7 Aug 2017

Give up on home ownership, strengthen renters' rights - Morgan

9:36 am on 7 August 2017

The Opportunities Party wants to dramatically change New Zealand's renting laws to make it impossible to evict tenants except in a few special circumstances.

State housing in Upper Hutt.

Photo: RNZ / Alexander Robertson

The party has announced its backing for a German-type model, where tenants have the right to remain in their homes even if they are sold to another owner.

Tenants would only be able to be evicted if they did not pay the rent or they damaged the property.

Leader Gareth Morgan said strengthening renters' rights would reduce social disruption and stress from families having to move home constantly.

"This way families can opt to be tenants forever and not be undermined by fear of losing their home."

The party said, in Germany, tenants could give 90 days' notice, otherwise the tenancy was ongoing unless the landlord was able to give a serious and legitimate reason for termination.

Even then the length of notice required from the landlord rose with the time the tenant had been in residence.

Mr Morgan told Morning Report the number of New Zealanders who were lifelong tenants would rise over the next two decades from 30 percent to 60 percent.

"The average house price has gone from three times the average income to eight to 12 times," he said.

"It's an exercise in futility trying to turn it around so more people can own their own home."

Read the party's renters' rights policy here (PDF, 515KB)

About 90 percent of the German rental market was privately owned, rather than by the state, and rents were set at market rents when tenants first signed a lease, he said.

However, a rent brake policy meant a tenant's rent could only increase by a certain amount as the lease continued.

By combining changes to leases with the Opportunities Party's capital gains tax policy, the party aimed to change landlords' motivations, Mr Morgan said.

"Landlords [will] invest in a property for the rental yield they get, not the capital gains."

The party also wants minimum standards for all homes to be introduced, and to gift current state housing stocks to non-profit social housing organisations.

'Ninety-nine percent of tenants would say no'

But the Property Investors Federation said tenants wanted flexibility, not long-term rental options.

Its president, Andrew King, told Morning Report the Opportunities Party's plan was not what the vast majority of renters would want.

"Most tenants prefer flexibility over security of tenure, so if they are living on the North Shore of Auckland and they get a new job in south Auckland, they can give three weeks' notice at the moment and get a new property and leave. So that flexibility is a real value to them.

"A tenant at the moment can give three weeks' notice and move. That's what they enjoy. We often say to tenants 'do you want a fixed term'; 99 percent would say no."

Mr King said renters in Germany were responsible for paying for all fittings like carpet, which added extra cost and might not be welcomed by renters in New Zealand.

"In Germany, as a tenant you have to provide the carpet, the curtains and the kitchen. You paint it, but at the start of the tenancy you are provided with white walls and at the end you have to put it back the way it was.

"That's one of the reasons why in Germany you have such long tenancies, but you have to commit to a lot of things."

Having professional landlords would also increase the cost of rents, Mr King said.

"At the moment it is around $133 a week cheaper to rent than own the average New Zealand home. The reason it's so low is we have a lot of so-called ma and pa investors and they do a lot of the work themselves and don't expect as big a return.

"If you start getting professional landlords, it's going to get a lot more expensive."

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