Rental Market Shake-Up Coming

Grant Foggo

November has seen significant shifts in the rental sector – the Healthy Homes Bill is close to becoming law and Phil Twyford, Minister for Housing, announced public consultation will begin in early 2018 for Labour’s review of the Residential Tenancies Act (RTA).

The new Government has wasted no time getting to work, aiming to have ‘modern tenancy law’ in place by the end of 2018.  We can expect this new law to cover promises made during the election campaign including:

  1. Setting a formula for rent increases,
  2. A 12-month cap on rent increases,
  3. A rental WOF, and
  4. Abolishing letting fees.

 

Our Director Grant Foggo, recently featured in the Stuff and the DomPost discussing how Wellington’s rental market will be affected by the proposed law changes. The overall direction is good for the quality of homes, but the policy changes are a massive expectation to put on property owners all at once, and will likely lead to increases in rents.  There is also the likelihood that we will see changes on how investors approach their property – some may choose to exit the rental market, but others will take their rental investment more seriously

In 2018 we will actively consult with the Government, particularly around their ‘robust minimum standards’, as want our property owners, residents and the Wellington rental sector to have a voice in this important process.

 

What’s our view on the proposed changes?

  1. 90 percent of our leases are already fixed-term 12 months agreements which are the favoured lease type in Wellington, tenants are protected for the term of the lease.  
  2. It’s unnecessary to put a 12-month cap on rent increases, as under current rules rents can’t be increased in the first 180 days (or six months of tenancy beginning) or within 180 days (or six months) of any previous increase.
  3. Requiring a formula for setting rent to be included in property agreements will harm the market. Each home’s rent depends on many variable factors.
  4. The proposal to get rid of letting fees will push all of the logistical costs of a tenancy onto property owners and will likely result in increased rents for tenants.

 

We want to help create a sustainable rental market that looks after property owners and provides healthy, happy homes to residents, creating a win-win situation for everyone.