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Newman Speech: Housing The Nation

Housing The Nation

Friday 19 Apr 2002
Dr Muriel Newman

Speech to Property Investors Association, Nelson, Thursday, April 18, 2002

Housing a nation is a major responsibility. It is a joint effort between the private sector and the government, for it is the private sector that provides most of the rental housing for those New Zealanders who do not own their own home.

Of the 315,000 rental housing units in New Zealand, 230,000 are owned by the private sector, 70,000 by the state, and 15,000 by local authorities. According to the ASB Bank, some 170,000 private property owners have invested $42.5billion into the rental property market. The Bank claims that rental property is the second most popular investment option after managed funds.

In light of the partnership between the state and the private sector regarding housing, it would seem sensible for the government to address some of the glaring problems associated with the Residential Tenancies Act that affect landlords. But rather than address them, the Government, in its Residential Tenancies Amendment Bill which has been tabled in Parliament, has chosen to ignore them,.

Of the 42,000 application last year to the Tenancy Tribunal, the state agency that deals with disputes that tenants and landlords cannot sort out between themselves, only 8% were filed by tenants against their landlords (Most of those by tenants of Housing New Zealand) while 39,000 were by landlords against their tenants.

The Ministry of Housing has acknowledged that most landlords comply with Tribunal orders, since failure to do so can result in fines of up to $12,000 and even imprisonment. Local authorities also have the power to fine landlords over health and safety issues, with one landlord in Auckland last year being fined $40,000

In spite of these hefty penalties that can be imposed on landlords, the government intends to increase those fines in its new bill.

The Residential Tenancies Amendment Bill which seeks primarily to bring boarding house tenancies under the auspices of the Residential Tenancies Act and therefore under the jurisdiction of the Tenancy Tribunal, has a number of other amendments including the introduction of exemplary damages, that affect residential tenancies:

· Tougher penalties are proposed against landlords who fail to provide the premises in a reasonable state of cleanliness, provide and maintain premises in a reasonable state of repair, or fail to comply with all requirement in respect of buildings, health and safety regulations. Landlords who breach these provisions may face exemplary damages of up toe $3,000 payable to the person seeking enforcement of work orders, usually the tenant.

· Letting fees will become payable by the landlord not by the tenant as is the case at present

· In location where wastewater is metered, those charges will payable by the landlord not the tenant even though the landlord has no control over the usage (some worry that this is a step towards asking landlords to pay for all water and maybe even power and gas)

· Landlords will not need to physically locate a former tenant before serving notice of a Tenancy Tribunal hearing providing an application is made within two months of a tenancy ending, with the application being sent to the tenant's "address for service" as noted in the tenancy agreement. If however the notice is served after two months, the landlord will need to locate the tenant to effect service.

· The Tribunal will be given the power to hear and determine an application even though one or both parties fail to appear; this will make it easier for landlords to obtain judgement against the tenants who have done a runner!

· A tenant's liability for any damage to the premises is not affected by the fact that the landlord has, or may have, insurance cover for damage to the premises.

The Bill also enables the crown to receive bond money from the Bond Centre which has remained unclaimed for more than 6 years, an election year windfall gain which , according to parliamentary questions, could be worth as much as $1.5million.

Boarding house owners have expressed very serious concerns that under the new bill the running of those establishments will hardly be viable. In light of the prevalence of tenants with severe mental health problems, they warn that the government will need to provide more community housing for those people if they are forced out of the boarding house business by this bill.

The bill fails to address a major problem for landlords - that of locating former tenants for the purposes of serving court orders for payment of outstanding rent or damage to the property. After such cases appear before the Tenancy Tribunal a court order for rent arrears or damages is issued. It then becomes the responsibility of the landlord to provide their former tenant's new address to the Court so that the court order can be served.

If the former tenant is a beneficiary however, the Ministry of Social Development hides behind the Privacy Act and refuses to provide details of the new address to the Court. In effect, the Department is preventing the rule of law being upheld, presumably because it is a civil matter. In criminal matters, such as the collection fines and other penalties, the information is provided by the Department.

I have drafted a Private Member's Bill to address this issue. The Social Securities (Facilitation of Deductions and Recoveries) Amendment Bill enables the location details of former tenants to be provided by the Ministry of Social Development to an agent of the court for collection purposes.

The bill also provides for those beneficiaries who rent from the private sector and who choose to do so, to have their rent deducted at source in the same way that they can so choose if their landlord is the state. Having rent deducted at source is an excellent way for those people who have difficulty budgeting, from falling behind in their rent.

This is a provision that the government clearly needs to use more often since $1.4 million is owed by Housing New Zealand tenants in overdue rents with $15,651 being owed by one tenant alone.

Just as the ACT party opposed the introduction of income related rents for state houses, on the basis that it introduced into the housing sector discrimination based on who a family's landlord is rather than their need, so too we will be opposing the RTA Bill on the basis that it doesn't address the right issues.

State houses are a limited commodity and as such should be regarded as a temporary housing option not a lifestyle choice. Some tenants have lived in their state house for 63 years with over 1000 people having lived in the same sate house for more than 41 years.

New Zealand's most valuable state house which has a market value of $582,000 is rented out for $58 a week. The family have lived in it for 32 years. The taxpayer subsidy must now be around $10,000 a year. In spite of the fact that the higher value state houses return not much more than 1% of their investment, the government refuses to look at selling those houses to reinvest in other ways. Nor has the government even looked t designed an exit mechanism for stat house tenants so that they move on in order to free up the house for more needy families.

If the housing bill currently before Parliament had addressed some of these issues, maybe the ACT party could have supported it.

Ends

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