Part of the Government’s economic response to the Covid-19 crisis has been to introduce a freeze on rent increases for the next six months and increased tenant protections.
That means it is now not possible to terminate tenancies during the lock-down period, unless the parties agree or for a limited, but specific, set of reasons.
These reasons include a tenant being 60 days behind in paying their rent.
However, on Thursday after reports some property managers were getting tough on tenants on rent payments and threatening to evict them post-lockdown, Prime Minister Jacinda Ardern told media she wanted the names of landlords flouting the new rules.
This has heightened existing concerns among many landlords about the attitude of both tenants and the Government towards landlords.
These concerns have prompted landlord Tracey Powell to send a letter to a long list of MPs, including the Prime Minister and Finance Minister Grant Robertson.
In the letter, Powell, who appreciates that these are extremely trying times and wants to be understanding, says landlords are providing an essential service to the country by providing housing.
Yet the vibe from the Government and public, via social media, suggests that it is OK for rents to be delayed or not paid during this time, she says.
“We don’t see supermarkets offering free groceries, utility companies offering free utilities, petrol companies offering free fuel, Councils offering to cancel rates or banks not charging interest on mortgages during these unsettling weeks or months.”
Nor are other services, like Councils and supermarkets, being forced into prices freezes, so why are landlords being targeted to give them, Powell asks.
“Landlords should not be forced into bankrolling their tenants - and the extension of the non-payment period from 21 to 60 days (before eviction) forces landlords into being a bank.”
She says that if tenants are given a “rent holiday” many will not be able to catch arrears up, while any bond collected will not cover a 60-day loss of rents should it arise.
“Please stop targeting landlords and assist them should a tenant not be able to pay their rent. Supermarkets are in the fortunate position of not supplying goods until payment is made – not so landlords! Please, treat us as the essential suppliers in society that we are.”
Powell is far from alone in her view that landlords are being unfairly targeted, rather than acknowledged for providing an essential service.
NZ Property Investors Federation executive officer Sharon Cullwick says while you would think that supplying a house for someone to live in should qualify as an “essential service”, it appears not.
“We agree that a rent freeze is appropriate during this lock down period and that tenants should not be given notice to leave for this period.
“However to extend this to three months, except if tenants are behind 60 days in rent, have caused substantial damage to the premises, abandoned the property or engaged in significant anti-social behaviour, is unjustified.”
The situation is made more unfair because tenants can give notice and vacate the property during this time, if they want to, leaving the landlord with no income, ongoing costs and little likelihood of finding a new tenant.
Cullwick says the increasing costs of providing a rental property, which include the upgrading of rental properties to meet the Healthy Homes minimum standards, had forced some landlords to notify their tenants of rent increases earlier this year.
But the strict new tenancy provisions mean those notices will now have to be put on hold for at least six months, or they’ll face exemplary damages of up to $6,500.
“These penalties on landlords are enormous and uncalled for. We should also point out that during this time the bills still have to be paid by someone, whether that be a landlord or a tenant.
“Yet for most landlords in the business of owning rental properties they are not classed as business owners or self-employed, or even as an essential service, so there is no financial relief in sight.”
A big part of the problem seems to be confusion around the concept of the rent increase freeze with some tenants, mistakenly, thinking it means they don’t have to pay rent for six months.
Additionally, the fact that landlords are effectively unable to evict tenants for not paying their rent over the course of the lockdown appears to have emboldened some tenants.
Not only are many landlords reporting a surge in requests for discounted rents, but several landlords have approached landlords.co.nz with questions about what they can do about tenants who have told them they won’t be paying their rent.
Since the Government’s announcement that banks will offer “mortgage holidays” to property owners whose incomes have been affected by Covid-19, tenant pressure for rent relief has increased further.
It seems that many people don’t understand what a “mortgage holiday” actually is or that many property owners won’t be taking one.
Cullwick says that it remains unclear whether the possibility of a “mortgage holiday” applies just to owner-occupiers or also to those who own rental properties.
“In addition, it should be realised that this isn’t really a holiday but rather a ‘deferred mortgage payment’ with increases in additional repayments and costs. So, in real terms there is no holiday, just extra payments and increased costs.”
The NZPIF understands that many people are really hurting at this time but some of these people are landlords who have always tried to supply good quality housing for their tenants, she says.
“We would like the Government to consider housing as an essential service and to include landlords in the measures to ease the current difficulties rather than just talking about heavy penalties.”
It’s worth noting that Housing Minister Megan Woods has said tenants do have obligations too.
“It is not acceptable for tenants to abuse the current situation by refusing to pay rent when they have the capacity to do so, causing significant property damage, or significant anti-social behaviour. Tenants are still fully liable for their rent payments and any damage.”
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