zealand insulation subsidy programme, which has been shown to reduce mortality rates. As a result, for every dollar we’ve spent on the programme, we’ve saved six dollars in the health system. We could support other housing improvements – we know that there’s a similar benefit-cost ratio for making simple changes that help prevent falls, such as step edging and hand rails.

3. Introduce a rental housing warrant-of-fitness

Regulation for housing quality in New Zealand is “unclear, insufficient, and not well enforced”. Many homes will remain poorly insulated even with the new insulation standards coming in in 2019. Plus there are no detailed standards to ensure that housing is safe and that there is energy efficient heating. A warrant-of-fitness for rental housing would resolve this by specifying the minimum required to avoid health and safety risks for tenants.

4. Robustly enforce rental housing regulation

One of the problems with tenancy regulation is that it tends to rely on tenants reporting problems. For the most part, we only learn that a landlord is failing to provide adequate housing if the tenant takes a case to the Tenancy Tribunal. However, this is a stressful process which is likely to harm the tenant’s relationship with her landlord, so we shouldn’t be surprised that research shows that many tenants avoid this. We need to take the onus of tenants and enforce regulation with inspections or random audits.

5. Regulate property managers

Anyone can be a property manager, and so many people do a bad job. Tenants report that their requests for repairs are ignored, and landlords report they’re tired of cowboy operators. Property managers should be registered and required to show they understand the law and meet competency requirements. We also need a process for resolving disputes and deregistering dodgy operators.

6. Make landlords, not tenants, pay the letting fee

Tenants who find a home through a letting agent pay a letting fee, which can be up to a week’s rent. This is a high cost for a tenant already fronting up the bond and rent in advance, and all to pay the letting agent for the relatively simple exercise of advertising a property and selecting a tenant. The fact that landlords choose the letting agent, yet tenants pay the fee, means that agents do not compete to offer the best service for the best price. Landlords benefit from the service and should cover this cost.

7. Support tenant advocates

Research shows that the support of a tenant advocate can make the difference to a tenant improving their housing. And yet experienced independent tenant advocates are not available to everyone everywhere. We need to fund tenant support wherever renters are.

8. Protect tenants from discrimination

The fact that tenants have asserted their rights should not harm their chances of obtaining housing in the future. Currently, the names of renters and landlords who appear before the Tenancy Tribunal remain online for three years, so landlords may choose against renting to tenants that have been in previous disputes. If tenants have been found by the Tribunal to be in the clear, their names should be taken offline to prevent discrimination and encourage tenants to to defend their rights.

9. And while we’re are at it… fix everything else, please

Part of the reasons tenants in Auckland and Wellington can’t choose better housing, negotiate better prices, or demand longer leases is because they’re competing with too many people for not enough rental homes. Part of the reason tenants are moving so often is because people’s homes are being sold from under them by property speculators. The problems in the rental market are ultimately driven by the problems in the housing market: high construction costs, high land prices, a tax system that favours property investment, rents that rise more quickly than wages, insufficient social housing, and not enough homes overall. So we need to fix those problems too. Now.

Dr Elinor Chisholm researches public health at the University of Otago, Wellington. She writes about these fixes and more at onetwothreehome.org.nz.

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