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Labour insurance plan is idiocy

Phil Heatley MP National Party Housing Spokesman

02 August 2006

Labour insurance plan is idiocy

National Party Housing spokesman Phil Heatley says a Labour Private Members' Bill that would force landlords to insure their tenants' guests is simple idiocy.

"Both the insurance industry and the real estate industry are putting the skids under Maryann Street's bill. I would have thought it would have been common sense for Ms Street to have sought advice from these major players BEFORE introducing her bill, not after." The Insurance Council says 'despite the fact that insurers could benefit through increased insurance premiums, the Insurance Council has a number of problems with the method proposed in the bill'.

The Residential Tenancies (Damage Insurance) Bill would require landlords to insure tenants against the cost of wilful damage caused, not by them, but by their flatmates or guests.

"If this comes to pass, it won't be the landlords paying the extra costs. They'll be passed on to tenants."

Mr Heatley says the bill passes responsibility for controlling and insuring damage onto landlords, when they have no control over the day-to-day activity in a home or who visits.

"Both the Insurance Council and the Real Estate Institute agree that landlords would struggle to get insurance for their tenants in the first instance, and even if they did there would be a series of negative 'unintended consequences'.

"First, landlords would have to provide the identity and claim histories of tenants to the insurer. This is difficult enough because in many cases flatmates come and go without the landlord's knowledge.

"Worse still, the resulting disclosure could see a number of potential tenants being uninsurable and therefore blacklisted for accommodation. According to the REINZ 'the issue of compulsion to have insurance cover ... would cause some people to be unable to secure tenancy of any property'.

"The majority of oral submitters on this bill agree that 'the intent is noble but it won't work'.

"This is a bill that Labour is promoting as good for tenants, but in reality it will drive up rents and force some tenants out on to the street. Surely, even Labour must see this as lunacy," says Mr Heatley.


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