It’s part of the dance of rule-making that many of those affected tend to object to new rules regardless of how sensible and effective they might be. As rules change, those affected need to realise the need to adapt and change; to move with their new environment. This of course requires new thinking, new strategies and new processes.
If you are not already aware, there’s a huge shift going on in the rental property market in New Zealand. It’s now the rental property business, not just a market. Some see the changes as a catch-up with other Western countries, while some see it as an unfair imposition on their landlording rights and privileges. These changes are bringing forth a lot of complaints, whining and general grumpiness from landlords in New Zealand. Bashing the Government over the head won’t change the new rules of this game either.
Roll with it
The ‘market’ that’s now a ‘business’ needs to mature. In many, many countries a lot of people simply don’t expect to own their homes and instead they rent on a long term basis. This generally results in those renters treating the house as their own. You can now see this trend starting to emerge here in New Zealand.
Historically, the average term of a tenancy is about 18 months, depending on which pundit you listen to (sounds about right to me). You can now expect to see that term extending far beyond that and stretching into years and decades, even lifetimes, and landlords will need to adjust to this.
Some landlords are actually complaining that they can’t kick tenants out when they want to. I’m an investor in the Wellington market, and I don’t want to kick any of my tenants out if I can help it! I want them to stay for years and years. I thought that was the whole point of renting a property out. If my tenants want to hang a picture, fit an earthquake strap to their bookcase, or even paint the back bedroom, I don’t have an issue with that.
It’s not all one sided
However, tenants cheering these new changes and rules now have a duty to responsibly care for the property they rent as if it’s their own. Tenants will have to develop a good track record as a renter, and nurture excellent references if they want to secure a property to live in. They’ll also have to be prepared to be rigorously background and credit checked before getting their hands on the keys.
Property investors, even ones who simply inherited grannie’s old flat and rent it out to a friend of the family (note: NEVER do that!) are operating a PCBU. That means it’s a business, not a hobby for a few extra dollars a week. There are many new laws and regulations that affect rental properties, and those laws and regulations are changing right now in ways that are already impacting on innocent rental owners. There’s even a list of fines helpfully put out by the Government so landlords can see what they’re up against.
The Real Estate Institute postulated last year that 46% of investors would sell up due to the new rules, particularly the “no reason” clause for ending a tenancy. Of course, as much as 54% of statistics are made up on the spot, and the current status of the real estate market does not back up REINZ’s assertion. There are plenty of investors out there buying and renting out properties. It’s the old school thinking that needs to change.
Get some help
In short, there’s a huge transition going on, and a lot of people are not comfortable with that transition. If you can’t deal with it, then I suggest you get a specialist to look after your rental properties rather than muddling along hoping it’ll all work out. As the T-shirt says: “Keep calm and get a Property Manager”
I think we all need to adjust to the changing environment and grow up a little bit on all sides.