Peter Thompson: Let’s not lose sight of the relevance of one-property landlords

Peter Thompson - Managing Director, Barfoot & Thompson
Peter Thompson: Let’s not lose sight of the relevance of one-property landlords

Public submissions on possible changes to the Residential Tenancies Act, which will affect the rights and obligations of tenants and landlords, have now closed.

The Government has made clear its intentions are to give greater security of tenancy to people who rent, give them greater freedom to make a rented property a home and to underpin its healthy homes ambitions around heating and insulation.

These are positive intentions and ones supported by the real estate profession.

The rental market, particularly in our bigger cities, is growing in proportion to the level of home ownership, and it’s in everyone’s best interests that we operate under modern, up-to-date rules relating to rights and obligations.

However, getting the balance right between the two parties is critical if the market is to function efficiently. It will not be an easy task.

As the Government sorts through the submissions and hardens up on its position, it is to be hoped it keeps in mind that while undoubtedly there are rogue landlords (as there are rogue tenants) by far the vast majority are looking to be good landlords (as are the vast majority of tenants).

Landlords are not always seen in a favourably light by the public, and there is also a perception that it is an area dominated by individuals with multiple property holdings.

However, the reality it quite the opposite.

For example, we manage more than 16,500 properties on behalf of investors, and by far the majority of these investors own only one investment property.

While I’m not aware of any data which shows what percentage of the total rental market is made up of one-property landlords, it is undoubtedly significant.

These one-property landlords are important participants in the rental market and should not be squeezed out by heavy handed regulations and onerous provisions.

From experience I know that these one-property landlords are focused on retaining good tenants.

They see continuity of tenancy of greater importance than obtaining high rents.

Wellington rentals

For me, the key concept the Government must retain within any changes made is the right of the landlord to choose their tenant – in much the same way that employers retain the right to choose their employees.

Any moves to require landlords to give tenants a ‘justifiable reason’ for not renewing a tenancy at the end of a fixed term tenancy, or why a landlord chose one tenant over another, would be a step too far in terms of a landlord’s rights.

I am disappointed that the Government has made the decision to exclude from the current review ways of strengthening the protection landlords have against tenants for damage they cause to property.

The redress landlords have against rogue tenants for damage under the Tenancy Tribunal and Summary Offences Act are too limited and cumbersome, and therefore inadequate. 

There are two other areas where early Government action would benefit the property sector.

The first is regulating the property management sector.

I believe there is a strong case for the Government to licence those that make property management their profession and should require tenants’ rent payments to be banked into audited trust accounts. Such moves would help lift standards and provide security around rent monies.

I would exclude owner-landlords or those acting on behalf of family members from this requirement.

The second area is acting on work undertaken by the previous Government to overhaul the Unit Titles Act in relation to body corporates.

This area of property management is badly in need of improvement. Areas of greatest concern are the transparency of body corporate management, disclosure around conflicts of interest and the adequacy of long-term management plans.

Action around these areas of management is long overdue.

Peter Thompson

Managing Director, Barfoot & Thompson

barfoot & Thomspon

 

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