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March 2014 Political report

The following is a summary of political developments and regulatory risks affecting the residential rental property industry:


  • Earthquake-prone buildings Bill passes first reading
  • Minister calls for crackdown on wreckers of state houses
  • Tenants stuck in quicksand by excessive rents
  • Government welcomes Health Select Committee report
  • General Election to be on 20 September 2014
  • Government reviews the law of trusts
  • Rental register plan backed by councillors
  • Next phase for social housing takes shape
  • Cunliffe outlines vision for economy
  • WOF an insult not a protection
  • Rent main issue with tenants
  • Fall in homeownership shows need for new policies
  • Action needed on high-rise maintenance
  • Investors support focus on insulation and heating
  • National’s policies locking families out of homeownership



Earthquake-prone buildings Bill passes first reading (5/3/14 NZGovt)

On 5 March 2014 Parliament completed the first reading of the Building (Earthquake-prone buildings) Amendment Bill.Of interest to the Federation, the legislation sets a requirement for buildings to be strengthened or demolished. The Bill does not apply to stand-alone homes other than multi-storey or multi-unit residential buildings.[ie, buildings with 2 or more storeys; and buildings containing 3 or more household units]. The Bill is to be examined by the Local Government and Environment Select Committee. Submissions close: 17 April. Committee report due: 5 September.


Minister calls for crackdown on wreckers of state houses (5/3/14 Fairfax)

Housing Minister Nick Smith says he wants a crackdown on people who wilfully wreck their Housing New Zealand properties. The Government is to chase up state house tenants to pay for the damage they do to. Housing NZ told Parliament’s social services select committee that in 2012, the cost of fixing damaged state houses was about $15m and double that of 5 years ago. A suspension policy for troublesome tenants meant people could be barred from living in a state home for up to a year.


Tenants stuck in quicksand by excessive rents (6/3/14 NZFirst)

New Zealand First is calling on the Government to take immediate measures to stop the exploitation of people forced to pay excessive rents. Associate Spokesperson for Housing Asenati Lole-Taylor says all New Zealanders should have affordable housing. Lole-Taylor says: “Landlords are stretching their rights by overcrowding their properties and overcharging rent. While most landlords are fair there are some who exploit tenants. There is more and more evidence illustrating the fact that market rents do not match the type of property nor its condition”. NZ First wants a review of the Residential Tenancy Act to ensure that it is equitable to both the landlord and the tenant.


Government welcomes Health Select Committee report(6/3/14 NZ Govt)

Health Minister Tony Ryall has welcomed the Health Select Committee report on improving children’s health. The committee made 130 recommendations focused on children’s health and wellbeing. In its response, the government has accepted in full, or in part, 109 of the recommendations, and has noted 14.One of the recommendations (#25) was that “the Government that it develop a legislative framework for private-sector landlords, to implement minimum quality standards, and introduce a “Warrant of Fitness” for all rental housing, with injury prevention among its objectives”. Budget 2014 may see the announcement of initiatives which will address some of the report’s recommendations.


General Election to be on 20 September 2014(10/3/14 NZ Govt)

Prime Minister John Key has announced the 2014 General Election will be held on Saturday 20 September. The Government’s intention is that the House will rise on Thursday 31 July and Parliament will be dissolved on Thursday 14 August.


Government reviews the law of trusts (11/3/14 NZ Govt)

Legislation governing private trusts in New Zealand is to be updated. The Government has responded to the Law Commission's review of trust law. The Commission is conducting a three-stage review of trust law. It released its first report – focused on express private trusts, which benefit individuals – in September. The Government has said it agrees with the Commission’s recommendation to replace the Trustee Act 1956 with a new Trusts Act. The use of trusts ranges from high finance through to the family home, with an estimated 300,000 to 500,000 trusts currently operating in NZ.


Rental register plan backed by councillors (12/3/14 The Press)

Christchurch City Council has agreed to explore options for setting up a register of residential rental properties. The proposed register is the idea of the Tenants Protection Association. TPA want to see the register tied to a warrant of fitness scheme for housing as it would provide a way of identifying landlords who were not providing an adequate standard of accommodation. Council community services general manager Michael Aitken warned: "a considerable amount of thought" needed to go into how such a register would work as the council currently had no ability to compel people to register their properties. The Council will reconsider the register at its June meeting.

[A register has the potential to be imposed by territorial authorities nation-wide].


Next phase for social housing takes shape (13/3/14 NZ Govt)

The Government has announced from 1 July 2014, there will be about 800 reviews (out of approximately 68,000) of state house tenancies). The aim is to move state house tenants currently paying market rents or close to market rents into a private rental. The assessment of people’s housing needs transfers from Housing New Zealand (HNZ) to the Ministry of Social Development (MSD). It is part of the housing reforms which also include extending income-related rent subsidies to community housing providers. As well as managing social housing assessments from 14 April 2014, MSD will also administer the income-related rent subsidy. HNZ will continue to be the landlord for state house tenants. Separately, the NZPIF CEO, says the reviews will help many families get into better housing. He says many are living in overcrowded homes, or even in their cars, and the policy can only be a positive thing.


Cunliffe outlines vision for economy (14/3/14 Radio NZ)

Labour Party leader David Cunliffe has used a speech to the New Zealand Initiative to talk about his vision for the New Zealand economy. Cunliffe re-iterated Labour’s policies on a capital gains tax, restrictions on foreign ownership and a review of monetary policy.

[Labour will announce its economic and tax plans after the Budget is announced – 15 May 2014].


WOF an insult not a protection (17/3/14 NZPIF)

The national Federation representing landlords is warning against progressing with the flawed rental WOF scheme, claiming its trialled roll-out is raising serious concerns for both tenants and landlords. NZPIF says: “We need to shift our focus away from a WOF scheme and look at how we can improve insulation and heating. This will be a much more effective way of improving the health of families living in cold or damp homes. Already there are calls for additional requirements to be added, such as P Lab testing and orientation towards the sun. This makes an already costly exercise more time consuming and expensive”.


Rent main issue with tenants (17/3/14 BOP Times)

Unpaid rent and property damage comprise the most complaints lodged with the Tenancy Tribunal(TT). The TT is a court that deals with problems that landlords and tenants. The TT can award compensation or order repairs up to a value of $50,000. In 2013, 45,045 complaints were filed to the tribunal up from 41,910 in 2012.


Fall in homeownership shows need for new policies (18/3/14 Green Party)

Official figures from last year's census show 64.8 percent of households own their own home or hold it in a family trust. That has fallen 12 percent since 1991, when the figure was 73.8 percent.The Greens policy solutions to make housing affordable and boosthome ownership include: helping first home buyers with a low-interest package,stopping speculators bidding up house prices, restrictions on overseas investment and a capital gains tax (excluding the family home).


Action needed on high-rise maintenance (23/3/14 Fairfax)

Home Owners and Buyers Association (Hobanz) says that many body corporates do not have adequate long-term maintenance plans (LTMP) to pay for future maintenance of multi-unit dwellings like high-rise apartment blocks. Hobanz is calling for a prospectus-style set of documents including LTMPs to be given to all prospective apartment buyers. And it wants improvements in the enforcement of the Unit Titles Act 2010 which requires bodies corporate to have LTMPs and maintenance funds. Andrew King, of the NZPIF, said: "It's potentially a problem. The larger ones should be okay. It is an area investors need to investigate when buying an apartment”. One of the key problems is there is a significant disincentive for owners, particularly investor owners rather than those living in the apartments, to be realistic about how much money should be put aside each year to pre-fund repairs that could be needed years in the future. The more money chipped in by the current owners, the lower yields investors get which can drag down prices when apartments are on-sold.


Investors support focus on insulation and heating (25/3/14 NZPIF)

The NZPIF supports the focus on heating and Insulation in Phil Twyford’s Healthy Homes Guarantee Bill. The NZPIF believes that well intentioned calls for a Warrant of Fitness (WOF) on rental properties to improve the health outcomes of children may be expensive to administer and the requirements for the WOF have already started to escalate. Under the Healthy Homes Guarantee Bill, Landlords will be required to make a declaration that their rental property meets the standards required by EECA. While the detail of these requirements is not yet known, this system will minimise rental price increases by eliminating the regular and expensive WOF inspections of rental property.


National’s policies locking families out of homeownership (27/3/14 Green Party)

The Greens are claiming that the appreciation in Auckland property prices shows that a capital gains tax is needed. They claim that that the profits earned from investing in rental properties “draws more and more money into the market, pushing up prices at an unsustainable rate”. Taxing the capital gains on rental properties would supposedly discourage this investment and bring house prices down.


They also say: "The lack of a capital gains tax on investment properties gives speculators a tax advantage that allows them to outbid families time after time. In Government, the Green Party will undertake a programme of building affordable houses and state houses to take the pressure off the market. We will introduce a capital gains tax (excluding the family home) and restrictions on foreign investors to dampen housing speculation. We will strengthen the rights of tenants to negotiate a secure tenure and limit rent increases, and introduce a mandatory Warrant of Fitness for all rental properties”.


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