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COMMENT: Landlords obligations to tenants

Do landlords have moral and social obligations towards their tenants, asks Auckland Property Investors Association vice-president Peter Lewis.

Tuesday, December 10th 2019, 5:49AM 1 Comment

The legal obligations of a residential landlord are clearly spelt out within the Residential Tenancies Act. In essence, the landlord must provide a clean sound habitable property that meets all relevant building, health and safety standards. As far as the Act goes, that is the end of it.

However, there now seems to be growing social pressure that those who rent out homes should also be expected to provide some sort of pastoral care.

Recent unfortunate incidents at some University Halls of Residence have generated cries that those institutions  have failed in their duty of care for those students who are living within their halls.

This may well be true for that particular rental situation, but does this necessarily translate to a similar obligation in the private sector rental market?

Over the years I have, from time to time, made attempts to help a few tenants in my rentals to sort their lives out and extract themselves from some sticky situations. Of course, I have no particular skills in this area and possibly may have made a few similar mistakes myself in the dim distant past, but perhaps life experience does help.

Usually these attempts relate to those tenant’s financial situation, perhaps where some short-term tragedy has occurred – job loss, relationship breakup, or a sudden large and unanticipated expense. By working with an otherwise sound tenant who is actually willing to make an effort and who is worth keeping in that property, these life hiccups can over time be sorted.

I have just emerged from a short stay in hospital occasioned by a quite unexpected but urgently needed surgical operation. While in the ward, I got talking to the young fellow occupying the next bed. He had been admitted early the previous day, but then his particular operation had been moved back in favour of more urgent cases, so he was fairly upset.

Talking with him further, he certainly had good grounds for agitation. Already the father of two small children, his wife had given birth to a third just two weeks ago, and was still recovering, having had a fairly rough time of it. He works in an hourly-rate contractor gig, so has no sick pay, holiday pay, or other income to tide him over while he was hospitalised.

With no money coming in and presumably nothing to fall back on he was, quite obviously, a worried man. So worried, in fact, that by the middle of that day he packed up and discharged himself rather than wait any longer for his treatment.

I assume that he and his family lived in a rental property. How would you handle this situation if you were his landlord and if he now fails to pay his rent as and when due? Certainly, we know what would happen if he was a heavily-mortgaged home owner – the Bank would issue a sternly worded letter reminding him of his responsibilities and also charge him a hefty penalty on the missed payment, but somehow landlords are meant to be rather more forgiving, caring and considerate.

So how much social welfare should a landlord offer? There are many landlords who already seem to view their property business as partly an act of charity. “Oh, these tenants are really good, and have been with us a long time. We keep the rent down and they are so grateful”.

In some cases, these landlords even boast that it is quite some years since they last reviewed the rent they charge. While it is their asset, their money, and their choice, quite why this is considered a good and honourable thing to do is never really explained.

In any other business, just because a someone has been a valuable and reliable customer for a substantial length of time seldom leads to favourable treatment – consider the enticements your power supplier, your bank or your phone company offers to prospective new customers compared to what they charge you and those others they already have ensnared in their net.

Housing New Zealand (or their latest iteration, Kāinga Ora) have an obligation to house the most needy and desperate in our society. Private landlords do not.  Like any privately-run business, landlords may pick and choose their customers, and if those customers – the tenants - prove to be unsatisfactory, they currently have the right to cease dealing with them. 

That is the fundamental difference between private enterprise and Government institutions, the ability to pick and choose your customers. The Government must deal with everyone, private businesses can be selective.

HNZ have adopted the policy of “sustaining tenancies”. Thus under political instruction Housing New Zealand won’t terminate tenancies, even in extreme cases. This has led to a number of well-reported incidents, such as a recent case in Hastings that left many locals living in fear. Intimidation, swearing, relentless partying, multiple burnouts and abusive behaviour took over a once quiet street.

The intimidation and threats of violence from a group of tenants were not addressed because of the “sustaining tenancies” directive and the policy of not issuing 90-day notices. All their neighbours, not just other tenants but also nearby owner-occupiers, have been badly affected.

They have to live alongside the gang members, suffering intimidation and noise every day. There are no sanctions for bad behaviour, it’s only other people’s money that pays for it all.

So HNZ are assumed to have the resources, the skills and the taxpayer funding to either undertake this pastoral work themselves or farm it out to other providers. However, I and most other individual landlords certainly do not. 

Yet looking at the most recently proposed tenancy law changes it would seem that similar social work obligations are now going to be imposed on private sector landlords.

We will effectively be required to offer life-time tenancies with minimal opportunities to regulate any unsavoury behaviour, and when such behaviour does occur we will be in the front-line – vulnerable, unprotected and no doubt the target of reproach by neighbours and social agencies.

This does not bode well for the future.

Tags: compliance landlords property investment property management RTA tenancy reform Tenancy Tribunal tenants

« COMMENT: Unlawful premises – moving past Anderson v FM CustodiansCOMMENT: Off-the-plan investing in 2020 »

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Comments from our readers

On 18 December 2019 at 4:44 pm Alan W said:
Several years ago I had a tenant and her partner and his 5 year old son who were renting from me. The tenant told me she was pregnant and began showing the usual signs, then found out the baby was not healthy and only had a small chance of survival. They thought they would need to move to Auckland as the baby would probably need to stay in Starship Hospital. I offered to hold the house for them while she had her baby and would need to make some tough decisions about where she would be living. Obviously, she couldn't pay rent in Auckland and to me, so I agreed that if she had to leave she could just do so and there would be no rent payable once she had gone, dispensing with the usual notice.

It turned out the baby was fine and they returned to her house where for a few weeks they were one big happy family - until partner took his son and left. This reduced her benefit so she couldn't pay the rent, so I reduced her rent by around 25% for an initial 6 month period. She kept living there with the new baby, then another woman came on the scene and I was told she was an auntie and was only staying a short time. Naturally, tenants are permitted to have relatives and visitors come and stay short term, but this seemed to drag on for a long time. I have the feeling that the tenant was effectively subletting, which was not permitted, especially when still paying only 3/4 of the usual rent.

As the six months low rent period drew to a close, she gave notice that she was leaving because she really couldn't afford to go back onto the correct rent. Frankly, I was getting to the stage of being pleased to see the back of her. However, before they left, they apparently had a farewell party, better known as a house trashing party. The results were horrific and required the whole house to be completely redecorated.

Naturally we took them to the tenancy tribunal, who ordered a payment which covered a small amount of paint and plaster, but absolutely nothing for the two weeks work my wife and I put into renovating the house, nothing to cover the travel from our home to the rental in another city, nor anything for the lost rent while this was happening.

My recommendation: while it is nice to be able to assist tenants in distress as they (maybe) seek to sort out their lives, not all of them are grateful. Given the same situation again, I would have followed the advice of my property manager and not have cut the rent initially, allowing them to leave so the house could be re-rented. No guarantee they wouldn't have had a farewell party, but it would have been less likely I think.

(On a side note, the next tenants in the house also trashed it; we spent another two weeks again redecorating it, and again tenancy tribunal would not allow any claim for the work done by my wife and I and other costs. We sold after that because that particular house seemed to attract bad tenants.)

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 ▼7.65 ▼7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 7.29 6.59
SBS Bank Special - 7.14 6.69 5.99
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 ▼7.84 7.35 ▼6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - ▼7.24 6.75 ▼6.39
Median 8.64 7.19 7.27 6.65

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