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Muriel Newman: Little Hope For Landlords

Little Hope For Landlords
Weekly Column by Dr Muriel Newman

Private property investors, who are concerned about the impact of the Government's proposed Residential Tenancies Amendment Bill, should not get their hopes up when they read the Social Services Select Committee's report on the Bill.

The committee received more than 200 submissions and heard evidence from Auckland to Dunedin - and, while the Bill proposes major changes to the operation and management of Boarding Houses, most submissions focussed on planned changes to laws relating to general tenancies.

In particular, most submitters opposed the Government's intention to pass the letting fee - currently paid by tenants to real estate agents who help them find accommodation - onto landlords. This is clearly a demand from the Beneficiaries Union, which presented 120 social policy demands to the Labour Government in 1999. By working through - and systematically implementing - them, Labour is ensuring that the beneficiary unions are driving New Zealand's current social policy.

The submitters overwhelmingly opposed the Government's plan to impose a $3,000 exemplary damages fine on landlords who fail to comply with Tenancy Tribunal orders, in light of the fact that a range of punitive provisions already exist: fines of up to $12,000, prison sentences, as well as local authority fines in excess of $40,000.

Most submitters also oppose the Government's decision to stop landlords passing wastewater costs, in areas where water-water is metered, onto tenants - even though tenants are responsible for paying for their water use.

During the 19 hours of hearings, the evidence given on these three issues resonated with Select Committee members. As a result, the Select Committee voted to oppose the Government's recommendations. In other words, the Committee wanted letting fees to remain the tenants' responsibility, decided there were already sufficient penalties for landlords without the need for exemplary damages, and concluded that waste water charges for should be the tenant's responsibility rather than the landlord's.

However, the estimated 170,000 private property investors who have an interest in this issue should not hold their breath - the fact that the Select Committee has recommended sensible changes to the Bill does not mean they will be passed into law. The Bill, as amended by the Committee, has yet to pass through Parliament. The Labour Party, supported by the Greens, will have the numbers to overturn the Committee's recommendations.

In essence, it means that letting fees will be passed onto landlords, exemplary damages of $3,000 will be imposed, and wastewater charges will be payable by landlords - not the tenants who use the water. The Select Committee report also acknowledged that rent in arrears was considered the most significant problem between landlords and tenants, comprising the lion's share of more than 40,000 applications to the Tenancy Tribunal. Most wanted to see tenants on welfare being able to have their rent be deducted at source in order to assist them in budgeting. Yet the Government failed to address this problem in the Bill. Nor did it address the other major problem raised by submitters - Department of Work and Income's failure to supply beneficiaries' addresses to an officer of the court for the purpose of serving Tenancy Tribunal orders for the collection of debts.

These two issues are, however, being investigated further by the Select Committee, as they are the subject of two petitions that I recently presented to Parliament. With regard to the rent deduction issue, it appears that - subject to agreement by the tenant - the Department of Work and Income will authorise the direct payment of a beneficiary's rent, if it is properly justified.

Meanwhile, Labour's housing policy continues to be a disaster - over $70 million of taxpayers money will be spent on building new state houses at a time when the private sector is more than ready, willing and able to provide housing. Labour's income-related rents policy has resulted in tens of thousands of families in urgent need sitting on waiting lists, while families whose needs are not urgent sit tight in their state house for as long as 40 years.

It is readily apparent that Labour's approach to housing is not designed to be fair to private sector tenants, private landlords or taxpayers. Labour's strategy is to curry favour from its voter base. Since Maori and Pacific Islanders comprise more than 50 percent of state house tenants, Labour's housing policy is targeted at them, as well as beneficiaries and superannuitants.

The sooner the Government recognises the folly of having $4 billion of taxpayers' money tied up in real estate, the better. Apart from a small stock of state houses for emergency purposes, rental housing should be provided by the private sector, with rental assistance for tenants being based on need.

**********

Dr Muriel Newman, MP for ACT New Zealand, writes a weekly opinion piece on topical issues for a number of community newspapers. You are welcome to forward this column to anyone you think may be interested. View the archive of columns at http://www.act.org.nz/action/murielnewman.html


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