Residential Tenancies (Prohibiting Letting Fees) Amendment Bill

Thank you, Madam Chair. Yes, Madam Chair, after that event my colleagues did say to me that it’s one way to rock the House and bring the House down. But it’s an honour to continue to speak on this bill. I was concerned, because I looked across and then I felt that maybe my speech wasn’t relevant, maybe I was on the wrong part—I don’t know what it was. You were both just looking—and I was stunned, but I realised it wasn’t that at all. So, obviously, there is an opportunity to continue on.

In light of the quake that we’ve just had—and at the march that was outside, they were actually talking about a Māori proverb and a whakataukī that comes from Psalm 127, which is actually appropriate right now. It declares this: “Except the Lord build the house, they labour in vain that build it:”—excuse the pun. But it just seems that the fact that this is there—what we are doing here, in one sense, in this Residential Tenancies (Prohibiting Letting Fees) Amendment Bill is it does feels like we’re labouring in vain, in a sense. Are we making a difference, that is, to the cost and the burden of that cost for those who are currently in a tenancy agreement arrangement? We believe that that won’t; that the conditions that are there—it’s already been stated.

It’s quite clear here. In order to be able to give some substance to those points that I’ve made, if I was to read through the Act, the current national average, as far as weekly rentals are, is $452. When it was worked out in regards to the cost that was spread over a period of time, in regards to the average letting fee for a tenant, it’d be roughly around about $10 to $12 if that was added on. The concern, though, is that while that may be added on—and tenants have said in their submissions, “Look, this would be good. It spreads the burden of the cost over a longer period of time.” However, once that has been set in place, there is no provision there in the bill—and the Minister of Housing and Urban Development may want to respond to this—to remove that current increase for the letting fee itself.

So, in actual fact, once a landlord has decided they’re going to increase the letting fee by an extra $10 to $12, that can be for perpetuity, for as long as the landlord decides to do that. So therefore, it’s an increase—

Chlöe Swarbrick: Are you advocating for rent control?

—I know there’s a bit of noise on the other side—that is going to be happening that’s $10 to $12. Now, for average people who are out there paying $450, that’s now $462 added extra on to their costs. What that is telling us is the fact that this is already not going to work.

Now, let’s hear from some of the people actually out there who are working with those to provide tenants. We know their security of tenure is critically important as well. So we think about the New Zealand Property Investors Federation—most people out there in the public may not know that almost 60 to 75 percent of those who actually own a rental property are mum and dad investors. These are people who are good people, genuine people, who have bought this on the premise of being able to provide for some form of super, some form of security, in their later days and when they retire, and so, therefore, these are not the so-called landlords that are out there that are not doing their part to ensure they provide a decent form of accommodation that’s warm and dry.

The New Zealand Property Investors Federation chief executive officer, Andrew King, said the law change was unnecessary and could have reignited rental auctions, where tenants try to outbid each other by offering higher rents to secure places—prohibiting letting fees was removing choice from those tenants prepared to pay and get a step ahead of some other tenants.

It’s quite clear, again, that these are those who work at the coalface, who are wanting to make a difference. What they are saying is that, number one, the costs will be shifted on, and, number two, it removes the opportunity for choice where, in actual fact, when you have property managers who work hard to ensure that actually they have the appropriate place of residence for a tenant, for a family, that are looking for residency—that’s the role of the property manager, as well.

I also, too, again, want to talk about some other comments that came up as we were listening to the submissions that were coming through. “By paying the letting fee, they have a wider choice of property and less competition from tenants unwilling or unable to pay”—these are some of the comments, and I’m reading them, from those who made submissions.

So I’ll be keen to hear from the Minister in the chair, Phil Twyford. My number one question is in regards to the lack of consultation and why there wasn’t a broader perspective and opportunity for that. Why was it not, then, held over to the two previous bills that we talked about at the moment which the Minister and his ministry is conducting—in other words, a reform to the Residential Tenancies Act itself? Then at the same time, question two, in regards to the concerns that were raised by those with property management roles of responsibility and for those that are tenanting—the concern that this will increase their current rates in the average rental market, and then at that time put an extra burden upon those people as well.

So I put those questions to the Minister. I hope that he will be able to respond to them in the appropriate way. That’s important for us, and we look forward to more debate through this committee stage.

E Te Māngai, tēnā koe. Tēnā koutou e Te Whare. It is a privilege to rise and speak after a relatively long line of National Party property owners, which we obviously know as a result of the Register of Pecuniary and Other Specified Interests of Members of Parliament, which is a public document. And the reason that I—

CHAIRPERSON (Hon Anne Tolley): I just caution the member—there is a Standing Order that actually deals with this, so just be careful where you go with that.

CHLÖE SWARBRICK: All right, Madam Chair. I’ll leave that point being made and say that this is obviously a House of Representatives. There are five individuals in this House, in that most recent register, who don’t own properties, and I am one of them. To that point, I would like to speak to the experience of renters, because this piece of legislation is delivering for 50 percent of New Zealanders, who rent. Letting fees are a barrier to entry. I think that’s important to note, because the point was made by Dr Nick Smith about the fact that costs should lie where they fall. In response to that, I can only say that surely it makes sense, following that line of logic, that people who are engaging in contracts with property managers or leasing agencies should be paying those fees. It is an anomaly in the law that allows for those leasing agencies to charge renters. So, surely, we want to correct that anomaly. Where else in the law are two contracting parties allowed to impose a cost on a third party who is not privy to that contract?

To the point around market competition—surely there would be greater market competition for the costs of leasing, should landlords need to shop around for those leasing agencies, as opposed to imposing those costs on renters. If I may, I’d like to make the point that if you own a rental property, you own at least one more property than your rental tenant. As my dad so frequently says, when you’re renting you’re paying somebody else’s mortgage.

The previous speaker, the Hon Louise Upston, spoke to prohibitive costs for landlords with regards to leasing, should they not be allowed to charge these letting fees. To that point, I would note the Reserve Bank’s advice that rents are driven primarily by supply and demand, not by landlord costs, which raises the important point that if it is becoming prohibitive for certain people to be landlords, then perhaps they should be selling those properties, therefore increasing supply in the housing market and allowing and enabling young people, prospective buyers of properties, to purchase their first home.

Secondly, I would like to point to the kind of statements around the landlord sector and the calls from the Hon Dr Nick Smith for transparent charges on rents. I’d agree with him on that point. I think it is really important that we have transparency and accountability about how rents are being calculated. So I’m really disappointed that, in 2016, the National Party, whilst in Government, voted down Metiria Turei’s Residential Tenancies (Safe and Secure Rentals) Amendment Bill, which would have provided greater security and greater transparency and accountability for renters.

Finally, I’d like to point to the 60 percent of submissions that were in favour of this piece of legislation, because, as has been noted time and again, this is about delivering for the 50 percent of New Zealanders who rent.

Thank you, Madam Chair. I want to just briefly respond to a number of points that have been made in the debate so far. Let me start off by addressing the point raised by the member Louise Upston and, in fact, by her National colleagues Nick Smith and Alfred Ngaro as well, that the risk—or the likelihood, as they suggested—is that as a result of the changes in this bill, costs will be passed on to the tenant. Nick Smith, notably, said that we should stop pretending, that at the moment it’s a transparent charge, and that all this bill will have the effect of is to shift that charge from letting fees into the rental costs.

Our view about this issue all the way along has been that the problem with the current system with letting fees is that, as the member Chlöe Swarbrick just pointed out, at the moment there’s a contractual and commercial relationship between the landlord and the property manager. The custom of letting fees that has arisen in recent years has seen those two parties in a contractual relationship charge a third party who is outside that contractual relationship. The property manager is working for the landlord but charging the tenant. Now, that is the opposite of transparency.

It’s obvious to anybody, I think, that property managers—engaged by landlords to help them run their businesses and manage the tenancies—provide a service, and of course property managers should be properly recompensed for that service. Our argument, and the view that underpins this bill, is that the real costs of that service should be accommodated within the landlord’s business model—not simply charged at the equivalent of one week’s rent to the hapless tenant, when, in fact, the real costs of the services that are provided by the property manager may bear no resemblance whatsoever to the equivalent of one week’s rent.

So it’s a much sounder economic and financial proposition, from the point of view of the Government, that the real costs of the property manager’s services are incorporated into the landlord’s business model. Of course they will be, to some extent, passed on to the tenant, but, as we know in this House, rents are set by supply and demand, and it was only the Reserve Bank in New Zealand who most recently published argument and commentary on this point of view. So any attempt by landlords to pass on those costs to tenants will be mediated by supply and demand. A landlord can’t just randomly add a whole lot of extra costs to the rent and think that the tenants will be able to pay that. It comes down to supply and demand.

I want to respond to Louise Upston and Alfred Ngaro’s comments about the very compressed time frame associated with this bill. They argued that it provided too short a time for the sector to respond and that there was a lack of consultation. They also raised the question about why this bill isn’t being dealt with as part of the wider review of the Residential Tenancies Act. So, to address that first question, the answer is that the current overhaul of the Residential Tenancies Act is a large, ambitious, and complex undertaking, and we’re currently doing a public consultation exercise with landlords, with tenants, up and down the country. As a result of that consultation exercise and the feedback that we get from landlords and tenants about the range of proposals that we put on the table, we will then draft legislation, and we will take that legislation through a full parliamentary process because it is a serious and complex undertaking. So that will take us probably all of next year to take that bill through the House.

Now, the reason that we split off the measures to deal with letting fees is that we believe that dealing with letting fees is a relatively simple undertaking. We don’t believe there’s any justifiable moral or financial rationale for the current way that letting fees are dealt with. It’s a relatively simple undertaking. The bill is a relatively simple bill. We want to ensure that in this summer season, when so many tenancies turn over—we want to lighten the load on renters, and there are millions and millions of dollars that are spent every year on letting fees. That’s money that we can, in the short term, spare tenants.

I want to come back to the argument that Opposition members made before that all we’re doing is transferring the cost of letting fees from letting fees into the rents. The other reason why it’s much better for renters if these figures are incorporated in rents, to the extent that they may or may not be, is that letting fees come at exactly the worst time for renters. They come when renters are having to find four weeks’ rent in bond, rent in advance, all the costs of moving house, and then they have to find letting fees on top of that. That is a terrible impost on renters at the time they can least afford it.

Louise Upston asked about other parts of the UK and why they haven’t followed Scotland. The member may be interested to know that England has followed Scotland and has introduced legislation to ban letting fees. Alongside rent and deposits, agents and landlords will only be able to charge tenants fees associated with the change or early termination of a tenancy. Wales has also started to follow Scotland’s lead with the Renting Homes (Fees etc.) (Wales) Bill, which was introduced on 11 June 2018. Also, in the state of Victoria in Australia, there are moves under way to prohibit letting fees.

There was one thing that the member Louise Upston said that I agreed with, and that is that bad landlords are not a majority. I disagree with her assertion that the Government characterises bad landlords as being the norm—quite to the contrary. A great number of the landlords are good, decent New Zealanders trying to provide a service, trying to save for their retirement, and trying to do the right thing. This Government is not in the habit of demonising landlords. Our goal with this legislation and with the review of the Residential Tenancies Act is to reset the mix of balances of rights and responsibilities that landlords and tenants share, to modernise this relationship, because we know that no matter how successful we are at turning around the declining rate of homeownership, a lot of Kiwis for the foreseeable future will be renters.

I want to comment on one of Nick Smith’s arguments that he made. He tried to say that the winners of this move will be short-term tenants because they are incurring extra costs through a rapid turnover of tenancies and they will end up under this law subsidising long-term tenants who don’t incur so many costs associated with the turnover of tenancies. With respect, I think the member is not seeing the wood for the trees. The way that letting fees currently operate are a burden, a financial burden, on renters. Actually, the effect that they have is to incentivise short-term tenancies. There is plenty of anecdotal evidence, particularly here in Wellington, where the revenue stream for property managers from letting fees encourages and incentivises them to promote short-term fixed tenancies, which lock in the very insecurity of tenure that we are trying to avoid.

Finally, the point I want to make is to address the point made by Louise Upston and Alfred Ngaro about the lack of consultation. I want to point out that submissions were received by the Social Services and Community Committee—187 of them. That is a pretty fulsome response by the community, and the majority of those submitters supported the bill.

Thank you very much, Madam Chair. I was just hiding under my desk in my office, working away for the constituents of Epsom electorate, and I heard Chlöe Swarbrick’s speech. I was moved to come down to the House and put a few things straight, because Chlöe Swarbrick’s speech demonstrated everything that is wrong with the world today, especially the standards of political discourse. She went to great pains to point out that she’s one of five people in the pecuniary interests register who does not own a house and therefore had some greater authority to speak on this bill than people who might own a home.

Well, this is the problem: we have a political debate that is not based on any sort of reason or logic or a discourse about what might get better results for the welfare of New Zealanders going forward but rather this idea that we each have intrinsic values which can’t be challenged or we might be hurt, that we can’t have the debate; that somehow it’s identity that matters in politics more than the actual facts, such as whether clause 4 in Part 1 of this bill corresponds with the intention of the House when the bill passed its second reading and, before that, when the House sent this bill away to the select committee.

We actually do need to have robust debate about whether or not this bill will make things better or worse for New Zealanders. Chlöe Swarbrick’s speech simply did not do that. I think it is worth noting that it is an example of the way that the quality of political discourse has collapsed, not only in New Zealand but around the world, as a victim of identity politics. But it is also a fact that we need to recognise that this whole bill actually—and particularly the idea that clause 4, by banning the types of fees or the format of revenue collection that a landlord can use to cover their costs, is going to solve a real problem—is pantomime politics. The idea that simply saying that a fee or charge cannot be levied for the grant, continuance, extension, variation, or renewal of any tenancy agreement, and that this is somehow going to solve a problem in the real world, rubs up against the fact that Governments may well be able to shift costs but Governments cannot avoid costs.

There’s an old economist, Thomas Sowell, who says that good economics is really just about relentlessly asking the question: what happens next? So after this bill, what happens next? Do the considerable costs of recovering the time and the effort used to search for and vet tenants—do those costs disappear once this legislation goes in place? Or are they shifted? My contention is that the costs will be shifted, and they’ll be recovered in one of two ways by landlords. Either landlords will charge more in rent over time to cover the costs they can’t cover with letting fees, or they will be covered by tenants spending more time queueing and searching because there are not agents available to cover that search process for them.

So when you have a price control, one of two things happens. Either the money gets recovered somewhere else, in higher fees elsewhere, or people spend more time queueing because you actually won’t to be able to pay somebody to do the searching and the very hard work that people have to do when arranging tenancies.

But going back to Chlöe Swarbrick’s speech, it was, in a way, appropriate for this bill, because the real problem in New Zealand is that we still build half as many homes per capita as the baby boomers built in their peak of the 1970s. That’s why there’s a shortage, that’s why people feel that rents are high, and that’s why tenants are hard up.

This bill represents an age of superficial politics where simply trying to pass a law to try and shift the cost is seen as doing something, when, really, it is not. It is a substitute for the real action that the Minister in the chair, Phil Twyford, very well knows is necessary, with infrastructure, with land use planning—none of which he’s actually managed to do despite all the promises he made when he came into this position. It’s a shame to stand here in this Parliament and be debating laws that will make no difference other than cosmetic—actually, they’ll make things worse.

Thank you, Madam Chair. Thank you for the opportunity this afternoon to speak on the Residential Tenancies (Prohibiting Letting Fees) Amendment Bill. I do want to ask a few questions of the Minister in the chair, Phil Twyford, but before I do, I want to respond to some of the contributions that have been made this afternoon.

I want to start with the contribution by the Green MP Chlöe Swarbrick. In her speech, she said that she was one of five renters in this House and suggested that, perhaps, because of that, she has more of a moral right to speak on this legislation than those of us who do own our own home. If that’s the case, I have to ask the Green Party: what about dairy farmers in mid-Canterbury, what about truck drivers in South Canterbury, and what about drainlayers in my electorate of Rangitata? Is she suggesting to them that they’re the only ones that can speak on legislation that affects them, because that’s, essentially, what she’s saying in the House today by saying that only renters should be able to have a view on this bill.

The second point she made which I thought was even more disappointing—

CHAIRPERSON (Poto Williams): Order! Order! I didn’t call the previous speaker to order, but just because a previous speaker has spoken about a particular item which is not relevant to the bill does not give subsequent speakers the opportunity to—

💬 Hon Dr Nick Smith: Of course it does.

CHAIRPERSON (Poto Williams): No, it doesn’t—Speakers’ ruling 45/1. So I would encourage you to come back to the bill. Thank you.

💬 David Seymour: I raise a point of order, Madam Chairperson. Madam Chair, I strongly reject and contest your assertion that my speech was not relevant to the bill. I was very careful to tie my contribution precisely to the sections of the bill being debated.

CHAIRPERSON (Poto Williams): Thank you. I wasn’t suggesting that your whole speech wasn’t relevant; I was suggesting that the portion where you referred to the previous speaker’s contribution was not in line with the bill. Thank you very much for your contribution.

Thank you, Madam Chair.

As luck would have it, I was just coming round to Part 1 of the bill, which refers to the substantial provisions of the bill. I want to ask some questions of the Minister, who has been making some contributions this afternoon, and I thank him for that. In the bill, it defines a letting fee as “any fee or charge”, and I ask the Minister how that would relate to an additional fee on top of rent—if a letting fee was not payable, how that would relate if an additional fee was put on to the rent for perhaps the first year of a rental agreement.

I say that because I was a renter up until just a few years ago, I’ll have Chlöe Swarbrick know, and as part of my 12-month fixed-term tenancy we had an agreement that a higher fee be charged at the start of our tenancy rather than at the end. The reason for that is because we had a number of university students in the flat who were working during the university year. So we had an agreement as part of our tenancy agreement to have a higher fee at the start of the year than at the end of the year. So I ask the Minister, if that was to be the case, if, for example, in lieu of a $300 letting fee, it would be permissible under this legislation to have a $10 a week additional charge for the first 30 weeks of the tenancy—because this legislation, I don’t think, at the moment, is very clear on that at all when it refers to “any fee or charge”.

The second question I have around that is it refers to any “letting agent or any other person”. In his contribution, the Minister earlier suggested that a property manager works for the landlord, and I don’t think there’d be too many people in this House who’d disagree with that. But the question then comes: if that fee is to be shifted from a relationship between the property manager and the tenant to the property manager and the landlord, that fee would have to be recouped somehow, and the fee would be recouped by the property manager charging the landlord. So I ask the Minister, if that was to be the case, that landlord would have to recoup that fee from the tenant? In fact, the Minister did allude to that fact in his contribution. He admitted, I think for the first time that I’ve heard him say it—he said that it’d be better for the tenant if it was incorporated within the rent. I found that quite interesting, because up until this point, the Government have suggested that it wouldn’t lead to an increase in rent, and now they’re saying that it perhaps will.

So I ask the Minister to perhaps rethink his comments he made about Nick Smith’s comment, which was that it would incentivise short-term rentals rather than longer-term rentals. I’ll come back to my $10 a week example: if a fee is to be recouped by $10 a week, of course that would punish longer-term tenants—

💬 Hon Member: Forty bucks a month.

—because they’re being paid, as my colleague says, an additional $40 a month for a far longer period of time than they are if they’re a short-term tenant. So I ask the Minister to rethink those comments, because I don’t think he’s quite understood what Nick Smith has had to say. Of course it will incentivise shorter-term rentals rather than longer-term rentals if someone is charged $10 a week for a longer period of time.

It is a pleasure to take a brief call on the Residential Tenancies (Prohibiting Letting Fees) Amendment Bill. I want to disclose, certainly, that I am a renter and therefore, according to the contribution by Chlöe Swarbrick, I must have greater moral authority than any other member of this House to speak on this bill. If the contribution from Chlöe Swarbrick has indicated anything to us, it is that the Green Party will certainly not, at any stage, be given the responsibility over the economy or housing, because that contribution, quite frankly, had no substance at all.

But I do want to talk about some aspects of this bill that I feel quite passionately about. We’ve had a debate around the letting fee and the structure of the letting fees, and, quite frankly, I don’t think that this is a good bill. To paraphrase my colleague the Hon Dr Nick Smith, it’s a smoke-and-mirrors bill. In fact, you could call it a fake news bill, where the Government thinks that they’re going to take letting fees off and that’s going to save tenants money, but, in fact, they haven’t thought through the unintended consequences of this bill, and that is that it’s going to add to rents, which will significantly affect long-term tenants.

I want to, in fact, get to some of the submissions, because I think that through the submission process a lot of good ideas came through that I would like the Minister in the chair, Phil Twyford, to respond to. A lot of these ideas were not about banning the letting fee structure but about improving the market for letting fees, improving the transparency of letting fees. I hear the Minister say that, in fact, the current system is not transparent and that is why we have the bill that we’ve got before us today. But I put it to the Minister that there are ways to improve the transparency of the current letting fee market without a straight-up ban. So I would like to know from the Minister why he did not look at alternative ways to improve the letting fee market without a straight-up ban.

Other ideas that came up through the letting fees submission process were around splitting the fees between tenants and landlords. What we’ve heard from the opposite side of the House for the last few months is that the benefits and the value of letting fees are much more accrued, or significantly accrued, to the landlords. But what we heard from the submission process is that in fact there is value in tenants using the services of the property managers in terms of helping them to get vetted quickly, in terms of giving them insurance over the property that they’re about to rent, and in terms of giving them some certainty even past the point at which they have moved into the house.

I certainly, in my instance, am able to go back to my property manager at any time and say, “Well, can I have this done or that done to my property?” And so it goes that the relationship between the tenant and the property manager lasts far beyond the short-term viewing of the contract which has been under discussion.

A third aspect that I’d like the Minister to certainly answer is around what we call a code of conduct and the amount of property managers that came to us during the select committee process and said, “Yes, there are some rogue operators out there, but let’s not punish the 95 percent of those hard-working property managers that are genuinely trying to provide value for both the tenant and the property owner.” And so why don’t we have a code of conduct for property managers? I’d like the Minister to answer that. And this code of conduct would set the standards for property managers in the sector, which we currently lack. It would also outline what they can charge on to consumers, in terms of the transparency, and it would also outline, particularly, a process for becoming licensed as a property manager. And the Minister needs to explain—[Bell rung]

CHAIRPERSON (Poto Williams): I call Dan Bidois.

Thank you, Madam Chair. It’s fantastic to continue this discussion because I really want the Minister to respond to the issues from the select committee, because I believe that the select committee submitters deserve a right to hear why this Government hasn’t taken their ideas seriously.

But now let’s come to the bill. Now, the bill in Part 1 looks at the unlawful act of charging a fee. And I have serious reservations about this part of the bill. We know that property managers incur time and effort, for a letting fee. We know that because they’ve told us in the select committee that it takes anywhere from 12 to 20 hours to rent out a property. We also know from the select committee process that tenants benefit from the services that property managers provide.

So the idea is that this is actually going to be an unlawful act, when it is a free exchange in a market society where one actor in a society has a service to provide and another has a willingness to purchase that service. Why are we getting in the way of that economic relationship? And if that relationship is, in fact, broken down, why doesn’t the Minister consider ways to improve that market rather than just a straight-off ban?

I do want to say that I echo the sentiment of my colleagues that have expressed a deep dissatisfaction that this bill will significantly affect long-term tenancies. Let’s just say, for example’s sake, that tenant rentals increase by a measly $2 a week by this bill. Now, under supply and demand we know that that’s in fact consistent with the arguments that this Government’s been making, which is supply and demand’s been driving the market. But $2? That’s not much. But $2 over a year—what does that add up to? That’s $700 a year. If you were in a long-term tenancy over several years, times that $700 by the amount of years that you’ve been there, and that is the impact, the unintended consequence, of this bill on a whole range of long-term tenants, of which I am currently one.

And I just don’t think that this Government has thought through the wider implications of this bill on the rental market. They should be focused on building homes and increasing the supply, and I’m not talking about 18 or 20 houses. This Government promised 10,000 houses a year. And what are they doing? They’ve just opened their first KiwiBuild home over the weekend—

CHAIRPERSON (Poto Williams): Can I bring the member back to the bill please?

—and quite frankly—Madam Chair?

CHAIRPERSON (Poto Williams): Back to the bill.

OK, back to the bill. Let’s get some empirical evidence. We heard, during the select committee process, the Scottish example that proves that rental prices are likely to rise. And even in the regulatory impact statement it says that rental prices will likely rise, and that’s going to affect a significant amount of tenants over time, particularly long-term tenants. And I would like to hear from the Minister, in respect of the concerns I have raised on behalf of those that have submitted in the select committee process, about how to improve the transparency, the effectiveness, of the market, rather than just a straight-out ban, because, quite frankly, it looks like this Government has reached a conclusion that they want to ban, no matter what, for the sake of ideology, rather than work to improve the regulations through a code of conduct, through increasing the transparency of the market, and through increasing the licensing of rogue operators to ensure that this market works effectively.

So I would like the Minister to answer that, and I say on behalf of those submitters that they deserve a right to an answer. Thank you.

I move, That the question be now put.

Thank you, Madam Chair. I do want to thank the Minister for taking a call, and there are a couple of issues that I want to just come back to—in the earlier contribution I made—because I don’t believe they were adequately addressed, or perhaps they were misunderstood.

But before I come to that, I want to just address two comments by speakers in this debate. One was Chlöe Swarbrick, and the view, which I iterated in my initial comments, around the disdain for landlords, which I find entirely offensive. If members come to this House to assess the ability of landlords based on a small number of the population that happen to work in this building, I think it shows how completely out of touch they are with ordinary New Zealanders. The very hard-working New Zealanders—and this is coming to a comment that the Minister made as well. There are approximately 270,000 landlords in New Zealand. There are no corporate or institutional residential landlords. And of those 270,000 residential landlords, there are approximately 546,000 properties. So it backs up what I said in my contribution on Part 1 of the Residential Tenancies (Prohibiting Letting Fees) Amendment Bill, that by far and away the majority of landlords are mum and dad investors who have one, perhaps two, properties.

And the Minister, in answering some of the questions, referred to the landlord’s “business”. Well, thousands and thousands of landlords don’t consider that they’re in business. They don’t consider they’re in the business of being a landlord. Yes, there are regulations and obligations that they have to comply with, but those mum and dad investors aren’t in the business of investing. They might be teachers, they might be nurses, or they might be truck drivers that have worked incredibly hard to save up for a rental property which will be their retirement fund, and so for them to have the ability to purchase expert assistance in getting a tenant for their property—which is the intention in Part 1. Section 2of the principal Act is amended in Part 1, and when it refers to the letting fee, we’re not talking about big businesses. We’re not talking about big-business people or fat cats, as the Green Party seems to think landlords are. The majority of them are hard-working New Zealanders who have scrimped and saved to put money into an investment—not a business, an investment—that they will use for their retirement. So I just want to make that very, very clear. So this particular impact means that those landlords won’t be able to have a property manager who then collects a letting fee for that service.

Now, the Minister, in attempting to answer my question about process, misinterpreted a key point. The two rushed parts of the process were before the bill was introduced and in its implementation. So the first part, the part that the regulatory impact statement clearly indicates, is there was insufficient time for Ministry of Business, Innovation and Employment officials to consult with the sector before the legislation was even drafted. That is the poor process that I refer to in this House. That is a process that should not be repeated by this Government, and it’s happening over and over and over again. In terms of the select committee process, that was one of the ones that wasn’t truncated. I think that’s a bit of an exception in this House at the moment. We did hear from a good number of submitters—some for, some against—and I want to thank my colleague Dan Bidois for going through some of the comments, specifically, that the submitters raised.

But I want to come back to the second part of the process that was absolutely rushed, and that’s what happens after this point. So we’re in the committee stage; there’s yet to be a third reading, of which we don’t know the date, and yet this is going to be implemented on 12 December. So the very landlords that I am talking about in this particular debate might have a week, they might have two weeks, to implement this legislation. That is an outrageous process. That is deeply unfair to the—and let me quote that number again—270,000 landlords in New Zealand. Now, of the properties—546,000 properties—not all of them have property managers. About 50 percent do. So we’re not talking about every single property that this could apply to, but that’s still a very large number—270,000 properties. Given that we don’t know when the third reading will be or when the bill will be given the Royal assent by the Governor-General, potentially they’ll have a week to implement it, which is grossly unfair.

I come to my third point in response to the Minister’s comment, and this is around the international experience; the country that was quoted a lot is Scotland, and they banned letting fees in November 2012. Unfortunately, the evidence showed both sides in terms of the impact on rent. The study by LSL Property Services and UK Tenant Data said that one immediate effect of the fees ban was that the rents increased from January 2013 to the following year, January 2014, by 4.3 percent, when they had been static in the year prior—4.3 percent. I am sure the Minister doesn’t want to see a 4.3 percent increase in rents this year. That was a risk that was clearly identified in the regulatory impact statement, so I’d be very keen to hear the Minister’s response on that. He clearly quoted Scotland. This is another part of the evidence in terms of the implementation from Scotland that I would like the Minister to comment on.

He also referred to the UK and Wales. Wales was looking at what Scotland did, as Ireland was, but instead they decided the problem was around disclosure. The Minister mentioned transparency in his comments, so I do want to come back to that, because it appears that some of the problem that the Minister wants to solve is around transparency and disclosure of the letting fee—what it covers, who it covers, when it should apply, etc. So Ireland and Wales, instead of banning letting fees, actually introduced greater transparency and had a requirement that the letting fees be disclosed by the property managers. The UK put a similar requirement in to make sure that tenants are well-informed. So it is important in this House that when international examples are quoted, they are quoted accurately.

The final point that I do want to make comes back to this wider reform. I want to reiterate the risk. When legislation like this is put in piecemeal when there is a bigger piece of work, then the policy intent of this does harm. So in the interests of legislation being concluded next year, which is what the Minister indicated around the broader residential tenancies reforms, it would make sense for this issue—and whether it’s the problem of increased rent or upfront rent. At the end of the day, someone still pays the increase, whether it’s an upfront fee or whether it’s an increase every week—4.3 percent is what happened in Scotland—or is it the issue of transparency of the letting fee itself?

The other thing that’s important on the international comparisons is to look at the type of property owners and landlords here in New Zealand compared to other jurisdictions. I would say that in some of those countries, the profile is quite different because of the very issue that these are not people in business. They are not in the business of owning property. The majority of them might have one or two properties, and the fact that they want to engage professionals to provide support that helps tenants who are looking for properties—and at the moment it’s a particularly tight market—is a service to them as well as the landlord.

I think it is important that National’s opposition to this piece of legislation is well understood, because the reality is that this will have a further increase on rents for the very New Zealanders that the Government supports, or purports to support.

Thank you, Madam Chair. It’s a pleasure to make a contribution to this bill. The regulatory impact statement talks about the uncertainty on landlord behaviour of removing letting fees, and I want to talk to an area not previously covered and build an argument. You see, it’s quite plausible that having letting fees may, in some sense, increase the level of social responsibility, and even the actions, of a landlord, and I’ll testify to that as a previous landlord myself. But the opposite may also be true, that removing the letting fee may decrease the sense of social responsibility and actions of the landlord, and I’ll actually prove that in this contribution.

Now, the regulatory impact statement agrees that there’s uncertainty of what the impact of this bill will be on landlord behaviour. To quote here, “Nor is there sufficient information or time available”—again, the Minister Phil Twyford mentioned time—“to fully consider the impacts of prohibiting letting fees or what, if any, impacts it may have”. It continues through, saying much of the same thing: “The specific behavioural response of landlords is difficult to forecast as time”—time, again—“for consultation has been limited”. So we have this uncertainty of landlord behaviour as we remove the letting fees. Here’s what I believe: first of all, the letting fee, if it’s removed, will be passed through to the tenants; secondly, I do think that removing the letting fee decreases the responsibility of the landlord, and I’ll get to that; and, thirdly, I think that having a letting fee—as a previous landlord myself, I was aware that the tenant was paying it and I did try and make some accommodations.

Let’s go back to that situation and the argument I’m making that reducing the letting fee may reduce the responsibility and behaviours, if you like, of the landlord. Here’s how I want to prove it: Land Information New Zealand (LINZ) is a landlord. They have 22 houses in Whangarei. LINZ tenants do not pay letting fees. Eugenie Sage is the landlord for those LINZ houses. She is an appalling landlord—appalling. It takes TV ONE’s 6 p.m. news to turn up to show the mouldy walls, the mouldy ceilings, before that landlord would act. Yet the day after TV ONE news, teams of maintenance people miraculously appear. There’s no letting fee in that situation—LINZ don’t—but all 22 LINZ houses, as of 31 October, are mysteriously now going to be examined by a maintenance person from Land Information New Zealand. The connection here is they pay no letting fee, but the landlord is still appalling—absolutely appalling. Again, what I’m saying here is that maybe not having a letting fee decreases social responsibility of the landlord, and, in this example, Green MP Eugenie Sage. We heard Chlöe Swarbrick talk about Metiria Turei and their warrant of fitness and how wonderful they are as landlords. Sorry, not this MP, not this Minister, not this party, not these landlords—appalling.

The argument I’m making here is that with a letting fee—again, that uncertainty of behaviour at what we can see in the regulatory impact statement. I believe, just to reiterate, that the letting fees will be passed through to tenants if we remove this. That’s not a good thing. We’re all wanting to improve the tenant experience, so I think that’s not a good thing. Secondly, I do believe, as a landlord myself, being aware that tenants have paid a letting fee, I have tried to make accommodations at times. I understand their circumstance. Thirdly, removing the letting fee in some senses decreases the responsibility of the landlord, and I’ve given you the example of Eugenie Sage, landlord for LINZ and the 22 Whangarei houses where she is an appalling landlord. Thank you.

Thank you, Madam Chair. Just a short call—I won’t go the full five minutes. So who pays? Who pays? Does the tooth fairy pay? Because don’t pretend that renters won’t pay. I’m just wondering how many people across the House have actually run businesses and know about costs and in-goings and outgoings, because I heard Chlöe Swarbrick talk, and she was saying that she was one of five that are only renting and that us, across the other side of the Chamber, according to the pecuniary register, are homeowners. Well, most of us bought our houses before we became politicians, except for maybe Nick Smith, because I can’t imagine that when he joined politics he was a house owner.

She’s 23, so it’s acceptable for her to be a renter, but I’ve been a landlord and I’ve been a tenant. As recently as this year, I was a tenant. I had to find a rental property, and I fully expected to have to pay a tenancy fee because I understand that people that run agencies that have to pay their own bills and run businesses and that do screening and fill out paperwork have got to pay their bills. How are they going to cover their costs? Well, of course they’re going to charge a fee, so it’s expected. So I can’t understand the thinking behind saying “OK, we’ll just ban that fee.”, because someone will pay.

I ran a Honda business, selling motorbikes and lawnmowers—that sort of thing—and I remember that my priority was paying my workers’ wages. That’s the first thing. Of course, you paid the rent, then you paid the payroll, and only after that did I come out of it with whatever was left over, which is what I got. I always used to tell—quite often, at the end of every month—my workers that they took home more money than I did as the business owner, and they wouldn’t believe that, because they’d see a shop full of hundreds of thousands of dollars’ worth of equipment. But, in actual fact, that was all on tick. That was all on finance. So that’s the situation. You have to pay. You have to pay—someone pays.

So Labour—their specialty is rising costs. Under their reign in the last 12 months, rents have gone up $25 a head—$25 a head. What we’ve got to look at is we’ve got to understand what accumulates to make those costs, and, obviously, the more costs you lay on landlords, they’ll pass it on to the tenant, and the tenant will pay. So Labour—what do they do? They hammer the risk-taker, the property owner—that’s myself; I’ve been a landlord myself.

They’re rushing this legislation through Parliament. They’re rushing it through. The regulatory impact statement tells us this. So, for me, this is politics and spin, rather than substance. Just banning a fee and expecting that no one’s going to pay it just doesn’t make sense.

I move, That the question be now put.

Motion agreed to.