Tenants or landlords – who holds the balance of power now? 

Over the past two terms of government there have been plenty of changes, many skewing the market towards tenants’ benefits rather than landlords.

“It’s actually been huge. Over the last six years, Labour has really changed a lot, in the rental market in particular, and the property market more generally,” says NZ Herald deputy political editor Thomas Coughlan.

What kinds of changes have there been? Coughlan takes The Detail through the big ones.

“First term, they banned this thing called the ringfencing of rental losses: the old system incentivised massive speculation by allowing a lot of investors to come into the property market, buy houses, lose money on renting them and write off those losses against other parts of their income,” he says.

“They extended the bright-line test, which is meant to be an anti-speculation measure so you pay a capital gains tax if you flipped your rental property.” 

As well as banning rental biddings, the Labour-led government banned no-cause terminations.

“Basically that means a landlord used to be able to say ‘Right, you’re out’ – now it’s much more difficult to evict tenants.”

Healthy homes standards were introduced, increasing the requirements for the likes of heating and insulation.

Labour also removed the ability for landlords to deduct mortgage interest on rental properties from taxes – without letting voters know their intentions.

“It just makes it much more costly to be a landlord, because all of a sudden you have to pay thousands of dollars in additional tax every year,” Coughlan says.

“It does put pressure on rental prices… but the reason the Government did that is not because of rental properties and the ability of tenants to have good and affordable rents, it’s to help first home buyers get into the property market.” 

Community Law Wellington and Hutt Valley tenancy lawyer Lauren Yates takes The Detail through some other changes, such as the removal of letting fees and the ability to leave a tenancy with two days’ notice in cases of family violence.

Another change is the switch between fixed-term and periodic tenancies. If a fixed-term tenancy ends, and neither the landlord nor the tenant objects within a specified timeframe, the lease automatically changes to a periodic tenancy.

But the parties on the right want to scale a lot of that back, to what it was like when National last held power.

“National and Act, as you’d expect, have snapped back the other way,” Coughlan says.

“They want to bring back no-cause evictions. They think they discourage people from becoming landlords because it’s harder to get rid of tenants, they want to get rid of the interest deductibility changes.

“It’s a very free market idea – if you get rid of some of this stuff then you encourage more people into the rental market and then you get more competition for good rentals.”

Tenancy lawyer Yates says although policies have moved more towards tenants’ favour, the only thing that would really put tenants on an equal footing would be sorting out the tenancy tribunal.

“I think the changes are good at ensuring more secure tenancies, but if tenants aren’t taking their landlords to the tenancy tribunal for breaches, that’s not evening the playing field.”

So how easy is it to go to the tenancy tribunal? How likely are you to get an award? How likely are you to get fully compensated for what happened? How big a threat is the tenancy tribunal to both landlords and tenants?

Yates says those are issues that need to be addressed.

Find out more by listening to the full episode.

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