Landlords are toast too

Well, who knew…..

We’ve been saying it for months, and now ‘officials’ (whoever they are) are warning Phil Twyford that his tenancy reforms will push up rents as they will drive landlords out of the market.

Correction, ‘officials’. That is already happening. What you should have said is that it will drive ‘even more landlords’ out of the property market.

Stuff?reports: quote.

Housing Minister Phil Twyford’s package of tenancy law reforms would likely drive up rents by causing some landlords to get out of the market, officials have told him.

Officials said while most of the tenancy law overhaul and other changes to the rental market considered by the Government would not have much of an effect on their own, their cumulative weight could lead some landlords to sell their properties to owner-occupiers.

Because owner-occupiers typically have less people in a house than renters, this could lead to a further shortage in rental properties – and higher rents. end quote.

If the moderators will forgive me, this is a case of the ‘bleeding obvious’. You can only kick a sector of society for so long before they give up and go away. But when that particular sector is providing a social service that the government itself simply cannot provide, it makes no sense at all. There has to be something in the whole process for landlords, otherwise, they will sell up and make a tax free capital gain, while they still can. quote:

The policies discussed include the Healthy Homes Guarantees Act, which sets more strict standards for rental properties, the extension of the Bright Line Test taxation change, and the expected end of “loss ring fencing” for landlords, a setting that allowed landlords to offset losses on one property against another. end quote.

Ringfencing of losses (if implemented) is out and out punishment for landlords and nothing else. Nowhere else does this apply. If you are running a small business in your spare time and it makes a loss, you can offset those losses against other income. But if you have a rental property, you can’t? quote.

“While these effects should be minor, the cumulative effect of changes to the Residential Tenancies Act 1986 may lead landlords to perceive the effects as more than minor. As a result, even if legislative changes did not materially affect the financial returns of landlords, some many nevertheless choose to sell their rental properties,” the officials wrote.

“The combined increase of these policies will be to increase sales of rental properties, with fewer landlords purchasing.” end quote.

For many landlords, any one of these proposals will represent the last straw. Whether having to insulate a property, knowing you’ll never recoup the costs in higher rentals, or the threat of a rental warrant of fitness that will cause unnecessary expenditure every year, or whatever… it was never much fun being a landlord, but now it is almost impossible. quote.

The officials believed that the Government’s attempts to increase supply would not materially change things for at least the next two years, with the housing shortage increasing by 14,600, even if 6000 KiwiBuild homes are built.

This analysis did not directly consider further reforms announced by Twyford in August that would end no-cause evictions, limit rent increases, and possibly ban “rental bidding”.? end quote.

So, officials were warning about a mass exodus of landlords before Twyford’s latest round of landlord bashing policies had been proposed? As if the possibility of the end of no-cause evictions, allowing pets in a rental or an enforced limit on rent increases is going to cause new landlords to flood the market?

The government has an enormous problem on its hands, but if this article is anything to go by, it is starting to realise it. Much as they would love to have every tenant in the country in a state house, they have nowhere near the number of houses to do it. They can’t build them, and because of stupid policies, such as refusing to consider houses built before the year 2000, they can’t buy them. Their answer to this crisis is to drive private landlords out of the property market, meaning that the general supply of rental properties is now at an all-time low.

Times are tough for tenants, even good tenants, who find themselves in long queues looking for somewhere to live. Thanks to the idiotic ideologies of this government, the problem is only going to get worse.