Residential Tenancies (Prohibiting Letting Fees) Amendment Bill

on behalf of the Minister of Housing and Urban Development: I move, That the Residential Tenancies (Prohibiting Letting Fees) Amendment Bill be now read a third time.

Around half of New Zealanders are renters. This Government is committed to making life better for our renters, and this proposed legislation is a down payment on a commitment that the Government has made. Banning letting fees will save renters an estimated $47 million a year.

I’d like to first of all acknowledge the Social Services and Community Committee for its consideration of this legislation and for them considering the 187 or so submissions that they received. I’d also like to thank those 187 submitters, whose feedback and comments helped the committee to shape the views on this legislation. These came from a number of interested parties, and they included tenants, community groups, students, property managers, and, indeed, landlords.

Letting fees are not fair. This might be one of many reasons why about 60 percent of the submitters supported the general intent of the bill to prohibit the charging of letting fees to our tenants. A letting fee is supposed to cover the costs of conducting open homes, vetting potential tenants, and advertising a property, but these are services that are provided to the landlord. The contractual relationship is between the landlord and the letting agency, but somehow the existing law allows the fees for those services to be charged to a third party, the tenant. Now, this is unfair, and in what other area of law are there two parties contracting with each other for an exchange of services then allowed to charge a third party? It is an anomaly in the law that is being addressed by this proposed legislation. There is no relationship between the fee and the cost of the services that are provided.

It’s pretty standard for a letting fee to be set at the equivalent of a week’s rent plus GST. Now, rent varies for different suburbs and different cities, and for different kinds of houses. However, letting fees are set regardless of the costs of the services that the letting agency is providing for the benefit of the landlord. There is no market competition on the amount that is payable.

This ban will mean that the costs of letting a property will be borne by the party who chooses the property manager. So the costs of letting the property should lie with the person that benefits from the service. This bill means that landlords can shop around for the most cost-efficient manager, and it will probably bring some competition to the property management sector. I am not aware of an area of law that allows people to contract for services and then charge a third party for those services.

Now, some submissions expressed some concerns during the committee stage that this bill may result in rent increases across the country. However, we do not expect there to be an impact on rents. Scotland, when they banned letting fees—they actually showed no evidence that it led to an increase in rents. Also, the Reserve Bank in our country noted that rents are driven primarily by supply and demand, not landlord costs. Treasury has also concluded that the experience in other countries shows that there’s no clear evidence that banning letting fees will indeed lead to increased rents. The UK Conservative Government has also introduced a similar ban to ban letting fees, and their reports agreed that there was no evidence that it led to an increase in rents. Other supply, demand, and financing factors contribute more to the amount of rent than the costs that are associated with tenanting a property, and the Government has a plan to deal with those.

If we accept, for argument’s sake, that landlords will try to pass the cost on that is currently being handed to tenants through these letting fees, and if landlords try to recoup those costs, we expect that rent might go up by a few dollars a week. Now, even if that were to be the case—and we don’t expect that it will be—that would surely be better than tenants being whacked with a letting fee that’s equivalent to an entire week’s rent all at once, up front, at the very moment that they can least afford it—when they’re having to fork out for removal fees, for bond, and for rent in advance. Landlords, and letting agents on their behalf, will retain the ability under the Residential Tenancies Act to seek reimbursement from tenants for expenses reasonably incurred as a result of signing a tenancy agreement, subletting, or parting with possession of the tenant’s interest in the tenancy.

The Social Services and Community Committee recommended a couple of changes. The first change is to separate the bill into two parts. This will allow the bill to be considered part by part under Standing Order 303(2). The change reorders the bill so that it would allow the substantive provisions in clauses 4 to 8 to come under Part 1 and allow further amendments in clauses 9 and 10 to come under Part 2. The second change is to the commencement provision in clause 2 of the bill. The bill will now come into force on 12 December 2018. This is because tenancy turnover is usually the highest between the months of November to February of every year. Tenants are more likely to move house in summer. It is the start of the new university year, and the fact is that the new year often accompanies a change in people’s circumstances. Implementing the bill during this period will maximise a reduction in costs for tenants who are signing up for new tenancies over this peak period of time.

The Government has committed to a review of the Residential Tenancies Act. This will advance a range of changes to make life better for our renters, and it will include consideration of limiting rent increases to just once per year. It will also contain other initiatives to improve their security of tenure and to better allow tenants to make their house a home. This review is expected to result in legislation being introduced into this House of Parliament next year.

Ultimately, the best way to put tenants in a better situation is to increase the supply of housing and end the shortage that is driving rents up. The Government’s KiwiBuild policy and urban growth reforms are designed to increase supply. Homeownership rates have declined, from around 74 percent in 1991 to around 63 percent in 2017. Approximately 576,000 households are currently renting in Aotearoa New Zealand. Now, based on the 2013 census data, 60 percent of renters moved within three years, while only 30 percent of owner-occupied homes moved within five years.

We know that Māori and Pacific are overrepresented in renting statistics. Since 1986, the proportion of Māori living in private rentals has increased by 88.3 percent, whereas across the total population, renting increased by 42.7 percent. Over the same period, the proportion of Pacific and Māori children living in rental properties increased from around 50 percent to around 61 percent for Māori and increased to 71 percent for Pacific children.

I’d like to again reiterate my thanks to the members of the committee and submitters, as well as our officials, for their contribution to the Residential Tenancies (Prohibiting Letting Fees) Amendment Bill. I urge the members—especially across on the other side of the House—to vote for this bill so that we can start reducing the costs that many families face, support a more consistent experience for New Zealanders, and make some meaningful changes to the lives of renters in Aotearoa New Zealand. I commend this bill to the House. Thank you, Madam Assistant Speaker.

Thank you, Madam Assistant Speaker. Well, what a pathetic excuse for a bill—pathetic, virtue-signalling nonsense. Now, the member who’s resumed her seat, the Hon Jenny Salesa, has read out a very nice speech that dealt a little bit with this bill and an awful lot with other bills and policies and other things that might be coming up, so I presume, given the tremendous amount of leeway given to her on this bill in her speech, I’ll get the same.

So let’s just have a look at this. She said, “This bill will make life better for renters.”, and I wrote that down as a quote. Will it make life better for renters? Well, I don’t think it will. What it will do is it will make life more difficult for landlords, which means that they will put up rents or they will exit the market. Now, it’s all very well for the Minister, who is representing Housing New Zealand, which is the biggest rental company in New Zealand. It has, according to its website, 63,000 homes. It is the biggest, it says, residential property owner in New Zealand. So we would expect, I think, in the House, that if we’re going to get lectured about what’s going to make a better life for tenants, we might be having a lecture from a Government that is actually going to keep people safe in their own rental homes. Instead, we have in my electorate, and no doubt in other people’s electorates, tenants who are living in fear because Housing New Zealand and their brand new homes—that we have all paid for; their brand new homes, opened this year—have locking systems that do not keep people safe.

I raised this issue in Parliament yesterday with Phil Twyford.

ASSISTANT SPEAKER (Poto Williams): Order! I don’t believe Housing New Zealand homes have a letting fee.

Excuse me. I raise a point of order, Madam Assistant Speaker. The member who has resumed her seat, the Minister, talked about KiwiBuild. She talked about the Government’s other priorities and other legislation coming through. None of that was about letting fees, Madam Assistant Speaker. She was allowed a tremendous amount of leeway.

ASSISTANT SPEAKER (Poto Williams): I’m just cautioning the member.

Thank you very much, Madam Assistant Speaker. I appreciate your assistance.

One of the things I want to talk about here is what makes a better—better—life for renters, as the Minister has referred to in her speech. She said letting fees are not fair. Well, actually, not having a safe home is not fair either. So if someone is, for instance, a landlord and they have to pay the letting fee themselves and a tenant says, “Oh, by the way, this lock on the outdoor locks that we have can be easily popped open with a screwdriver and we need a whole new door system put in.”, I would expect a good landlord would not say “I tell you what, we’ll send round the locksmith to give you a different lock.” when the entire system needs to be changed—not like Housing New Zealand does.

I would expect that a Minister representing a Government that says it wants to make life better for renters might have a commitment to safety in the home. I would expect a Minister who said “This is unfair.” about letting fees to say it is unfair when the country’s biggest landlord does not care enough to put in a locking system to protect a woman and her young family from burglars and, in the latest case, an attempted rape. I would have thought that the biggest landlord in the country—and represented by this Government’s Ministers—would not be lecturing—

ASSISTANT SPEAKER (Poto Williams): Order! Could the member please make a passing reference to the bill.

Yes, thank you, Madam Assistant Speaker.

ASSISTANT SPEAKER (Poto Williams): That would be useful. Then perhaps make a contribution as a third reading speech.

So when we look at this particular bill, what is so unfair? Well, what’s unfair is that now tenants who are staying in houses for a long time are going to be paying more rent—more rent—even though they are not shifting around tenancies. Long-term tenancies and long-term tenants will no doubt now be actually paying more. We’ve heard the Minister say this: that rents might go up by a few dollars a week. That’s another direct quote, because I wrote that one down too—another direct quote. So I would have thought she might also like to say, “Well, maybe we could have a bill making life fairer for renters—a bill that addresses security as well.” So I would have thought it would’ve been a good opportunity when we’re prohibiting letting fees to have looked at the issue of prohibiting dodgy locks on doors put in by landlords because it’s cheap, and then taking the cheapest option open to the landlord to actually say to the tenant, “Oh, we’ll just go and change the key in it.”

So that’s the sort of thing that could have been in this bill. That’s the sort of thing that could have made life a bit easier and a little bit fairer for tenants. I would have thought when the Minister is referring to this bill making life better for renters that she could also have said, “Well, actually, another thing that could make life better for renters”—and could have been in this bill but clearly is not—“is an obligation for a landlord to treat a renter as though they too have something useful to do in their lives every day.” One would have thought this bill, dealing with letting fees to apparently make life better for renters, would, in fact, mean that a landlord would contact a tenant before sending a workman to their house, particularly when they’ve been broken into several times; that they would, in fact, check that that was some time when the tenant was home from work to be there. Those could have been things that could have made life better. Perhaps the letting fees that are now going to be prohibited could actually be included in that idea. I think that would make life better for tenants.

So I would have thought that a Government so concerned with making life better for tenants—or renters, as we’ve been told by this Minister—would actually be saying, “Well, maybe instead of”—as the Minister said, in her words—“a tenant being whacked by a rental fee of an entire week’s rent, perhaps, in fact, that rental fee could go towards improving the security on the home.” That might be a good idea. I think that could have been included in this bill but, unfortunately, it is not.

We’ve heard from the Minister today that KiwiBuild is to increase demand. Well, all I can see in this bill is nothing to do with KiwiBuild other than that it’s certainly going to be securing some really good outcomes for some quite wealthy people, but it’s certainly not going to deal with the average rental person or tenant who’s going to be concerned with this bill and the rental fees.

I think, though, that what it will do is that it will, in fact, hopefully, highlight the fact that more people now are going to have to rent, and more people are going to be very concerned about the fact that they’re going to have to pay more rent because of this bill. I think it does nothing to make life better for renters. What would be better is, actually, if landlords were encouraged and incentivised and congratulated for doing the right thing by their tenants—you know, landlords who actually care about the security of tenants in their homes, those sorts of landlords. Instead, what we see here is a bill that knocks around landlords, that yet again pits landlords against tenants, that sees landlords as the problem.

Housing New Zealand and the Government are already landlords to 63,000 properties. In my opinion, and in my experience as a lawyer but also as a constituency MP, Housing New Zealand is the worst landlord in the country. Housing New Zealand does not charge letting fees. Not charging letting fees does not make a landlord a good landlord. Housing New Zealand has now a waiting list of almost 10,000 families waiting for a Housing New Zealand house. That increase has gone up 1,000 this year, even though there are no letting fees to be banned when one tries to get a Housing New Zealand house.

💬 Greg O’Connor: Someone didn’t build enough houses.

That contribution from Mr Greg O’Connor, who once was important—once was important; no longer is. He’s forgotten that the increases all happened under his Government—[Interruption]

ASSISTANT SPEAKER (Poto Williams): Order! Order! I need to be able to hear the speaker.

Thank you, Madam Assistant Speaker. In fact, the increases all happened under his Government. The waiting list under National went down; under Labour it’s gone up. And that’s going to continue, because this Government hates private landlords, hates people providing a service that they think they should do. They are people who think they are the only ones who can serve the people, and they are the worst at it. Thank you.

Thank you, Madam Assistant Speaker. Look, it’s a real privilege to be able to get this slot, to speak on my favourite topic, which is housing. I said to Minister Henare, “Can I have your 10?” and he said, “Absolutely”, and that’s why I’m here. I’m excited. I wish the member for Papakura wasn’t leaving, because—

ASSISTANT SPEAKER (Poto Williams): Order!

—she made me even more excited.

💬 Hon Members: You can’t say that.

Kia ora. Sorry, Madam Assistant Speaker.

ASSISTANT SPEAKER (Poto Williams): Thank you, members, for helping me with that. Carry on.

Look, can I get down to business before the clock ticks down before I can get anything out. The only thing that was pathetic was that speech, because the most pathetic effort was that in nine long years they did nothing—absolutely nothing—in housing, and they’ve come here today saying that this bill is pathetic. This bill is described by a constituent—I’m proud to be a constituency MP, myself. Letting fees—goodbye and good riddance, and I need to say no more.

But I want to respond, because Minister Twyford and Minister Salesa are quite right. This is all about making life a whole lot better for renters. They say landlords will put up the rents. They say landlords will sell off their properties and exit the market. They say there are safety and security concerns. They say—appallingly—that the public service department Housing New Zealand Corporation is incompetent. I don’t want to put words into their mouths, but, look, that’s untenable. It’s absolutely untenable. “Let’s look at putting up rents!”—there’s no evidence of this. There’s nothing—nothing. There’s no evidence. This is typical of an Opposition who had nine long years to put together a housing programme, but all we have seen are nasty texts, stones thrown, and words that are just absolutely cheap.

This is a Government that is serious, serious, and serious about fixing housing in New Zealand. It’s a continuum. When we look at anything from homelessness through to social and public housing, affordable housing, be it for first-time buyers, to those who own their own homes, down to those who want to add on to their property portfolio, this is a Government that’s got a comprehensive approach, and this is one small part of that.

The sad thing for me and members of the public is really that this is just another case of a real victimisation of the vulnerable. Those who haven’t got much—in this case, a home—like Māori, Pacific, and ethnic people who are at the absolute bottom, who come to my office in Newtown and tell me—I’ve had nearly 1,000. When I was privileged to be able to speak this morning, I had a quick count-up. I talked to the electorate office secretary and asked, “How many inquiries have we had about the Residential Tenancies Act, the letting fees, and the other piece of work that Minister Twyford is doing?” Nearly 1,000. And that’s 1,000 too many. When I looked through them, I said, “How many relate to letting fees?” Nearly all of them. That’s too many. That’s far too many.

Look, let’s go to what they say. I want to refer to a young chap—and where’s the evidence? There’s nothing like a bit of evidence here. I want to talk about Ben Crawford, who is a renter in my electorate. “It feels like there’s nothing you can do, because if you kick up a fuss, there’s always tonnes more people out there who need a place desperately, so you can easily miss out.”—and that’s the crux of the issue. This is a total disgrace, and I’m glad that we’ve finally put in place something to fix it.

Can I say that this can’t come fast enough. Once this is banned, once this is got rid of, then we can focus and get back on track with building houses. [Interruption] There’s confusion over the other side as to what building houses actually means, who they’re actually for, and why we’re doing it. You would have thought, after nine years, there would have been some—the market would have responded—but they didn’t. Then what do you do? You don’t want to intervene, because you can’t tell your mates that they can’t build their houses. I don’t know. It seems chaotic over there.

On this side of the House, we’ve got a plan for housing. We’re organised. This is just one very small but very important part of fixing the crisis that that side put on the nation of Kiwis. God, what a sad day when we have to continually spend this time fixing all these issues, when really we just want to provide good, decent Kiwis decent homes. It’s such a stress. It’s such a stress, when you have to step back to move forward. Look, everything we do is “fix this; fix that”—oh! Madam Assistant Speaker, say no more. I’m really proud to commend this bill to the House.

Well, I must say, I used to watch the House from my television about six years ago, and I used to ask myself “Do these people know what they’re talking about? Do they actually read the bills that are being debated?”, and Paul Eagle, right there, has convinced me that they do not, in fact, read the bills that are being debated, because, quite frankly, what a drivel of a speech that was from the member. I want to say to Ben in Paul Eagle’s electorate that the issue at hand is about supply, and that supply is greater than demand. So if that is the crux of the issue that the member opposite has raised, then surely the solution to that problem is to build more homes. I’m not talking about 18 homes or 24 homes, but I’m talking about massively increasing the supply, which this Government clearly is not doing.

But today, and at this moment, it is a very sad day to be in this House. It’s a sad day because it’s a day where this Government chooses to ban something outright rather than improve the market and improve the efficiency and the transparency. It’s a sad day when 95 percent of the property managers out there in New Zealand—the good property managers—are disadvantaged just because of the small, rogue operators that are operating in this market.

This is a bad bill. I’ve said this to you before and I’ll say to you again: it will not make the life of tenants any easier. As my colleague the Hon Judith Collins said, it’s about whether this bill is going to make it better for the lives of others, and she as well as I concluded that it will not, in fact, do that. It will make people in long-term tenancies worse off under this bill than before the change happened, and there are so many other ways that they could have improved this bill through the process of this Parliament. But, instead, they chose to continue with the ideology of banning rather than improving.

Let me tell you about some of the improvements that we had in the submissions process, and countless numbers of submitters gave productive ideas on how they could improve this bill—how they could improve the objective that this bill sought to adhere to—but that wasn’t taken up in the committee of the whole House. The first was around improving the transparency of fees. We’ve talked a lot about it, and we had it in our minority view that this House could have improved the legislation around the transparency of fees so that tenants know what they’re paying for up front. We also had an idea from the submission process around splitting the fees, because, as we’ve heard, it is not only landlords that benefit from the service but also tenants.

The third idea that came up in the submissions process is around a code of conduct for property managers in the market. Now, this is something that I think we should have considered, and I feel very passionate about it. It is around having a code of conduct for all property managers—including those 2 to 3 percent rogue operators—which should set the standards for letting fees, which would outline what they could charge, and which would have put some standards in place for the code of conduct of rogue operators. We presented this in the committee of the whole House and, again, it was not taken up by the Minister or the Government side of the House.

There were a lot of other ideas, but I just want to say, of course, that in the bill itself, which Paul Eagle has to read—you should read the bill, because it states it’s actually an unlawful act to charge a fee. Fundamentally, we on this side of the House believe that if there is an agent that is willing to provide a service and if there is somebody willing to pay for that service, where is the role in Government in that service? We should be allowing that economic relationship to take place.

We’ve all been there. I’m a renter myself, and I’ve paid a letting fee over six times in the last 10 years. I just think that that side of the House should have considered the fact that they didn’t need to intervene in the market place as it stood. But—[Interruption]

ASSISTANT SPEAKER (Poto Williams): Order! Settle, members.

We have heard loud and clear about the effects of this bill and the unintended consequences of this bill on the public of New Zealand. Let’s run through it very clearly: long-term tenants will pay far more over the lifetime of their tenancy because of increased rents, we will have landlords and property managers who will find workarounds and find ways to vet tenants to make sure that they get the right tenants in place—and we heard that throughout the submissions process—and we will not solve the crisis that Paul Eagle’s constituent desires to be solved, which is around the supply of houses in the market.

We also heard about a Scottish example where they banned letting fees, and the report found that there was no clear evidence that banning letting fees led to rent increases. But just because there was no clear evidence, it doesn’t mean that that was conclusive. We all know that it’s hard to apportion rises in rents to supply and demand or to market changes versus, in fact, changes in letting fees. We heard very clearly from property managers in the sector how they will change their behaviour—and how property managers and owners will change their behaviour—through the cost increase from the bill, and that is simple: they will charge their landlords, and the landlords will pass it on to tenants. So that is very clear, and on this side of the House, we stand firmly opposed to a bill that is a straight-up ban.

Quite frankly, this Government—rather than improving markets and improving outcomes and improving the transparency, they are ideologically in favour of banning things. We saw that with the oil and gas exploration ban. That’s going to have massive unintended consequences on the New Zealand economy.

I just want to say that I will be opposing this bill in the House in the third reading. Thank you.

Thank you, Madam Assistant Speaker. Well, actually, I was about to make this probably one of the shortest calls in history, because I think we’ve debated this issue at the first reading. I heard the arguments from the Opposition—none of it very convincing at that stage. We debated it again at the second reading, and here we are at the third reading, and I’m hearing boring repetition—

💬 Andrew Bayly: Come on, Ronnie. Do the work.

ASSISTANT SPEAKER (Poto Williams): Order! Even interjections must include a member’s full and proper title. Thank you.

Thank you, Madam Assistant Speaker.

So we’re at the point where we’re hearing boring repetition, but then every now and then something different does pop up. The notion of a code of conduct being proffered by the National Party as a means of the market regulating itself—I actually think I heard the same speeches, probably, to be fair, coming out of the mouths of Roger Douglas and Richard Prebble in the 1980s: two people who have been dismissed into the political ether because of their theories, along with Ruth Richardson’s views and Bill Birch’s views on trickle-down. Isn’t it ironic how probably one of the main reasons that we have this wonderful coalition Government made up of New Zealand First, Labour, and the Greens is because of the public’s final conclusion that trickle-down doesn’t work—

ASSISTANT SPEAKER (Poto Williams): I’m afraid I have to call the member to order. We are straying.

—nor does the belief that the market will regulate itself in the way that the honourable member was just suggesting it might. The National Party minority report—

💬 Dan Bidois: What’s the bill called?

You’re a silly boy: the Residential Tenancies Amendment Bill. So what you’re talking about is in the Residential Tenancies (Prohibiting Letting Fees) Amendment Bill, introducing instead of this legislation, Mr Bidois, in line with the right-wing thinking of that party—the ultra-right-wing thinking, looking after its business mates—it would advocate that we dismiss this bill today and we introduce instead a code of conduct. Well, boy, hasn’t that worked so far! When we were in Opposition last year, we suggested many times that that was what was required to get landlords to comply with the basic requirements of their tenants, like making sure that the gutters were replaced when they were rusted out, and like making sure that the House was insulated, but that was rejected by the National Party. So to have the National Party now suggesting that a code of conduct inflicted upon the real estate industry would work, having just told us last term that a code of conduct wouldn’t work, is silly—just silly.

💬 Dan Bidois: Come to the bill, mate.

I am speaking to the member’s comments on the bill and specifically the member’s own referrals to their minority view on the bill. So, I’m simply—

💬 Dan Bidois: We didn’t mention it in the minority report.

So I am simply saying, Mr Bidois—the wonderful thing about these young guys coming to Parliament in their first year and first term: they know a lot. They tell you they know a lot. [Interruption]

ASSISTANT SPEAKER (Poto Williams): Order!

I would say to that member that we would reject—

💬 Hon Member: You used to know something once, Ron.

ASSISTANT SPEAKER (Poto Williams): Order! There have been lots of references to the Speaker throughout the course of this debate. It will now stop. Thank you.

Thank you. We would reject any notion that a code of conduct being run by the industry itself would resolve this issue. We would agree with others who believe that there are some anomalies in the way in which this fee is charged, like, for example, Housing New Zealand. Housing New Zealand doesn’t charge such a fee, and yet Housing New Zealand is still able to manage the large number of applicants for houses that it has in an environment where demand exceeds supply.

💬 Alastair Scott: That’s why they don’t need the letting fee.

What stands out to us, Mr Scott, is that this is a wonderfully convenient filter put in place to ensure that the types of tenants that these landlords and these agents don’t want to have to deal with are eliminated from that housing market. That is why we end up with people living in vans during a National term of Government.

💬 Alastair Scott: More under your Government.

Mr Scott, that is why we ended up with people living under bridges, and that is why, fundamentally, we disagree. It’s not hard to disagree, because whenever we raised this issue in the last term and we talked about there being a housing crisis, that Government—Mr Scott’s Government—said there was no housing crisis. It wasn’t a crisis to have people who were locked out of the housing market, who couldn’t buy a home because they’d become unaffordable. Through various mechanisms such as this, designed to filter those low-income families—filter those possibly not-so-acceptable families, to certain people—out of their market, they would introduce a fee such as this.

Not based on actual costs of leasing the property, not based on an analysis of the expenses incurred—just a carte blanche one week’s rent regardless of whether the home was in West Auckland, South Auckland, Pakuranga. You know, regardless of where it was, it was just one week’s rent. That flies absolutely in the face of all of the assurances that I ever hear from business people that they are analytical about their charges, that they have pre-set margins that they adhere to, and that they trade fairly. What this just smacks of is a rort; (1) a rort, and (2) a deliberate filter put in place to eliminate people they didn’t want in their houses. Well, that is not how one cares for the well-being of the people of this nation.

I’m proud of the fact that this Government has a housing policy. It has got KiwiBuild running. It has set its goal on building more community homes, catering for the homeless, catering for the people who have been locked out of the Auckland market through rampant property sales to offshore investors where they’ve driven the prices up through the roof and made it impossible for families who have a collective income of $160,000 a year to buy a house. Well, we have overcome that now, and we’re on track to put right that which was so badly run for the last nine years. New Zealand First is very proud of this.

💬 Andrew Bayly: Well, we’ll be watching you.

We support this. Well, I only hope, sir, that you are watching—not the Assistant Speaker—for a very, very long time from that seat over there. Thank you, Madam Assistant Speaker.

Thank you, Madam Assistant Speaker. I stand in opposition to this Residential Tenancies (Prohibiting Letting Fees) Amendment Bill in its third reading. I would like to start my comments by saying that this bill is going to put a lot of pressure on the tenants, and definitely it is going to affect some of the people in the business.

💬 Mark Patterson: Really?

Yes, you can listen to my logic too.

My understanding is there is no free lunch anywhere in the world. So if you are going to stop having this letting fee being paid to the property agents, they are going to get this money from somewhere else, and obviously they will ask for landlords to pay the letting fee so that they can continue on with the business.

The Minister the Hon Jenny Salesa mentioned that it is only the landlords who get the benefit of the letting fee being charged from the tenants, but the benefit goes to the landlords. I totally disagree with that, because the reason is those agents get the properties from the landlords, which they put up in the market and then the tenants can get into those properties and have their houses. So it is totally wrong to say that the tenants don’t get any benefit out of this.

As I said, there’s nothing like a free lunch, and definitely when landlords will have to pay this kind of money to the agents, definitely they are going to increase the rents. So it is going to affect, again, the tenants, and we have already seen in the past 12 months that there has been an increase of almost 6 percent in the rents, from $400 to $425, which is almost a $25 a week increase in the rent. I can assure you that I have discussed this issue with some of the very experienced people in this industry, and everyone says that it is not going to make any difference. There is no evidence that this will help the tenants in any manner.

If we take the average of about $600 rent, which is prevailing in Auckland, it means they will have to pay almost $10 to $15 extra every week as their rent to the landlords, because the letting fee will be passed on to the landlords and they will be ultimately passing it on back to the tenants, and that is going to hurt their back pocket.

The previous speaker, the Hon Ron Mark, mentioned about the minority view by National. I totally agree that there are more ways that we can help the tenants rather than this. The Hon Ron Mark also mentioned that we did not do anything, but I would like to remind him that during the last term we brought in legislation that was going to ensure that all the landlords would have to ensure that their houses were insulated so that the people living in those houses could have the benefit of good health. So that was part of our legislative programme last term where—I can’t remember, but definitely New Zealand First must have opposed that legislation.

Before I conclude, I want to give an assurance to this House that this side, the Opposition, is very cooperative. As you must have seen earlier today, we supported a good bill on child poverty. So wherever there is good legislation, this Opposition will support it. Wherever there is bad legislation, we will oppose it. With these words, I conclude my contribution.

I mean, it’s just the Opposition going over and over and over the same tired, tired, tired arguments—or the excuse, at least—for why they are voting against this Residential Tenancies (Prohibiting Letting Fees) Amendment Bill to prohibit letting fees, saying that it will not benefit the renters. As if they actually care about people who rent! In saying that, they have put up nothing to suggest how we actually readjust and fix the power imbalance which is currently absolutely the case for people who rent in this country. So that’s why I stand, thinking you cannot—sorry; not you Madam Deputy Speaker. The Opposition’s arguments are so weak and flimsy that it’s actually not about adjusting the power imbalance that is currently in place that is having incredibly harmful impacts on people who rent, which is going to increase more and more. It’s over half of all New Zealanders, but of course for Pacific, for Māori, for people with a disability, it is far more of those populations who currently rent. So I cannot at all take seriously any of the hackneyed arguments that are coming from the Opposition as to why they are opposing this residential tenancies amendment to make it unlawful for a letting fee to be required to be paid.

Again, this bill on its own is one part of an overall programme to change the way we think about renting in New Zealand, in Aotearoa. Renting needs to be seen as a dignified option. Some people don’t have any other option—far too many—so we need to change how we see renting as a culture in this country, that it is not a second-class citizen approach, that people who rent have as much right to be able to live with dignity and security and put down roots in their community whether you rent or own. That is actually what is at the core of this bill to remove the letting fee requirement.

And, yes, it is harrowing for most people to have to gather all of that cash upfront just to be able to try and find a place. I mean, that’s aside from all the other structural discriminations that happen in the renting process. That’s aside from all of that—just trying to gather together all the resources that are required to even think about looking for a warm, safe secure home to live in, to raise whānau in, to be able to be part of a community in. So this is absolutely essential that we keep removing the barriers, including letting fees. We cannot go forward. We cannot go ahead with transforming how we see renting in this country without this pertinent, vital step. So I’ll be very clear about that, and the Green Party are particularly pleased to see this, because in 2014 it was one of our election priorities as part of our overall “Every house is a home” announcement. In that was the removal of the obligation on tenants to pay letting fees.

Again, in 2016, Metiria Turei’s member’s bill made it to the floor in here—the Residential Tenancies (Safe and Secure Rentals) Amendment Bill, which offered a raft of changes to improve renting situations, including, again, to remove letting fees. So we are absolutely clear that this is an essential part of ensuring that people who rent are given a fair deal, and many landlords are also clear about the positive outcomes of ensuring that tenants get a fair go. Those landlords will continue to be great under this legislation. What we are simply doing is just trying to correct it a little bit—just trying to understand that people don’t need an extra challenge. They really don’t. They don’t need extra hardship.

This needs to be seen alongside a whole raft of other necessary changes, which, again, this Government is picking up and running with. So I go to the side a little bit, Madam Deputy Speaker, but only to address the debates from the members on other side of the House who are saying this on its own isn’t enough. This isn’t on its own—that’s because this isn’t on its own. It’s going to sit alongside healthy homes conversations and changes, and of course the Greens have been very clear that we would insist on a warrant of fitness. This bill is going to sit alongside the residential tenancies review, and particularly look at how we give secure tenancies for families, for people to rent. Of course the Greens have also been very clear we’d like to see rent controls which, in part, would help to address the very reason that the Opposition are saying they will not support this bill.

I just have to say I do take issue with the ongoing arguments coming from the Opposition as if they genuinely care, when in actual fact they are putting up no real solutions to address the power imbalance—that would have an impact on their investors and their speculators, who they’re quite happy, and have always shown, to want to protect. So they are using people who rent as an excuse for their debate. But I see right through that, and will continue to call that out.

So, yes, we do need overall changes, alongside removing letting fees, to ensure even though there is no clear evidence that it will actually increase rents—this removing letting fees—even though there is no clear evidence, and if there is any evidence it is minimal—

💬 Louisa Wall: 2 percent.

2 percent, Ms Wall. But that is why we also need to continue with the work to sit alongside this to ensure that we are getting prosperity for more than just the wealthy few. That’s our responsibility in this House.

And so it was, I thought, a relatively short contribution that I was going to make, and I think that it’s incumbent on us to remember that this work is part of a long, enduring change that we want to see.

💬 DEPUTY SPEAKER: The third reading is a summing up of the bill. I know you can refer to other matters, but not at length.

Thank you, Madam Deputy Speaker. So I agree with this. We’re very pleased to see this. Removing letting fees is something that we have long called for, and we will continue to do the work to make this bill part of those overall measures. Thank you.

Thanks very much, Madam Deputy Speaker. I stand here today in opposition to the Residential Tenancies (Prohibiting Letting Fees) Amendment Bill in its final reading.

We’ve heard some very interesting contributions from the Labour-led Government today about the banning of letting fees, and, in her speech, Minister Jenny Salesa for the first time admitted that there could be an increase in rentals. This has been argued continuously across the process—that the banning of letting fees would not increase rents. Well, the Minister actually admitted it today—that there could be a few dollars’ increase in rents as a consequence of this bill. Now, it may not sound much to have a few dollars, but even if that’s, say, $5 a week, those tenants who are the best tenants, who settle into long-term rentals of maybe over two years—they’re the ones that are going to be penalised the worst, because at $5 a week, or probably $500 over their tenancy, it is going to be an added cost to them. It may not have been the upfront cost, but it’s certainly going to add to the cost over the term of their tenancy.

The Hon Judith Collins made a valuable contribution to this debate earlier this morning, and she referred to the standard of rental properties. There is a cause and effect with every decision that is made, and what is going to happen here is we’re going to take the margin for the landlord off the rental properties. Now, of course, the landlord is then going to have to find ways of cutting costs. I am almost going to guarantee that what we will see is the downward slide in standards in rental properties, and we heard it today from the Hon Judith Collins. We start to get budget equipment installed into properties, like the ill-working locks that anyone can push their way into in a Housing New Zealand home. So those increased costs reduce the profit margin for a landlord.

We heard from submitters, and even the real estate people, that if you buy a rental property in one of the main areas in this country—say, Auckland, Wellington, or maybe Christchurch would also have been at one point. But if you buy in those main areas—in those high-pressure rental areas—then you are not likely to cover your costs—

💬 DEPUTY SPEAKER: Not me—not me.

—oh, excuse me—then the landlord is unlikely to cover his costs simply from the rental that he attracts for that property. So there is a real risk in owning rentals.

Now, we heard through the process that 90 percent of rentals are owned by mum and dad investors, and we have also heard from other speakers from the Government benches today about the impact that having more housing stock will have on the market. Well, we have been waiting. We were promised last year that there would be 10,000 homes a year built to take the pressure off the rental market, but, actually, getting 18 off a developer is not giving any comfort to the sector.

Now, these mum and dad investors who employ the property managers to let their properties, they are the ones who are being spooked by all of the regulation that is coming down the pipeline at them. We’ve got this ad hoc prohibiting of letting fees—now, I’m not sure whether they’re simply trying to find work to do on the Government benches, or whether they’re just simply making ad hoc decisions and wasting this House’s time—but we’ve got a huge review of the Residential Tenancies Act coming down the pipeline, the Healthy Homes Guarantee Act, which is going to add more pressure to landlords, and then there is the risk of having the capital gains tax.

I think that this is a very poorly thought through bill. I think the unintended consequences are going to become obvious very quickly, and I do not support this bill.

Tēnā koe, Madam Deputy Speaker. Thank you for this opportunity. This is a very specific bill with some great outcomes for the people of my electorate in Tāmaki Makaurau. We’ve heard in this House how we can leave things to the market. Well, I often leave a lot of my opinion to the market—that’s the Ōtara market, the Manurewa market, the Māngere market—and the voices are very clear there that this bill will help the people of Tāmaki Makaurau, the very cohorts in our community that the member Marama Davidson has spoken about. This bill is very specific, and I take great pride in recommending it to the House.

Thank you, Madam Deputy Speaker. I stand to take a call in this split call on the Residential Tenancies (Prohibiting Letting Fees) Amendment Bill that’s before the House. The House already knows that we are opposing this bill. The reason why we’re opposing this bill—I know the Hon Peeni Henare in his speech talked about the fact that this is a great day for his electorate. I’m not so sure that this bill will do greatness. It may do some good things, but I’m not sure if it will do the great things that it’s been intended to do.

The reason I preface that comment is because in all the submissions that we had, the discussions were around the issue around the impact of the letting fee. The example that was given was actually from out in Scotland. There’s an organisation called Shelter, in which they actually remove letting fees from their current situations of residual tendencies and a security of tenure of homes over in Scotland. But what’s been proven, when that happened, is that over the last five years the impact on the sector has been the lack of residential properties available for those, which has meant that there’s been an increase in rent rises. So to use that as an example, I think there’ll be—

💬 Louisa Wall: England and Wales are going to do the same thing.

Wales—they haggled over it, but what they did is they actually set a cap. So they’ve set a cap on that. So transparency was one of the issues, and I know that Louisa Wall is talking about that—other examples have been set there. So it’s not the silver bullet. It’s not the issue that I think will bring greatness to the residential tenancy market; it may bring some good things, it may bring some relief for a certain period of time.

I suppose the concern on this side was this: why is it that this was introduced now when it’s only a small portion of an amendment to a change to the Act, when there currently is, through consultation, a total reform of the Residential Tenancies Act as it is? Why was it not left until the point of time in which, through the whole of the Act, there could be the conversation so that this small proportion could be included in the whole? So we can only surmise on this side that it is because it’s been part of the 100 days in which they could have a tick-box to say that “We’ve done this.”

So while we say that we oppose this, it’s on the principled basis that, actually, there could have been a better job that could have been done by the current Government of the day. However, it is what it is. We oppose this bill. We don’t believe it will achieve the great things that they are talking about. It will achieve some relief, but in the long term, I think it will have some unintended consequences for the whole sector. I commend my views to the House, but oppose this bill on behalf of us as a party.

I stand very much in support of this bill. It’s been interesting listening to the debate today, because so many of the issues that we come here to fix are around housing. We talk about health and we talk about so many of the other issues that exist in our society, but so many of them come back to housing—to making sure people have somewhere to call home.

Now, the new Opposition MP Dan Bidois talked about the fact that he’s paid his letting fees six times in the last several years—I think he said three years. If that’s not evidence of just how unfair this is, I don’t know what is.

Just the unfairness of this: just take the situation where there are two properties for let, and that’s likely today because of the shortage of properties—and I won’t go into that. We had the member from Papakura absolutely taking the opportunity that she seems to on every occasion to rubbish KiwiBuild and to try and sort of build a case against it—as if anyone over there or anywhere could build a case against a programme which is designed to put more houses on the market—and that’s what this is about. Of course, I realise—coming back to the bill—that it means that the more houses we have, the more there will be to rent, and this is the whole point.

So, going back to the situation where you have two people lining up and probably a hundred people looking for flats, one of those flats is being rented privately, and the person who is successful there—who will, no doubt, be the best tenant—will not have to pay this fee, but the person who is going to where the property is being rented through an agency will have to pay this fee. So what we’re actually doing is punishing the best tenants, in this particular situation. They are the ones that are going to end up having to pay. The best tenants are the ones that are going to end up having to pay more, and I presume my acquaintance Mr Bidois is one of those good tenants. He has had to pay that much more money than if he had gone private. So that’s the unfairness around us.

The other thing too is, of course, we’re going to now get a generation of renters. I mean, the reality of it is that we, through KiwiBuild, will be doing our best to ensure—we have seen evidence just this week of people who are earning and who are out of the market. Unbelievable, isn’t it? People who actually have two good incomes still can’t get into the market—and I’m sure those who are shaking their heads across the House, they go to the market. Already, we’ve talked about how they go out meeting their constituents. They will know this to be a fact. They will know that they have people on two good incomes, often with a good deposit, who are locked out of the market, and these are the very people we’re going to bring back in.

Coming back to the point of the bill, they are the people who even with that will, no doubt, be a generation that are going to have to rent, and what we have to do is ensure that we look after the rights of those people. We have to be flexible as a Parliament. We have to be flexible, as legislators, to make sure we’re making laws now that are going to be relevant for the future.

I’m reminded of a friend of mine who lived in a mountain village in Switzerland, who had rented. Her mother had rented. They had rights. There was an expectation that they would be able to remain in this house till the day she died—which was, in fact, the case—because most of the people in that village rented. Again, this situation had existed and they had made sure that they took into account the rights of those people, and this is what we’ve got to make sure we do here. So, going back to the bill, certainly, we have to be careful—we know that there are poor tenants and we know there are going to be problem tenants, but we’ve got to make sure that our legislation is not punishing the good tenants, and that’s exactly what is going to end up happening if we continue this.

One of the points brought up was why we don’t wait to do a full review of the Residential Tenancies Act. Well, if we wait till we do a full review, that will be another two or three years—again, depending on how long it takes, and certainly the for legislation that will go with it—before we actually get this situation rectified. We are in a situation where the majority of younger people hitting the market are going to be renting. They have no more rights now than they had 15, 20, or 30 years ago, and yet the situation—the rental market; the whole housing situation they’ll be going to—has changed completely. So, as legislators, we owe it to them to make sure we’re creating an environment that takes into account that a new Generation Rent is coming on stream.

So I stand here proudly to recommend this bill to the House. Again, it’s not going to be an instant quick fix, but it’s going to be one of those trends that is going to ensure that we are adapting to the new market which we are in now, which, sadly, is Generation Rent. While we, as this Government, will build cheaper and while KiwiBuild will succeed—I saw the final-term member for the Wairarapa there, yelling across the House that KiwiBuild hasn’t achieved anything. All I’ll say is to watch this space, because I’m proud to stand here and I know that while Rome wasn’t built in a day, we are still admiring—

💬 DEPUTY SPEAKER: Yes, but we’re not talking about KiwiBuild.

—some very fine buildings called the Colosseum. So I recommend this bill to the House.

Thank you, Madam Deputy Speaker. I’m pleased to take a call at the third reading of the Residential Tenancies (Prohibiting Letting Fees) Amendment Bill. It’s a short and straightforward bill. As we all know, it amends the Residential Tenancies Act to remove the ability for landlords and agents to charge letting fees.

I’m only going to take a quick call on this, but I would like to point out that, in my view, this bill perfectly sums up the Government’s level of competency and capability. They don’t like something—well, just get rid of it. If we just ban it, put it over there—poof! It’s gone. Don’t worry about it anymore. It reminds me of playing that game with a baby where you put their hands in front of their eyes, and everything disappears and it’s all gone and it’ll all be fine if we just get rid of it. They’re incapable of coming up with a nuanced approach and actually understanding all of the issues, because what they tend to do, and have done in so much other legislation that’s come before this House, is rush it. They don’t do any proper consultation. In fact, I think in this case, the regulatory impact statement actually said that there hadn’t been proper consultation, and the full extent of the impacts could not be identified. And it’s done in so many other bills, and it’s done here again. That’s why we don’t have a nuanced approach. We have this approach of if we just ban it, then everything will be fixed and everything will be fine.

The point is that they can’t understand that, actually, there are always implications when you do this kind of thing. They can’t understand that maybe there will be some unintended consequences. We were at pains to point this out through this whole process, as were the submitters. Basically, they said that there is a reason for these costs. There are costs associated with the renting out and renewing of tenancies, and those costs must be borne.

As the National Party, being a completely capable party, we did come up with some suggestions in our minority view, where we said that a sensible alternative measure would be to make these letting fees more transparent, to ensure that they can be reasonably charged, that renters would understand what and why they were being charged, and that there would be a reasonable cost charged, rather than just banning them outright. But instead of allowing landlords to charge these letting fees upfront, renters will now most likely be—as we’ve pointed out and as submitters have pointed out—paying higher rents throughout their tenancy. So, in fact, what we end up with is a position of unintended consequences where renters will, over the lifetime of their tenancy, be paying far more than they would have with this upfront cost. As my colleagues have mentioned, we’ve already seen a $25 per week increase in rent since this Labour-led Government came into power. It’s happening, and it’s going to continue to happen.

One of the other things that we pointed out was the fact that we don’t understand why the Minister has forged ahead with this badly designed bill instead of wrapping it up with the Government’s sweeping residential tenancies review—review number 52 of 170, I should point out. They’re rushing it through with a commencement date of 12 December, which is some sort of poorly planned Christmas present to tenants, which will actually make them worse off in the long run.

As I said earlier, this bill reminds me so much of other bills that we’re dealing with—airy-fairy, feel-good, put it out there, it sounds really great—like the oil and gas ban. But the reality is the Government haven’t done their work. The regulatory impact statement pointed that out in this case, like it did in the oil and gas case as well. They are incapable of putting together a nuanced approach that actually looks at the potential outcomes in coming up with a much better policy rather than just banning it and pretending like everything is going to be OK, and that is why we are opposing this bill. Thank you.

Tēnā koe e Te Māngai o Te Whare. Tēnā koutou katoa. This is the third reading of the Residential Tenancies (Prohibiting Letting Fees) Amendment Bill. It was heard by the Social Services and Community Committee. They received 187 submissions and heard 27 oral submissions.

I’m not a member of that committee, but it’s been interesting preparing for this third reading debate today. What I’ve discerned is that the Tenancy Services actually hold 425,000 bonds. And this is really interesting—

💬 DEPUTY SPEAKER: It might be, but is it to do with the bill?

Of 425,000 bonds, 164,000 of those are in the name of a property management company or a landlord. Under the legislation, private landlords who do not use a letting agent—and I’ll repeat that: private landlords who do not use a letting agent—cannot charge letting fees. So, currently, for 60 percent of the properties where bonds are held by Tenancy Services, letting fees are not charged. So, essentially, all we’re doing is making sure the other 40 percent—or the 164,000 properties—that have property managers who are also letting agents can now not charge a letting fee. So, in essence, what this bill is saying is that a landlord is a landlord is a landlord. It’s their property, it’s their right and responsibility if they want to let that property, and, as such, it’s their responsibility to pay letting fees.

I want to highlight some of the research and evidence that was presented to the select committee about why that is a fair thing. It was presented by people like Kate Day from Renters United, who said that the letting fee practice was unfair, onerous, and not a tenant’s responsibility. That’s what this bill actually reinforces 100 percent: it’s not a tenant’s responsibility; it’s a landlord’s responsibility.

So I want to tautoko Minister Twyford for bringing this piece of legislation to the House. I do want to acknowledge, however, that there is a review of the Residential Tenancies Act, and the select committee made some recommendations regarding that, but this was a priority for us. I also noted that the select committee don’t want a three-month commencement date; they want it to start on 12 December 2018 in recognition that most of the tenancies happen over this Christmas period: November to March. So there is a rationale behind this piece of legislation.

The Opposition have tried to paint this as a waste of time and that we don’t have any rationale for it. Well, can I say that, actually, it’s an absolutely responsive piece of legislation, and the Minister, in doing so, has said that if a property owner—somebody who has an asset—wants to advertise their property, wants to have open homes, wants to have someone review applications, wants to prepare tenancy agreements, and wants to have a property inspection, then, in fact, that is not the responsibility of the renter; it is the responsibility of the landlord. That’s what this piece of legislation makes crystal clear.

We have followed Scotland, who did this in 2012, and I must say that, for the UK Parliament, this will also ensure letting fees cannot be charged in England and Wales. And why? Because of the comprehensive evidence about how unfair and unjust this is, from organisations like the University of Otago—their Housing and Health Research Programme: letting fees make tenants stay in unhealthy homes for longer because it would cost them to move. From The New Zealand Rental Sector, which was a Massey University SHORE & Whariki Research Centre / University of Otago study: upfront, those who can least afford letting fees are likely to have to pay more. They were really clear that renters should only have to pay rent and bond.

This whole letting fee practice has been borne by the renter, and what this piece of legislation says is that, actually, it was never their responsibility, just as is contained in the legislation, where private landlords who do not use letting agents cannot charge letting fees. So what that will mean is that of the 425,000 bonds that are now held by Tenancy Services—which we presume are 425,000 homes servicing 425,000 families—now those renters, those families, those people who are living in those houses do not have to pay letting fees. I support that 100 percent and commend this bill to the House. Kia ora.