There are more than 20,000 families on the state house waiting list and taxpayers are spending $1 million every day on emergency and transitional housing. Rental properties are being taxed more causing rental prices to increase. All this demonstrates that we have a rental crisis.

The New Zealand Property Investors Federation (NZPIF) has developed a five-point plan to fix it.

Failed Fixes

A large part of the rental crisis has been caused by measures to fix the housing crisis. Higher taxes to reduce investment in rental property was meant to stabilise house prices. This has clearly not worked, but there is wide-spread rental property shortages, higher rental prices and poorer outcomes for tenants.

The NZPIF plan to fix the rental crisis and improve the living standards of tenants is based on the five core principles of providing stable and better homes, lower costs, more rental properties to meet existing and future demand, and improved access to justice for both tenants and landlords. The fifth principle, creating closer communities, is for the benefit of all New Zealanders.

More Security

Many tenants in New Zealand would like more secure accommodation. The government tried to provide this, by removing the 90-day notice with no stated cause, but this has only made it harder to remove antisocial tenants causing problems for their neighbours and communities. The plan calls for reinstatement of the 90-day notice provisions.

The real cause of tenants feeling insecure in their rental homes is that an owner might sell it, forcing them to leave. The NZPIF proposes a new “long-term tenancy” option (additional to existing periodic and fixed tenancies) based on the German model. Landlords would agree not to sell their rental (or only sell with the tenant remaining in the property). But tenants can still end the tenancy if they need to and can also decorate their rental to their own tastes. This would allow some tenants to feel like their rental was more like their home.

However like the German system, owners would be compensated for the higher risks involved and for giving up some of their property rights. Like Germany, tenants would have to provide 12 weeks’ bond for this new tenancy, would have to give twelve weeks’ notice rather than four, and would be responsible for outgoings like rates and insurance, but not repairs and maintenance.

Pets Allowed

Another part of the NZPIF plan is to remove some of the risks in allowing pets, helping owners to say “yes” to tenants with pets.

These ideas are to provide a more flexible rental system that will match the different requirements of tenants with owners able to accommodate these requirements.

There have been many media reports about increasing rental prices. While rental prices are determined by market forces, common sense demonstrates that when the cost of a product increases then the price of that product will increase.

Tax Deduction

Rental prices have traditionally increased at the rate of inflation. However, over the last eight years, rental prices have increased faster than inflation. To address this, the NZPIF plan calls for reinstating mortgage interest as a tax deduction, removing ring fencing and bringing the bright-line test back to two years. Unlike Healthy Homes laws, these tax increases provide no benefit to tenants and can only put pressure on rental prices to rise.

Government needs to acknowledge that there is a rental crisis and some of their well-intended housing solutions are part of the problem.

There are 27 suggestions in the NZPIF Plan to Fix the Rental Crisis which you can see on the NZPIF website News section under Federation Reports.