Hawke's Bay Property Investors' Association

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Nick Smith to look at Warrants of Fitness for Rental Property

Following a recommendation by the Childrens' Commissioner, New Minister of Housing, Nick Smith, has requested that his officials look into the feasibility of a Warrant of Fitness for rental property.

To many people a WOF for rental properties will seem like a reasonable idea, especially for tenants who receive an accommodation allowance from the Government.

There is certainly no argument that New Zealand Tenants should expect to live in safe and well maintained homes, but a WOF is not the best way to achieve this. It is also concerning that the Children’s Commissioner wants the WOF to become stricter over time, which could mean some existing rentals would no longer be able to be let.

Calls for a WOF are not new. Successive Governments, both Labour and National, have concluded that a WOF would be an expensive waste of time as the condition of rental property is covered in other Acts of Parliament. Sensibly they have rejected the call for a WOF and we hope that will be the case this time as well.

It appears to me that an annual WOF to confirm a rental property has, among other things, hot and cold taps, a toilet, a bath and a stove is patronising to tenants. I would have thought that Tenants are more than capable of checking if their rental property has the features they need before they move into it. If something goes wrong during a tenancy and it is not remedied, the Tenancy Tribunal is available for Tenants.

Tenants will ultimately pay the cost of these inspections and I’m not sure they would be happy to pay higher rental prices just to have someone come around and check their property for them.

There is more than enough room for rental prices to rise. A good comparison is the cost of renting compared to owning your home. Currently it costs $5,071pa ($97.50pw) more to own the average New Zealand home than it does to rent it. At this point of the property cycle you would expect the cost of renting to be much closer to the cost of owning.

If rental prices rise then tenants who cannot afford the increases will move to smaller properties or get others to move in with them. Overcrowding has a severe impact on the health of tenants and you can bet that should this occur it will be landlords that get the blame.

A WOF on rental property is an expensive waste of time and resources that tenants and tax payers (through the accommodation supplement) will ultimately pay for. Ensuring that rental property is well insulated would be a better strategy as it better targets improvements in tenants health and well being. Even that is wrought with difficulties. You can insulate a rental and put in a heat pump, but if the tenant doesn’t turn it on in order to save money, little will be gained.

Despite this, the NZPIF believes that insulating rental properties is a more targeted approach to improving tenants living conditions than the expensive scatter gun approach of a WOF. Members of Property Investor Associations around the country agree, as a survey of members found that 79.6% of their properties already had some form of insulation.

Tags: federation reports