02-01-2008

Looking ahead - areas of importance

1. News
2. 2008
3. January

For the Federation, the next 12 months will be of critical importance in terms of how the regulatory and political environment unfolds. This is especially so given the uncertain outcome of the general election that is pending for the last quarter of the year.

There will be a number of major issues that will be progressed and or debated during the year.

The primary role of the Federation is to represent its member’s views and ensure a credible approach to government on policy issues that may impact heavily on investor landlords.

In representing the interests of investors, the Federation will play an integral part in influencing the Residential Tenancies Amendment Bill. This will entail the promoting of positions on key aspects of the legislation that will impact the membership now and into the foreseeable future.

The following are areas that have been signalled to be contained in the Bill:

• Lifting of the Tenancy Tribunal’s monetary jurisdiction to $50,000 from $12,000 and new sanctions
• Creating new rights of entry for appraisals by real estate agents and building inspectors
• Allowing landlords to recover reasonable debt collection costs incurred in enforcing Tenancy Tribunal orders through a private debt collection agency
• Clarifying responsibility for outgoings such as electricity, rates and water
• Allowing some tenant breaches eg sub-letting, assigning a tenancy without consent, over-populating the premises or becoming a problem neighbour to become unlawful acts that can result in exemplary damages being awarded, as an alternative to eviction
• Making a tenant’s liability for damage limited to four times the weekly rent, if the tenant did not cause the damage intentionally or recklessly intentionally or recklessly encourage or permit another person to damage the premises.

In general terms the Bill’s proposed elements appears to be sensible however the requirement for landlords to cover tenant damages is undesirable and the Federation supports better personal responsibility provisions.

The Federation will also need to take a leadership role on the updating of the Unit Titles Act. The proposed new legislation will essentially seek to provide clarity around the rights and obligations of unit owners, bodies corporate, developers, tenants and lessees.

The Parliamentary year commences in mid-February and the important select committee also commences then. That process will enable an ideal opportunity for the Federation to meet with the Committee and present its oral testimony to the inquiry into housing affordability.

A key Federation objective will be to respond to one of the Committee’s terms of reference items and assertion that investors increase the demand for residential properties and to counter various commentators knee-jerk “solutions” such as using tax policy levers to achieve affordability.

The area of direct political engagement will also be an important task for the Federation. In the pre-election run up (polling likely to be in October) the Federation will be engaging with relevant Parliamentarians of all political colours.

The recent official announcements by the Government on energy efficiency (compulsory insulation), changes to the debtors/insolvency regime and improvements to the tenancy tribunal decisions (re: online database) will afford the Federation opportunities to build on relationships and reinforce its perspectives with Ministers and officials.

Moving forward, the Federation will need to harness the participatory power of the wider membership and its association infrastructure, ensure key messages are credible with the key audience and at all times act professionally in the heated debates.

Housing affordability - Inquiry

With oral submissions on the inquiry into housing affordability to be heard next month (21^st February) various media and housing commentators (eg the Alliance and Green Party, economists, etc) have again suggested simplistic “tax” solutions as a way of addressing affordability. Labour, National, New Zealand First, United Future, and Act, however, have all stated their opposition to any such tax changes.

The argument put by some housing watchers is that investors in rental properties who place their money there because of tax deductions and tax-free gains have driven up the market. In turn, implementing a capital gains tax or changing the deductibility rules would diminish the demand.

What is more, the whole tax area for investors is currently under review by the IRD and others and is at high risk of politically expedient Government intervention.

 Separately, the Prime Minister has disputed some recent findings that suggest New Zealand is the least affordable country for housing. Helen Clark attacked the survey’s sample size and methodology and noted that Japan, Sweden, France and Germany also had high house prices and wondered why those countries were not also surveyed or compared. And Jim Anderton has also noted that countries with a capital gains tax; such as Australia, still have to cope with rising house prices