Themes and Issues
More people rent and it's important to get the balance between landlords and tenants right
Since the RTA was passed in 1986 more New Zealanders depend on or choose to live in rental housing. Of those who do, most rent from a private landlord rather than a social landlord [1].
These changes have occurred during a period of overall growth in the New Zealand population and in the number of New Zealand household units, which increased from 1.08 million in 1986 to 1.34 million in 2001.
The number of people living in houses they own, rather than rent, peaked at 74% between 1986 and 1991 and declined to 68% by 2001.
The reasons for these changes are complex and include:
- Decreasing home ownership affordability. House prices have increased relative to income. While repayment of a mortgage may be affordable, saving the amount required for a deposit may be more difficult. When it is difficult or impossible to buy, renting becomes the ‘default option’.
- Housing affordability is a particular issue in the main urban centres, especially Auckland but also in provincial centres such as Nelson.
- Increasing levels of non-mortgage debt including credit card, hire purchase and student loan debt can restrict people’s access to mortgage finance and home ownership.
- Patterns of family and household make up are changing, and some of these changes may affect people’s willingness or ability to buy a house. These changes include couples choosing to have children later and an increasing number of sole parent families.
- Decreasing emphasis on the importance of home ownership among young people – changing lifestyles, labour-force mobility and increased emphasis on other options for spending.
- Proportionally higher population growth among Maori and Pacific peoples, groups with traditionally lower home-ownership rates.
- The increased number of short term visitors to New Zealand , such as overseas students requiring rental accommodation.
Figure 1 shows that the share of people living in privately rented houses (as a proportion of those living in all types of rental houses) increased from 67% to 81% between 1986 and 2001. It also shows that the share of people living in houses owned by Housing New Zealand Corporation reduced from 27% to 17% and the share living in houses owned by local authorities reduced from 4.3% to 1.9%.
Figure 1
Because more New Zealanders rent their homes, and more of the homes they rent come from private landlords, the social and economic benefits (and costs) of getting regulation of the rental market right (or wrong) are now greater.
If the balance of rights and responsibilities between tenants and landlords is wrong, it can impact negatively on the willingness of landlords to provide rental housing.
The RTA sets out the rights and obligations of both landlords and tenants and provides a way for each to enforce their rights. The RTA requires tenants to pay their rent, to take reasonable care of the house they rent, and to give notice if they want to leave. Landlords are required to maintain the house, allow their tenants quiet enjoyment of the house and give reasonable notice if they want the tenants to leave.
Some landlords say that they do not have the means necessary to judge the character of tenants when they first enter into a tenancy agreement. They say that the RTA does not provide them with the ability to end a tenancy if the tenant has provided false or misleading information to get the tenancy. Some landlords also say that it can take too long for the Tenancy Tribunal to make orders against ‘bad’ tenants, that the penalties provided by the Act are insufficient and that it is hard to enforce Tribunal orders because of difficulties in tracing tenants.
Tenants sometimes say that landlords do not properly maintain premises or make repairs within a reasonable time. In such situations tenants can feel powerless. Only a small proportion of tenants take claims against landlords through the Tenancy Tribunal, with only 10% of Tribunal claims being lodged by tenants. Some tenants may instead attempt to resolve the dispute by withholding rent, which in turn may result in an action against them by the landlord.
Questions
- Does the RTA currently achieve the right balance between the rights and obligations of landlords and the rights and obligations of tenants? If not, why not?
- How can Tenancy Tribunal orders be better enforced?
Footnotes:
1. Social landlords include Housing New Zealand Corporation, local authorities, some iwi and some charitable organisations. Social landlords are typically motivated by social rather than commercial objectives.