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16mar home truths hero
15 March 2016

Opinion: Home truths

Barring a dramatic reversal in house prices, the number of people renting will continue to rise.

Aspiring homeowners hoping 2016 will be the year they make it on to the property ladder won’t find much encouragement in the latest statistics. Average house prices started the year at $556,000, up 12.6 percent on January 2015. If it’s Auckland, think double.

For punters lacking a spare half million, the grim realities of the rental market await. Thirty-two percent of households are now renters, up from 23 percent in 1991.

The make-up of the market has changed dramatically since then. But the legislation intended to safeguard tenants’ interest hasn’t. Thirty years after it was introduced, the Residential Tenancies Act is showing its age.

Renters today can expect to maintain their status as tenants for much longer than previous generations. Rent is likely to eat up a bigger proportion of their income and, chances are, their dealings will be with a property management company rather than their landlord.

Property management companies have been rapidly taking over the landlord’s role – and their fees are likely to have played a part in pushing up rents. But they remain largely unregulated, despite continued complaints about their practices. Anyone can set up shop as a property manager, no questions asked.

Harder to ignore is the dire state of many rental properties. Research shows renters are more likely to experience problems with cold, damp housing compared with owner-occupiers. Several decades of rising electricity prices also means these same houses cost vastly more to heat.

The government has belatedly moved to introduce minimum insulation standards for rentals as well as requirements for smoke alarms. Minister of Housing Nick Smith has called the changes a “pragmatic package” of reforms. Children’s Commissioner Dr Russell Wills has been less complimentary, dubbing the government’s response “shameful”.

Dr Wills has taken aim at the government for shying away from mandating heating and ventilation standards for rentals. As he points out, an unheated house is still a cold house: sticking a bit of insulation in the ceiling of a drafty, single-glazed 1940s bungalow on the wrong side of the hill won’t raise the temperature by much.

Barring a dramatic reversal in house prices, the number of people renting will continue to rise. Tenancy legislation needs to strike a better balance between the landlords’ responsibilities and tenants’ rights. The quality of our housing stock may be circa 1940 but our consumer protection laws need to be fit for 2016.

About the author:

Jessica joined Consumer in 2008 as a writer. In her current role, she works with a dedicated group of staff responsible for the organisation’s research, advocacy and campaigns. Her research brief covers consumer protection and legal rights as well as investigation of misleading claims, dodgy pricing practices and environmental issues. It’s never a quiet day in the office.

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