Residential Tenancies Amendment Bill

I move, That the Residential Tenancies Amendment Bill be now read a first time. I nominate the Social Services and Community Committee to consider the bill. At the appropriate time, I intend to move that the bill be reported to the House by 22 June 2020.

The Residential Tenancies Act 1986 came into force over 30 years ago to govern a rental market very different to that of what we see today. Since 1986, homeownership rates have declined and 609,700 New Zealand households now live in a rented property, which by last year was an estimated 32 percent of our population. More people, including families and older people, are renting for longer or even for life. The 1986 Residential Tenancies Act has not reflected this reality, and there are still issues with the stability and insecurity of rentals, which can have negative impacts on health, education, and employment. Through this bill, the Government is delivering on its promise to over 1 million New Zealanders who rent that we are making the rental market fairer and more secure. It sits alongside this Government’s other improvements to renting, including the banning of letting fees and the healthy homes guarantee.

Comprehensive public consultation from August to October 2018 helped shape this bill. There have been frank, robust, and at times difficult conversations with those representing property investors and landlords’ advocacy groups, but what we are talking about in these reforms is not just much-needed protections and security of tenure for tenants but also clearer processes and certainty for landlords.

The views and perspectives of over 4,700 submissions from landlords, tenants, interest groups, and public or community housing providers have gone into shaping this legislation being introduced today. I would like to thank all of those who have contributed over that time and engaged in this important process.

This bill recognises the balance between protecting a landlord’s interest in their property and ensuring tenants receive fair rights for the rent that they are paying. This Government believes that every New Zealander, including renters, should have a safe, warm, and dry home to call their own. This Government appreciates the contribution that landlords make in providing these homes. These changes are designed to have the least possible impact on landlords.

This bill will improve tenants’ security by removing no-cause terminations to end a periodic tenancy agreement, but still recognises landlords’ rights. For instance, under these reforms, landlords will still be able to terminate tenancies for a range of fair and justified reasons, such as antisocial behaviour, or someone who is at least three weeks behind in their rent. If they want to change the use of the premises or to redevelop it, that will also be a reason. If they want to prepare it for sale, or move themselves or a family member in, all of these reasons give a landlord justification to terminate a tenancy, but it is simply not appropriate in 2020 for a person to be required to leave their home without knowing why.

The bill mandates that fixed-term tenancy agreements must become periodic tenancy agreements upon expiry, unless both parties agree otherwise, or the justified reasons set out in the bill apply. This will flatten the inflated demand that has been created in some regions by tenancies all ending at the same time.

The bill makes rental properties safer and more livable by setting out clear processes for tenants to make minor changes to their rental accommodation. These changes could be as simple as brackets to secure furniture and appliances against earthquake risk, baby-proofing the property, hanging pictures, or installing visual fire alarms and doorbells for hearing-impaired tenants. Landlords will be able to set reasonable conditions when agreeing to these minor changes.

The bill also includes additional proposals to improve the process for the installation of fibre in rental properties. Where a tenancy or property does not already have ultra-fast broadband, and a tenant requests it, landlords will be required to permit and facilitate the installation of ultra-fast broadband unless any of a range of exemptions apply—for instance, where fibre could compromise the structural integrity or weathertightness of the building, the landlord could decline the request. The costs of installation would be the tenants’ responsibility, and not the landlord’s. This amendment will help tenants obtain installation of fibre in reasonable circumstances, and will further the Government’s roll-out of ultra-fast broadband.

The bill prohibits the solicitation of rental bids by landlords, and this includes the requirement that landlords must specify a rent amount when advertising a rental property. The bill also limits rent increases to once every 12 months, instead of the current provisions of six months in the Residential Tenancies Act as it stands.

In 2016, the tenancy compliance and investigations unit was established to enforce rental rules. This bill provides the regulator, which is the Ministry of Business, Innovation and Employment in this case, with a suite of new tools to take direct action against parties who are not meeting their obligations. The bill also increases the existing financial penalties in the Residential Tenancies Act, and this package of amendments will improve compliance with the law.

I’m also aware of situations where tenants have a justifiable cause to go to the Tenancy Tribunal, but are unwilling to do so because they may be blacklisted by future landlords. For the tenancy system to work, people should feel confident that the Tenancy Tribunal can be used without being targeted. The bill clarifies the situations where identifying details and other sensitive information can be anonymised. This includes automatic anonymity for a party that has been wholly or substantially successful in taking a case to the tribunal.

We are mindful that these changes need to modernise the law and correct problems in a way which is proportionate and places reasonable requirements on landlords and tenants, and which will endure changing market characteristics. But these changes are needed because the reality of renting has changed over the past 30-plus years. We’re talking change where, as I said at the start of the speech, the reality now is that around 32 percent of Kiwi households live in rental accommodation, whereas in 1986, it was 25 percent. We’re talking about change where now around 43 percent of Kiwi children live in rental accommodation. Back in 1986, it was about 26 percent.

I know there are opposing views on this proposed legislation, and I welcome those being discussed at the select committee process. But the changing nature of renting in New Zealand means our rental laws need to change as well. They complete the package of improvements of rental markets that were planned for this Government’s first term, and which include the introduction of the healthy homes guarantee, to ensure that all rental accommodation is warm and dry.

I look forward to a time when, thanks to our reforms in this bill, renters in New Zealand can make a rental house truly a place to call their home. To finish up, I would like to thank both the New Zealand First Party and the Green Party for their discussions to the point to get to this first reading—notably Marama Davidson and the Hon Ron Mark. I commend this bill to the House.

It’s a pleasure to lead off the Opposition position in this debate on the Residential Tenancies Amendment Bill at its first reading, and I certainly want to preface that it’s a pleasure to do this because this bill directly affects me as a renter. I am one of the only renters in this Parliament, so it gives me a special privilege to be able to give a perspective on how this legislation is going to impact renters as well as landlords.

Now, this is yet another shot in the guts for landlords. At a time when we all know there are affordable housing challenges in New Zealand, this bill is going to pile on the costs for landlords and reduce the amount of available rental property available. We can already see that the KiwiBuild has been an absolute failure for this Government. We’ve already seen that the Government, through Kāinga Ora, or Housing New Zealand, has started to buy up private developments; therefore, crowding out first-home buyers.

This Government is now so bereft of ideas that their solution to this is simple: “Let’s pile on the costs for landlords, and keep renters in their homes.” Well, the National Party disagrees with this approach, and we disagree on the simple basis of facts. Rents are up in Auckland by $50 since this Government came into office. Housing prices are still going through the roof. The social housing register—

💬 Lawrence Yule: 14,000.

—has increased by 14,000, my colleague Lawrence Yule has just made me aware. So these proposed changes are going to do nothing for the housing affordability challenges.

Let me run through these challenges for the people at home. So part of the proposed changes in the residential tenancies is going to be increased regulations around tenancies. It gives tenants the right to add fittings and change the household. It gives renters the ability to have a pet and, as a renter, I’d certainly like that, but I think that this is a step too far.

It also beefs up the regulators to, in fact, intervene and fine and punish landlords who are not complying with the legislation. It also increases the penalties for landlords that breach the standards that are outlined in this law. It also restricts rental increases to a fixed amount, and also proposes changes to the Tenancy Tribunal as well.

So all of those changes—when you add it up, what is this going to mean for your average mom and pop landlord? What it’s going to do is it’s going to pile on the costs. It’s going to make it actually less worthwhile to lease or rent your house out, so it’s going to reduce the supply of rental properties on this market. It’s, in fact, not a carrot but much more a stick approach to landlords. It’s going to raise the costs for renters like myself and the many thousands of Aucklanders who rent throughout this great nation, in not just Auckland but throughout New Zealand. It’s going to raise the costs even more on those that rent.

Don’t take my word for it; take the Real Estate Institute’s perspective on this, who also says that this is going to pile on the costs, and for many landlords it’s going to be too much. So what you’re going to see, in fact, is landlords just say “Look, I’m going to give up. I’m not going to rent my house out.”, and that is the exact opposite of what we want in this country.

So National’s position is, of course, that we strongly oppose this legislation. It is going to add on extra costs for landlords. It’s going to reduce the supply of rental properties throughout New Zealand. These changes do nothing for the long-term challenges of housing affordability in this country.

You just cannot trust this Government when it comes to delivering on affordable housing. Two years ago, this Government said that they would build 10,000 homes a year. Well, how many homes have they built—200, 300? You cannot trust this Government on housing.

Second—and I do want to raise this important point, and it’s in relation to the process of which this bill is being put through Parliament. Now, the Minister in charge, Kris Faafoi, has just outlined a shortened select committee process, from six months to, I believe, four months and two days. We know that this is in a rush to get this bill into legislation before the next election. Maybe it is because they are, in fact, not confident that they are going to win the next election. Maybe it is because they want to demonstrate that they have done something in relation to housing affordability after sitting on their hands for the last 2½ years and doing nothing.

Since I have been in this Parliament, I have witnessed attempts to curtail democracy for political gains. It is very important for the public of New Zealand that we have the rigorous process surrounding the way in which our legislation is scrutinised. So I would ask that, in fact, the Minister reconsiders the shortened select committee process—

💬 Dr Duncan Webb: Speak slower!

—and take it back to six months. Let’s analyse this, Duncan Webb. Let’s analyse this in a select committee fashion. Let’s get everybody who is affected by this bill, renters and landlords alike, to see what they have to say on this bill.

So it is a pleasure to lead this debate, opposing these radical changes that are not necessary for New Zealanders that are going to pile on the extra costs for landlords. National will oppose this bill.

Thank you, Madam Speaker. Thank you for the opportunity to give a contribution in the first reading of the Residential Tenancies Amendment Bill. It’s an absolute pleasure to stand this afternoon to talk about this bill, because the rental market has changed significantly, as we heard in the Minister Kris Faafoi’s opening comments.

I know that the number of people renting in Northland has continued to increase. I was perplexed when a lady stopped me outside of the Kaikohe Warehouse and she said, “Willow, I have had over 50 people apply to live in my one rental property in Kaikohe. How do I say no to all of these people? How do I even choose which needing and deserving family to give this one home to?” So I know that more people in Northland are renters and not homeowners, and that is a real challenge for us.

As a Government, we believe that everybody should have the access to a safe, warm, dry, and secure home. So this Residential Tenancies Amendment Bill is important for those families whose realities, whose situation, is that they are going to be or have been and potentially could be renters for life. So I’m really pleased by the series of changes that this Government is making to make our rental accommodation safer, warmer, drier, and healthier, because that is lifesaving legislation that we’ve introduced.

What this bill is proposing to do is to give people more security in their tenancy where their families are in the position of being renters, so I’m really pleased to see that you can’t terminate without good reason. I think this is important, especially when there is so much demand on rental properties now days; there’s such a power imbalance between landlords—

💬 Angie Warren-Clark: Bidding war.

—and renters. There’s a bidding war. In fact, we’re prohibiting the ability to auction off what price of rent it is that people are going to pay. So I think that these are really important safeguards that are being introduced in this legislation.

I think about the over 43 percent of our children in Aotearoa who are living in these homes. It’s really pleasing to see that families are going to be able to make minor changes to make their houses safer and more secure. In fact, one of the references that was made was to even being able to baby-proof a house. There are just some really practical suggestions to enable those who are in the renting situation to make this a home for them and their families in consultation and conversation with their landlords, so I think it’s a very humanising aspect and whānau-friendly aspect of the legislation.

I don’t want to take the full amount of time as there are others who are going to be speaking after me, but the thing that I wanted to conclude on—and I found this quite interesting—is keeping up with the advances in technology in the modern world and actually being able to install ultra-fast broadband into a lot of these properties. You know, when I looked at that, I hadn’t realised that this has potentially been a problem. When I think about it in Northland, we’re still receiving the roll-out of that up there. It’s just a really practical thing that we can put in here that is going to give those families and those communities access to the best technology. So I think it’s a very forward-thinking piece of legislation, as well. With that, I commend the bill to the House.

There could be nothing more stark in the difference between the two main political parties than in this bill. I stand to speak to it on the basis that this is everything about regulating, taxing, piling on the costs, redistributing things—it’s all about that—and it’s got nothing to do with what actually works. We strongly oppose this bill.

I want to give this House some examples that I’ve seen in my own electorate already. So as you push the costs up, landlord after landlord is exiting—is exiting—and selling their house. Sure, they’re going to first-home buyers, but the net pool of rental accommodation in my electorate is, fundamentally, declining.

Yes, this Government is very proud of their meagre attempts in the housing market. They told us today in question time that no Government has built more State houses than they are. Great—that’s a laudable goal—but when the market on the other side is simply declining and the private sector market provision is declining because of costs, because of compliance, and because of regulation, the net result is that we’re going backwards.

I listened to the last speaker, Willow-Jean Prime, talk about “It’s going to be much harder to terminate tenancies.” Anybody can go and talk to a landlord. That is such a turn-off for them—that is another example of why they can’t be bothered. If they have difficult tenants or they have a change in circumstance, all we’re doing is making it harder for them to stay as landlords in the rental market.

I give you examples in my own patch already. It was denied by the Minister of Housing in the House today, but I believe that her response was fundamentally wrong. In my electorate, Housing New Zealand is buying houses because they can’t build them quick enough. They’re buying them, often at above-the-odds market rates, and putting tenants in them who, in many cases, are then trashing the houses, destroying the neighbourhood, and, in many cases, have fundamental gang associations that mean that the whole neighbourhood has been transformed. Now, in that case, that is a rental market that is—

💬 Angie Warren-Clark: Scaremongering.

It’s not scaremongering. It’s absolutely going on and true, and I have evidence of it. The net result is that because of that, even more people don’t want to be landlords. They don’t want to be landlords, they don’t want to be caught up in it, and they don’t want any part of it. So, on one hand, the Government has a laudable goal of trying to lift standards, of trying to improve quality, and of making things child-friendly. You can do that with your own houses, but the private sector will do what it wishes, based on where the market return is, where the money is, and where the risk profile is.

The net result of this bill—which is why this side of the House is so opposed—is that you are going to, fundamentally, move private landlords out of the sector. They got scared enough when the capital gains tax was being considered. They’ve hung in there, but this is just another kick. I have talked to many real estate agents—many—in this space who say, “All that will do is you’ll shift landlords from out of the market.”

In my own patch, we have never had so many people living in temporary accommodation. Over 450 are living in motels, some of them for over a year. In my own patch, the rental crisis has never been worse. The net result of that is that people are living in substandard conditions. What we need is a market that is prepared to provide long-term rental accommodation, and by regulations that are so rigid, so tight, and so difficult, the net result of it is that a large number of these landlords are going to leave.

I do want to come to the shortened time for this bill to be considered: four months and two days. I understand that’s a way of getting around the rules, but this is a big deal. This is a big deal where lots of people will want to have a say. Just because it’s election year, I fail to see why we’re going to constrain things to this degree, when the net result is, in my view, we’ll look back in 10 or 15 years’ time and say, “That was a complete market failure. The market has deserted us.”

There’s more and more demand for rental accommodation and there are fewer and fewer houses because of this very bill. That’s why this side of the House strongly opposes it.

Thank you, Madam Speaker. It’s really interesting listening to the debates, and I guess that as this legislation makes its way through select committee, I fully anticipate that there’ll be strong representation from those on both sides of the floor in this debate.

There will be the property investors. I do have, and New Zealand First always has had, some sympathy for the plight of senior citizens who have taken it upon themselves to buy one home, as the renter is going to be their superannuation fund and is going to be the provider for them in their later years. Some of them are doing that because they’ve seen the interest rates on their deposits in banks, where they have had that decline markedly over the last 10 years in particular. They see the real estate market as being a more attractive investment proposition to provide for them in their retirement, and are, quite obviously, taking the advantage of a capital gain.

The previous speaker, Lawrence Yule, is quite correct. From everything that I’ve heard, there is a little bit of mild panic at the thought and suggestion that a capital gains tax might be implemented amongst those people, and those elderly investors in particular. There is a somewhat different view of those who have rental property portfolios more on a corporate level, because they tend to bring with them a corporate approach to the management of those tenancies.

What we do know is that the market has changed markedly since the Residential Tenancies Act was first implemented back in 1986, or something around that time. The Residential Tenancies Act created back in 1986 was one thing. We are now at 2020, and the market has shifted. There have been a number of things that have contributed to the changes we’ve seen and the effects of them. One of them has been, quite clearly, the exiting of the market by Government.

There used to be a time in this country when the Government was the predominant renter, when the Government provided State housing for New Zealanders at a time when the majority of New Zealanders owned their homes. That has changed quite substantively now, and given the market forces—and I do remember the speeches from people, the neo-liberals, who believed that the market would determine the future and that it would all balance out and it would all come right and that Government needed to get out of owning houses and that the Government should not be in the business of owning and renting properties, and what have we seen? Well, we’ve seen homelessness increase.

We’ve seen people living in cars, and these are not people who are unemployed. We have seen families where mum and dad have both had jobs—and, in fact, one of them has had two jobs—who are living in vans. Everything has changed, and if people can’t accept what they see with their own eyes, or what they are dealing with as members of Parliament in their own electorate offices, then I can only suggest they’re asleep or they don’t do any work in their electorate offices, because those of us who do go to our electorate offices and who do do this work see this problem every day.

I can say this. In the Wairarapa, and here is a classic example, we used to have hundreds and hundreds of State houses—580-odd, actually. But a Government of the day decided to sell the whole batch to a private trust enterprise who promised—who promised—that they would meet the community housing needs of the Wairarapa, and what have we seen? They promised that they would maintain a housing stock to meet the community needs. They promised. And what did they get? Well, I’ll tell you what they got. This is a real hell of a deal coming from a party who prides itself as being the great stewards of the economy, the great managers of the State’s assets. They sold these 540-odd houses for $19,000 each—$19,000.

This was the deal from heaven. In the very least, the capital gain that was achieved overnight was about a 400 percent return. In fact, some would suggest that when those houses were revalued the day after the deal was done, it was something like about an 800 percent return on investment. And that trust, called Trust House in Masterton—[Interruption] Well, I’m not going to go down that path, Dr Webb, but I would say this: there were some very strong connections between people who wanted this trust to get all of the houses, and I’ll leave it at that.

So they bought all of these houses for less than $20,000 each and promised to pick up the social obligation. Now what do we have in the Wairarapa? We have a housing problem. We have a problem where, one, there are no community houses; two, there are not enough houses to meet the growing population; and, three, people are unemployed—that’s why they can’t get houses—and Trust House has decided that it’d rather invest its money in pubs and bars that can house pokie machines, which, ironically, take money off the same group of people who rely on community housing. But that’s for Trust House to explain themselves, and I have been on the record as criticising that entity for not living up to its obligations.

But therein lies the lesson. If the Government absolves itself of its responsibility to provide housing for the people, and if the Government of the day puts that responsibility in the hands of a private enterprise and the Government has no way of ensuring or guaranteeing that that private enterprise or that trust will actually do the work it promises to do and undertake and accept the responsibilities that it promised on the back of a sweetheart deal, then the Government is either foolish or the Government is—

💬 Marama Davidson: Immoral.

—stupid—I don’t know. Or immoral—I don’t know. The net result is that we have a housing problem, and we have a totally different market, where tenants can be taken advantage of. We have a totally different market, where you end up with bidding wars, and it is the prospective tenant who’s got the big chequebook who gets the house and other people end up homeless.

It’s interesting, and I’m watching Alastair Scott, who’s not going to be standing again this time. He understands very, very clearly what’s happened in the Wairarapa, and I recognise him for that because he’s been supportive of some of my criticisms and I know that. But look, we’re in a different situation now. We have to look at the rules. I think we will be mindful of the comments that are made and submissions that are made as to how this might impact on the total housing pool. We will be mindful of the difficulties people face getting into housing. Those are the very reasons that this legislation has come before us.

There is a select committee process, and I will be encouraging the New Zealand First representatives and the Government representatives to listen closely. But the inescapable fact is we have a problem, and it’s not going to go away by us continuing to do what we’ve always done since 1986. Things are drastically different, and if I believe there’s a problem in Masterton and Carterton and Greytown and Martinborough and Featherston, then I guess I’d have to concede that our problems pale into insignificance with the problems that face people in Auckland and Christchurch and Wellington.

This bill seeks to give some strength to landlords. It does seek to make some adjustments—so things that we never ever imagined back in 1986 like broadband, or the desire of people to connect up the rooms of their houses to broadband so the kids could come home and do their homework on their laptops and on their tablets. These things were never imagined back in 1986, but these are realities now, and to say that a tenant can’t install broadband or can’t have wireless connection to their house is a little bit silly, but, of course, there are some definitions and some criteria in this bill that specifically identify what is minor work and what is not. Of course, no one is going to be sanctioning a tenant knocking out a wall and putting in a new door or a new window, but there are some minor things like fixing your shelves to the walls so that they don’t fall over in an earthquake—something Wellington’s a bit prone to—that we believe are sensible and worth considering. That is why New Zealand First is supporting the first reading of this bill.

Thank you, Madam Speaker, for the opportunity to speak to the Residential Tenancies Amendment Bill in its the first reading, here in the House. It is the bill that, quite simply, piles pressure on landlords. It does not give them strength, as the previous speaker Ron Mark just outrageously claimed; it piles pressure on landlords—as simple as that.

Like my previous colleague Lawrence Yule, I want to give some examples from a local context: Onehunga. Onehunga is a suburb in the electorate that I represent, the great Maungakiekie. First in Onehunga we had the KiwiBuild two-bedroom home that was too small for even KiwiBuild’s rules. So we had Minister Phil Twyford get that wrong and they had to quickly go back and change the size of that apartment. Then in Onehunga, we had just recently a private buyer with a 10 percent deposit down on an apartment, and then Housing New Zealand, or Kāinga Ora, came in and gazumped her and undercut her and turfed her out.

So we’ve had that in Onehunga, and now the Government’s on to private landlords in that area. How are they doing that? Here’s an example. I have had correspondence from someone as a constituent, and here’s what Richard said to me: “This proposed bill”—the one that we’re debating right now—“undermines my rights as a property owner and prevents me from controlling who rents my property and how long they can rent it for.” And here’s the golden line: “It’s just about the straw that breaks the camel’s back as far as myself continuing to rent out my property.”—the straw that breaks the camel’s back for someone who wants to continue to rent out their property.

Now, what’s the answer to this? There isn’t an answer from the other side of the House. How does any of their programme engender trust in getting housing going in my area and in New Zealand? It doesn’t. The programme is unbelievably flawed. This Labour-led Government cannot be trusted to deliver for the housing market for tenants or landlords—full stop.

There are failed programmes everywhere we look: KiwiBuild, rents going up all over New Zealand, and this is nothing short of an attack on property rights for good, well-meaning landlords around the country. What we’ve got here is a bill that will give ability for tenants to modify their houses without permission of the owner, to have an indefinite length of tenancy, and also have pets without permission. All of these create a cauldron that makes it a lot tougher for landlords to want to stay in the market of renting out their homes. It will definitely encourage some landlords to sell up and create more pressure on the market.

Now, you wouldn’t think that we on this side of the House would need to be this simple, but we’re about to be this simple. It’s a message for the Government: too much, too quickly on landlords without any incentives. As Dan Bidois said earlier, more stick than carrot without any incentives leaves fewer people wanting to be landlords. That’s the simple message: too much, too quickly, fewer landlords—that’s what you will face, and you will face that very soon.

I’m going to finish back at Onehunga again. Emergency housing grants are up 70 percent—70 percent—in Onehunga. We have now another addition to the perfect storm of bad policy, and what we need is much better weather. Bring on 19 September for a good, sunny day and a change of Government.

Thank you, Madam Speaker. The Greens are proud to see the introduction of the Residential Tenancies Amendment Bill, and I’m very pleased to stand up and support the bill in the House today and commend Minister Faafoi for bringing it to our attention. We know that homes primarily are for living in, that everyone needs a home, and that that is the sole responsibility of what good Governments should do for people. It’s to provide a sense of stability and calm and security which everybody should be entitled to—stability and calm that every person deserves—and that Aotearoa can most certainly provide, whether we rent or own our own home.

So we need to ensure that our rental laws are fit for purpose and that they recognise, first and foremost, that a home is a building block of our lives. We should be able to rely on this feeling and this sense of being able to put our roots down as we go about sending our children to our local schools, as we develop relationships and friendships in our local neighbourhood, and as we go about the ordinary living tasks of everyday life: our laughing, our cooking, our sleeping, and loving family.

So the problems here then have been obvious for far too long with the original renters’ laws that were brought in back in 1986. What the reliance on that original legislation from the 1980s has meant is that previous Governments have been allowed to continue to see housing viewed as something left to the market, instead of a core public good. This legislation starts to correct the imbalance of power between tenants and landlords that has been having a harmful impact on communities and families, actually, for far too long—for far too long.

Some speaking in opposition in this House to this legislation are hypothesizing a harmful impact on landlords and they—

💬 Dr Duncan Webb: Catastrophising.

—catastrophising; absolutely, Dr Webb—are not speaking into the decades of harmful impacts that relying on outdated legislation and market levers have caused to ordinary folk around our entire country. We don’t expect the market to be able to provide for core public goods such as education and health and drinking water. In fact, even when we have tried to leave a little bit of the market to those services, that hasn’t gone very well. So a market is designed by its nature for profit and not for people. We cannot expect it to be concerned with social or environmental outcomes. So this legislation is starting to correct that imbalance.

Now, some of us in this House—not all of us—may remember cassette tapes, if I may, from the 1970s and 1980s. Not everyone will know what this is today. This is a cassette tape from the 1970s and 1980s. This is from the time when the legislation was first introduced, and it’s also the last time that housing prices made any sense in this country. Many people do not know what a cassette tape is. Many people today do not know what sensible house prices are, either.

Back then, when this legislation first came through, I think around 26 percent of children lived in rental homes. Now, 43 percent—probably inching closer to 50 percent on more recent figures—of our children, with their whānau, live in a rental home. So it’s time, long past time, that we responded. I wanted to mention that Leilani Farha, the sort of UN expert on the right to housing, called this not a housing crisis, but a human rights crisis, and that’s exactly what this has been for people in our neighbourhoods for far too long.

We are changing the fact, in this bill, that you can be removed from your home for no reason. So for those who are scaremongering and catastrophising that this will restrict landlords from having suitable tenants, that is not the case. That is not the case at all in this legislation. One is still able to maintain good cause and good reason with fair notice to be able to move tenants on through their tenancy, but what we can no longer put up with is tenants not knowing whether any minute now they can be served with a no-cause reason—no reason—just if someone feels like increasing the rent, for example.

This is what I got told when I was in Dunedin this week. If they’ve had a conversation with other investors and they’ve agreed as investors “Let’s hike things up a little here Let’s do it together.”—this is what I’m being told when I’m talking around the country. We are removing that ability to simply say, “Oh, I feel like putting the rent up. We won’t offer a reason for the tenants. We are just going to give notice and move them on.” That, under this legislation, is actually unlawful now. That is now unlawful. It’s not just not allowed; it is actually unlawful. So these are good things.

These are significant steps, actually, in starting to correct the power imbalance that has caused harm—never mind hypothetical harm—that has already caused harm. So the reforms in this bill are necessary because things have changed, because more and more people are renting because less people are able to feel that they are living in a home where they have put down secure roots.

I’m one of the few people who still rent a home, and, believe me, we are trying to change that—it’s rough out there. But I come with a status, a high income, and privilege. That means my landlord is quite understanding, and we have a good relationship because we are probably ideal tenants, if we think about it. But not everyone has this privilege. Not everyone is able to feel that they’re pretty safe in the home that they’re renting.

This is a fundamental change that we are seeking in this legislation, and we have to do more. So the excuse coming from the Opposition to keep the massive imbalances in place is that landlords are going to exit out of the market. Well, that’s because this bill on its own isn’t what we are saying is the solution to supply and affordability, so that wipes that excuse for standing up for people who rent, right out of the water.

These are important changes: extending notice periods for asking tenants with a good reason to move on, making sure that we can put up pictures. My mokopuna is about to start walking soon, so we’re making sure that we can make some safety changes and minor changes around the house for those sorts of safety reasons—you know, the things we’re thinking about are like going to make our door so it’s a little bit harder to just run out on to the front road. These are ordinary things that many, many landlords and tenants have already been able to establish, but we’ve got it here and are recognising it in some legislation now.

This is why the Greens are really pleased to consider this legislation as part of the step. We need to go further and faster, and alongside reforming rental law, we have to keep increasing public and affordable housing and make sure that our rental homes are in good condition. I’m very proud of having worked hard on this bill over the past year and a bit, and I am looking forward to seeing it progress through the House, because when we have a sense of feeling settled in our communities, we can better engage, we can better contribute, and we can feel like we have got a hopeful future. Kia ora.

Thank you very much, Madam Speaker. I don’t agree very much at all with Marama Davidson, the previous speaker, generally, but, specifically, there is one thing I do agree with her on, and I’d like to preface my next few minutes by saying that both sides of the House agree that we want safe, warm, and dry homes for our tenants. There’s plenty of examples and plenty of legislation that this side of the House has done in the previous nine years to ensure that is the case. Some of that legislation is coming into force now. Interestingly, Housing New Zealand is exempt from a lot of that. It’s quite ridiculous. So the largest landlord in the country is exempt from complying with the same laws that you or I might have to comply with if we are a landlord. It’s ridiculous. Why isn’t the largest landlord in the country complying with the same laws, same rules, as every other landlord?

The second point I would like to make is I wanted to talk about the cost of capital. So previous speakers on this side of the House have talked about why it is difficult for landlords to stay in the market. We talk about the last straw on the camel’s back. I’ve had landlords ring me up to say “This is it. I cannot get these tenants out. I can’t even get on to the property. They will not see me. I’ve given 48 hours. I’ve got them in front of the Tenancy Tribunal.”—and that is clogged. The Tenancy Tribunal in the Wairarapa is clogged full because we’ve got a situation where the Government is not allowing landlords to express their rights by removing bad tenants.

Cost of capital—this is the stuff that we need to build houses. This is the stuff that landlords provide to the market to enable houses to be built and tenants to be housed. Now, if the Government wants to put another cost on to the cost of the capital of the landlords, there’s only one thing for it—assuming they want to stay in and be bothered with dealing with it—and that is to put the cost up. The revenue has to go up to match the costs on the other side.

So it’s very simple. We’ve already seen costs go up because of the brightline test extended by that Government. We’ve seen costs go up because landlords have had properties ring-fenced. That increases the cost of capital. Therefore, the landlord is going to demand—they’re going to demand—a higher return for that property because they’ve got to pay the bank the mortgage and they’ve got alternatives to put that capital in.

If they’re not going to get the return on capital that they deserve, that they demand, and that the market allows them to do, they will simply move that capital to a different place. They’ll just put it in the bank and forget about it. They’ll put it in the sharemarket. They’ll invest in the NZX or the New York Stock Exchange—whatever it might be. But they will not choose to invest in the property market—they will not choose to invest in the market to enable tenants, to provide homes.

If they do, though, they need to get their return on that capital. As this Government puts in more regulations, more layers of costs, then the price of that capital goes up. This is just another cost of capital inflicted on landlords which will see rents rise.

One of the points I would like to make, though, and I find it quite inconsistent, is that the Government’s quite happy to allow foreign capital into the Auckland light railway project—the Canadian money that’s going to come along and partner with the New Zealand Superannuation Fund—but they’ve already banned foreign investment into property. There’s some inconsistency here.

The other inconsistency is that we’re allowed to tender and allow auctioning on first homes for sale—that’s fine—to see the highest price enabled for the seller of a property, but the landlord is no longer able to do that. If they choose to do that, they’re no longer able to do that. So what’s going to happen? The landlord will work a way around it if he wishes to play in the landlord game, and, as we’ve heard, a lot of people are leaving.

The issue was that these guys banned the agency fees, so a landlord can’t on-charge to a tenant a fee. There’s another cost that’s been put on the landlord and is, therefore, reflected straight away in the rent. The landlord must get a return on capital, and putting all these layers upon layer upon layer of costs only will always be reflected in the cost to the tenant.

The fact that rent prices might be high is to do with all those costs associated with this Government. The answer is, obviously, an increase in supply. That is the key to reducing the cost of housing and, therefore, the cost of rentals.

These guys are barking up the wrong tree, walking down the wrong track. They really need to rethink where they’re coming from and consider the capital, where it’s coming from, and the return that’s required and demanded, because without that, the tenants are only and always going to suffer.

The next call’s a split call—five minutes.

Thank you, Madam Speaker. Taking a quick call tonight on the Residential Tenancies Amendment Bill, I just want to congratulate Kris Faafoi for bringing this bill to the House. I think it’s exceptional. Tauranga City is the fifth-least affordable city in the world—the fifth-least affordable city in the world—so this is absolutely important for our city that we have some changes. We’ve got over 600,000 households in this country who are renting. We’ve got 43 percent of our children who are in rental properties. Household ownership for Māori is decreasing faster than in any other time in history—28 percent of Māori own their own homes.

I am absolutely delighted to commend this bill to the House because we will be making a change for those people out there who are renting. Thank you.

Well, no one’s property is safe with a Labour - New Zealand First - Greens Government. Fundamentally, that is what this Residential Tenancies Amendment Bill is—it’s an attack on private property rights. We ought to ask ourselves why has this come about—why has this come about? Well, partly, because they’re a bunch of socialists on that side. That much is pretty obvious. But the other reason why we have this right now is that the previous legislative change that this Government has made in this term of office has impacted rents by an average $60-a-week increase. Now, they’re very upset about that because they, in their clouded, ideological minds, thought they could layer regulation on landlords and it wouldn’t affect rents. They thought “Ah, no. It’ll be fine. Landlords have got plenty of money. They make profit. They’ll just swallow the extra cost.”, but no, rents went up, and went up sharply.

So what have they done? What is the main measure of this bill? The main measure is to stop landlords increasing the rent, because they know their legislative change drives costs up for renters, and so they’re going to legislate to prevent landlords from actually recovering and getting a proper return on their capital.

Not only are they dealing with landlords’ return on capital, but they’re, basically, saying the house you own as a landlord is no longer yours to decide what to do with it. By removing the right for a landlord to end a tenancy for any reason with 90 days’ notice, they, in their clouded, ideological minds, think that the landlord’s home is the renter’s home. It is a home the renter gets to use for as long as the landlord wants to keep it on the market and they meet the terms of the tenancy agreement and the landlord wants to retain them. It is the landlord’s house.

The results of this are going to be pretty simple. We started seeing it with the previous legislative changes. More and more landlords are simply going to take their tenanted properties off the rental market. Like a lot of things this Government does, it will have a perverse outcome, where it actually reduces the supply of rental properties.

They’re so hopeless at building homes. How many is it—330 KiwiBuild homes? It was supposed to be 100,000 in 10 years. We’re two-and-a-bit years into it, and they’ve done about 330 of them. They’re not going to fix the supply issue, because they’re absolutely incapable of doing it, and, at the same time, they’re going to put measures in place that shrink the current supply of rental properties.

It’s a bad bill. We oppose it.

I would invite members opposite, and most of them I’ve spoken to have been to Europe—most of them know people who live there. When they go and speak to people in Switzerland, France, and Germany, most people over there live in their rented properties, and they have incredible rights. People come back and say, “Wow. If only we could be like that.” Could I invite those members opposite and those listening to think that this is a stepping stone to get to that very desirable situation.

Currently, 43 percent of children in New Zealand live in rental homes. I invite those members opposite to think what proportion of children lived in rental properties when they were children or when they were 20 years old. It was a heck of a lot less than that.

We’re in an evolving market, and what we have to do is we can do two things. We can sit and do what we’re hearing opposite—we can defend the status quo—and remain in it and nothing changes, or we can prepare for the future that has already arrived, and this is legislation which is allowing us to do that.

For those that said over there that we’re not allowed dogs, that’s another absolute lie—false news. We are allowed them.

So can I invite the members opposite to get with the history—the future that has already arrived. Thank you, Madam Speaker.

Thank you, Madam Speaker. This bill really epitomises what this Government is all about. It’s about controlling people’s personal property rights. It’s all about the Government knowing best. But the Government doesn’t know best, because none of these people on the other side have ever actually had to make a dollar in their life, and none of them understand what it is actually about.

💬 Hon Ron Mark: Ha, ha!

Mr Mark is laughing because he knows his leader has sat in this building for 40-odd years and is now some economic guru, but the reality is they don’t understand what a market operates like. If Government or any organisation goes into a market and then disrupts the ability of that market to operate, there are perverse effects, and we have seen that in the last two years under this Government. Rents have gone up because of the rules that this Government has put in place.

Now, they may say “Oh, we’ve made these houses a house for life. We’ve taken away a tenant’s potential loss of the house.”, but they’ve increased the rent 60 bucks a week—$60 a week. They’re not getting that from the Government on the other side; they’re paying that money out, and that means that people have to give up their rentals because they can’t afford them. Then, they go on to the State housing waiting list, which has gone up by 10,000 under this Government, reflecting 10,000 people that have been thrown out of their houses because these people have increased the rents on them.

What is that going to do for New Zealanders? If you’re a landlord, what does a landlord do in this situation? Well, the landlord’s got it so that once a year, they can increase their rents, so it won’t be a $20 increase in rent; it’ll be a $120 increase in rent. They will put the rents up 120 bucks. If they don’t get someone that can pay that, they’ll wait till the next person comes along, because they know that someone will come along and pay that at some point, and that will be the problem that will happen in this country.

Those landlords will still sit on their assets and they will still look for their capital gains, which we were told was going to stop under this Government, because they would do a capital gains tax to stop capital gains. Where did that go, Mr Mark? What happened to your party around that issue, with the great Labour leader and the vision of stopping the housing market in that regard?

But it is worse, because I’ve got an example of something that’s been happening in Hamilton that I think is just absolutely disgusting. What is happening in Hamilton is that Housing New Zealand is going out there and buying houses that are rentals to meet their targets of how many houses they need to have purchased in addition to the housing stock. Now, these are rental houses that have got tenants in that are law-abiding, paying tenants.

💬 Brett Hudson: Paying market rentals—yeah.

Yes, and guess what happens? Housing New Zealand evicts them. Housing New Zealand sends these people out of their house—

💬 Hon Nathan Guy: And they come to your doorstep.

—yes—and then they put in tenants from their waiting list.

💬 Brett Hudson: And are they paying market rent?

No, they’re not. They’re paying $80 a week or $100 a week, instead of $400 a week. So what is actually happening now—

💬 Brett Hudson: Economic geniuses!

—is we’ve had to have the geniuses on the other side go into the market and buy up rentals to cover up the mistakes they’re making around the market.

So this is another perverse entry into the market by the Labour Party, which understands how a market works. They’re very quiet. Now, the reason they’re quiet is because they know it’s the truth—they do not want to go out there and deliver anything.

I had one group come to me. Fourteen houses were purchased by Housing New Zealand off this one group. All the tenants were told to leave, and they were all requested to leave so that they could put Housing New Zealand tenants in. So that’s 14 renters that then had to go—

💬 Hon Nathan Guy: 14 families.

Families that have to now go into the rental market just to meet their targets. No recognition of how hard it is for those families. No recognition that those families now have to move. They have to move schools, they have to go into a rental market, and they probably have to pay more for a new house now—no recognition of that. But no, Housing New Zealand can say it’s got another 14 houses in Hamilton. That’s all they’re after—that statistic.

That’s all the Labour Party cared about. They didn’t care about the people that they threw out of those houses in Hamilton, they don’t care about the people that they’ve put the rents up 60 bucks a week on, and what is actually even worse than that is that New Zealand is a country that needs entrepreneurship. We need people to take a risk and we need people to go out there and work hard. That is one of the fundamental things that build a country, and in New Zealand, a lot of people do that by owning a second rental house. That is their chance to have something other than just their wage or salary. That’s their way of building a future for their family and doing what they want to do in the future. That now has been taken away from them, because they don’t have control over that asset. They have to put somebody in there and keep them in there.

You know, they are talking about the European model, where you can’t have an empty house. You have to put somebody in it. That’s the choice of the landlord, not the choice of Government. Then, they’re saying that there cannot be any rental change for a year. That is the choice of the landlord, not the choice of Government. Then they’re saying that the person cannot leave. That is the choice of the landlord and the tenant, not the choice of the Government.

So we’ve got hard-working people out there that go and invest in property as their major investment, and then these guys come and tell them what they can do with that investment. Well, that’s going to last a long time, isn’t it, because those people aren’t silly. They have worked too hard to build the money up for that. They’re not going to go out there and let a pack of people that have never made a dollar in their life and who have sat in cosy seats in here for 40 years and think they’re economic gurus tell them what to do—no way. They’re going to smarten up, and there’s not going to be any houses. Then, the Government’s got to step in and find those houses, and we get a massive big increase in the problem that we’re seeing in New Zealand around housing.

This is an economic policy that is doomed to failure. It is typical of what you get from a left-wing Government. It is something that fails on all accounts, whether it is economic, whether it is personal, or whether it is the attributes of what we want New Zealanders to aspire to be. It is a failure on all accounts, and they will dress it up and they will say that we are looking after a certain group of people. They’re actually hurting that group of people more than anyone else. That group of people pays the higher rents. They missed out on the opportunities to get in a house, and—and—when they do get into a good rental, the State can take it off them. The State is doing that now, and we’re seeing that, day in, day out, with examples of the State using its market power to take away individuals’ ability to get a house.

They may laugh, but they should come to Hamilton and tell those 14 families that were thrown out by the housing Minister that they care, that they want the best for them, and that they put people into those houses that haven’t earned that ability as those other people had because they had paid that rent. They had paid to be there, and they didn’t deserve to be thrown out by a Government that just intends to build dependency on the Government as its way to get people to vote for them at the next election.

Well, that side of the House is a little riled up, and I’ve got a clue that it’s got something to do with the numbers that they are seeing, because we know that that side’s full of nothing but negativity—nothing but negativity. I think it might have something to do with the ghost economic plan that came out by their leader, who’s polling at abysmal rates, and I’m sure they’re all freaking out for their parliamentary careers—their ghost economic plan, just like their ghost housing plan.

Now, that side of the House, they pulled others down. That side of the House, they sold houses off. That side of the House said that there was no housing crisis. But this side of the House is committed to delivering a fairer and more secure rental market for renters, and I am extraordinarily proud to stand on this side of the House under the Rt Hon Jacinda Ardern’s leadership and with the vision that the Hon Kris Faafoi has for making residential tenancies safer for all New Zealanders. I’m proud to support this bill.

Could I just remind members that these little objects in front of us actually amplify your voice.

on behalf of the Associate Minister of Housing (Public Housing): I move, That the Residential Tenancies Amendment Bill be reported to the House by 22 June 2020.