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Let it Be

Written By: - Date published: 8:44 am, December 12th, 2018 - 56 comments
Categories: class war, Economy, housing, infrastructure, labour, phil twyford, poverty, tenants' rights, workers' rights - Tags: ,

Rejoice! The Labour led Government has just removed a completely unfair tax on accommodation renters, ending the practice of rental firms ripping off tenants by charging a bogus upfront ‘letting’ fee. No doubt the Taxpayers Onion will be overjoyed.

Until today, most property management firms charged new tenants a fee for, er, doing nothing. The letting fee, usually equivalent to a weeks rent, was simply a tax on the vulnerable and powerless, levied out of greed.

Tenants already struggling to find bond in advance, usually before any previous bond was returned, will be relieved that the financial burden has been lessened. It is possible that some rents will increase to cover the supposed loss to the agents, however that is still preferable to paying upfront for a non existent service.

Renters United spokesperson Robert Whitaker is in favour:

“The first thing is, they can actually compare apples with apples in the rental market and not have to worry about letting fees being piled on top of all of their other moving costs.”.

Barfoot and Thompson director Kiri Barfoot says they run a business and provide a service, and it doesn’t worry them who pays for it.

“There are costs to find tenants for a property and someone has to pay for it, so if we can’t charge the tenants, landlords will be looking to pay.”

Which raises an interesting legal question. If the tenants pay for this service, doesn’t that establish a commercial relationship between the agent and the tenant? Doesn’t it follow that the agent has an immediate conflict of interest, because they are clipping the ticket both ways?

Minister Phil Twyford’s is upbeat about the change:

“The previous way that these letting fees were handled was totally unfair to tenants. They were hit with one week’s rent plus GST at the very time they could least afford it. When they were having to pay rent in advance and bond and all the costs of moving.”

Minister Twyford doesn’t think tenants will end up paying more.

“Landlords are already charging as much as they can within supply and demand. So it’s not at all clear that because the small minority of landlords who use property managers want to pass on those fees through rent, it’s not at all clear that they’ll be able to.”

The Misery Party’s Judith Collins cheerfully lied about the dropping of the charge, with a bizarre claim about CGT:

“Now that this government is coming in with even more things like a capital gains tax, there’s not a lot of money in it – so that’s why they have to pass it on.”

In the real world, there are no plans to extend CGT, though it is part of the Tax Working Group’s discussions.

All in all, this is a small, but welcome step in the Government’s overall housing plan. Bringing fairness to the rental market by removing a significant financial hurdle for tenants shows that Labour is taking a global view of our accommodation needs and not just relying on the market to self regulate.

With Kiwibuild underway, house prices rises steadying and Housing NZ revitalised, this is the first Government in 40 years to seriously tackle our housing crisis. In fact, this may be the first Government in a generation that does not actively make the problem worse.

 

56 comments on “Let it Be ”

  1. Andre 1

    The cost of attracting customers is usually borne by whomever is selling and is part of being in business. Would petrol stations be able to charge a “forecourt fee” just to pull up to the pump, or could a supermarket charge a “door fee” to cover their various expenses?

    I’m having trouble coming up with other examples of private businesses being able to charge a fee before you even start using any of their service or product. Mostly it’s former or current government monopolies that can get away with “lines charges” or similar.

    And if it costs landlords to lose their existing tenants and get new ones, maybe they will become more interested in longer tenancies.

    • Muttonbird 1.1

      +1 on the last one para.

      There were instances in Christchurch where the agent was charging a new letting fee for rolling over the lease. That’s the stuff of Satan.

      I don’t think rents will rise across the board. Rental owners don’t raise the rent every time they fix a tap.

    • Blazer 1.2

      Auckland airport charges taxi drivers a $2 fee for dropping passengers off!!

    • KJT 1.3

      Banks do it all the time.

  2. Ankerrawshark 2

    I know this will likely incur the Roth of puckish but Judith is becoming more trump Like by the day, with lies, quoting fake news and personal attacks (young KiwiBuild buyers)

    • Clive Macann 2.1

      Trump like? The opposition there is just as bad or worse. Are you suggesting it’s the same here in NZ?

      • ankerawshark 2.1.1

        Clive, what I meant was Judith’s tactics are beginning to look Trump like. eg quoting a fake news website about the age of consent in France and asking Jacinda to comment on it. Implying that a CGT was already a done deal, criticizing the young Kiwibuild couple on their social media (or her social media)………

    • Puckish Rogue 2.2

      Blasphemy! You bad, evil doer. Get down on your knees, repent and ask our lord for her forgiveness!

      Our Jude, who art in heaven,
      hallowed be thy Name,
      thy government come,
      thy will be done,
      on earth as it is in caucus.

      Give us this day our daily postings.
      And forgive us our trespasses,
      as we forgive those
      who trespass against us. (That’s reference to you)

      And lead us not into socialism,
      but deliver us from communism.

      For thine is the kingdom,
      and the power, and the glory,
      for ever and ever. Amen.

      • ankerawshark 2.2.1

        Pukish, I am glad you feel able to forgive me. But I realized in posting what I did could cause some upset for you. That was not my intent. And I almost hate to say this but stand by my statements.

        I also have to say I admire your tenacity and devotion to your cause.

        • Puckish Rogue 2.2.1.1

          “I also have to say I admire your tenacity and devotion to your cause.”

          Its not hard, I mean when you meet a goddess its as natural as breathing to worship them

    • Cinny 2.3

      trump like judith…. nek minute she’ll be endorsing mike hosking for the UN.

  3. Robert Guyton 3

    Pucky’s Roth?
    David Lee?

  4. Personally I always found the only “significant financial hurdle” I faced as a tenant was paying ever increasing rents.

    But sure, its some nice optics I guess. Give National voting landlords another excuse to feel like the commies are at the door and up the rent (as if they need one), and allow Labour supporting landlords to feel they are nobly taking a presumably ‘significant financial’ hit for the greater good (and upping the rent, but for entirely unrelated reasons I’m sure).

    (On my fb this article appears with the classic photograph of Savage delivering the breakfast table to a new State House.
    That would have to be the most misused photo in the History of New Zealand Labour Party.
    Why on earth do people insist on matching current Labour policy around housing, especially rental stories, with a picture of a family, a single income, tram drivers family, no less, moving into their own home?
    If there is a connection between renting and State houses then It would be more relevant to match these articles with something more current…like a picture of Jacinda delivering a mandarin tree to the nice professional couple moving into their kiwibuild. I wonder if that image will ever become iconic in the struggle of the working classes?)

    • Re: the photo of the Blessed Mickey, the last paragraph of the post explains all:

      With Kiwibuild underway, house prices rises steadying and Housing NZ revitalised, this is the first Government in 40 years to seriously tackle our housing crisis. In fact, this may be the first Government in a generation that does not actively make the problem worse.

      • Antoine 4.1.1

        What we really need is City Councils to seriously tackle our housing crisis

        It’s largely their problem to solve

        A.

      • Siobhan 4.1.2

        No, it doesn’t.

        “In fact, this may be the first Government in a generation that does not actively make the problem worse”.

        ..for life time renters that statement may seem a touch…lackluster. And its certainly not the sort of sentiment that got Savage voted in.

        “Vote for us…we’re better than that bunch of psychos and at least we won’t make things worse, at least not actively, though we will keep to their genius financial constraints” jeez, that’s not really getting me fired up

      • Infused 4.1.3

        None of that is doing anything. Prices are steadying because Auckland been booming for the last 7 years.nits dipping now Wellington is still cranking and rents are getti g higher.

  5. Antoine 5

    All I can say is that if my property manager ups their %, it’s going straight to the tenant, who will pay.

    A.

    • Cinny 5.1

      Why do you use a property manager please Antoine?

      We ditched ours and it’s worked out so much better for all. Highly recommend it if you’ve got good long term tenants.

      • David Mac 5.1.1

        If an owner is out of the country longer than 3 months it is illegal for the owner to manage their own property.

        We have lots of overseas owners.

        If a comfortable drive away and a strong working understanding of the residential tenancy act I think there is a strong case for an owner to mange their own rental.

        If my deceased Grandma left me a house in Kaitaia and I lived in Christchurch, I think I would be foolish not to appoint a manager.

        • Antoine 5.1.1.1

          Some good points there David

          A.

        • Brigid 5.1.1.2

          “If an owner is out of the country longer than 3 months it is illegal for the owner to manage their own property.”
          I don’t think there is any legislation that governs property management. If I’m wrong, could you provide a link that shows there is?

        • Cinny 5.1.1.3

          Thanks David, I didn’t know that re overseas for 3mths rule.

          Our rental is in Welly, so it’s pretty easy to get there from Motueka/Nelson.

          Good point re location.

          We had a bad experience with Quinovic, so ditched them, it’s worked out better for us all. For example, tenants advise if they are going on holiday, and we head over there and do improvements. Mum has always said, if we don’t want to live in the rental, why should we expect anyone else to. As a result have always kept the property in good condition and updated it regularly.

          Are lucky enough to have primo tenants that have been there for years now. They look after the place and we look after them, the rent is low compared to market rates and we give them a week rent free at Christmas.

          Good communication is key.

      • Tricledrown 5.1.2

        No profit if you pay a property manager and most of them just take the money and do nothing not even regular check ups.

        • Antoine 5.1.2.1

          All false there tricldrown, there is still profit and at least some of them demonstrably do stuff

          • Tricledrown 5.1.2.1.1

            If you are an investor you want 6% return on capital minimum if you are landlord paying a mortgage /rates /insurance/maintenance/upgrades to meet new regulations. There is no profit or return on capital if you have to pay a property manager most are just ticket clippers. Antione I work in the building industry and know what happens. Most landlords don’t do regular maintenance they just do patch up jobs to placate tenants that’s the only way they can make a profit.

            • Antoine 5.1.2.1.1.1

              I have a rental property, use a property manager, make a profit, and they do regular checkups and provide photographic evidence among other things.

              A.

    • ankerawshark 5.2

      Antoine are your profit margins so tight on your rental that you have to do this???? I know that is a personal question and I respect that you may not want to answer it.

      I just don’t believe that profit margins are tight at all for landlords. I was one myself a few years back. Unless landlords have over extended themselves in which case my advice is get out of the business.

      • indiana 5.2.1

        There was a time when a Labour government introduced LAQC – Loss Attributing Qualifying Companies. Property investors used this legally and government encouraged avenue to negatively gear themselves so that they could reduce their taxable income. Effectively, the idea was not to be making a profit, but a loss.

      • Antoine 5.2.2

        >Antoine are your profit margins so tight on your rental that you have to do this?

        I’m honestly not sure what my profit margin is, but I’m not inclined to reduce it!

        A.

  6. Mr Marshy 6

    Lol, this reporter really has zero economic nous if he thinks its worth rejoicing. A landlord fee is coming and that will simply be passed on to the tenant. Its called business. You dim socialists really shouldn’t comment on anything business related as your clouded ideology just shows your ineptitude. Report back in a years time when rental stock has shrunk as landlords sell up, and rents rise. See if you are rejoicing then …

    • ankerawshark 6.1

      Actually Mr Marshy, you are making grave assumptions here. I am a business owner and have been a landlord. I have always factored in fairness to tennant customers, and I am doing very well thank you very much. I feel more than entitled to comment on such thing. So actually, and I don’t usually say this sort of thing, shut up.

    • Red Blooded One 6.2

      Wow, so angry with your dim socialists comment Mr Marshy. My property managers have advised that I will be paying a weeks rent if they secure me a tenant in the future. It is not going to be a regular charge (hopefully) as I would much rather my tenants are happy enough to stay long term. The charge will only transfer through to tenants if/when market rent rises occur. If you see a one week charge once in a blue moon as an excuse for you or other landlords to wail, moan and sell up, I suggest you do. The rental market is obviously not conducive to your ethics or lack of.

    • Draco T Bastard 6.3

      If a person is paid by both the landlord and the tenant then who’s he working for?

      • David Mac 6.3.1

        The house.

        Property managers represent the house. Good ones are in the business of creating lovely places to live. Their meagre income comes in from all over the place. Some of the GST on that packet of long grain rice you bought this morning is in a PM’s pocket.

        • Draco T Bastard 6.3.1.1

          If that is true then we don’t need the landlord. The landlord just represents an unnecessary layer of bureaucracy.

          • David Mac 6.3.1.1.1

            Yep, we get how it would work in the Dracosphere.

            The fact remains, there is a layer of landlords because their rental house is a little business and history hurts landlords that don’t approach ownership as a little business.

            • Draco T Bastard 6.3.1.1.1.1

              Yep, we get how it would work in the Dracosphere.

              It’d be cheaper, less expensive and have better results.

              The fact remains, there is a layer of landlords because their rental house is a little business

              That’s not actually a fact. It’s a misunderstanding of history and capitalism.

              If housing was provided by the state then there wouldn’t be any capitalist business available. It is only through the changing of laws (such as the Inclosure Laws etcetera) that allowed rentier capitalism to bloom. Of course, the feudalism that came before was worse but not by much.

  7. David Mac 7

    Property Management is a crap vocation for the greedy. The margins are tiny in that business. They’ve become dependent on letting fees to keep their mouths above the water line.

    Property management income is generally split 50/50 between the franchise holder and the ‘in the field’ property managers. They generally charge about 8% of the rental income. So if a house is returning rent of $300 per week, there’s $24 income for the office. Split 50/50, the property manager is making $12.

    An average roll of 50 rentals x $12 = $600 per week for the manager. Often contractors, they have to pay for their extensive car and phone usage from their $600 per week, then their taxes. Even if managing 100 rentals, that would be a 65 hours a week job to do properly, after overheads, the money is still pretty ordinary.

    For the greed inclined, begging outside a shop pays better than residential Property Management. I don’t think PM’s are looking for letting fee replacements because they’re greedy, I think they’re doing it so that they don’t starve to death.

    • Draco T Bastard 7.1

      For the greed inclined, begging outside a shop pays better than residential Property Management. I don’t think PM’s are looking for letting fee replacements because they’re greedy, I think they’re doing it so that they don’t starve to death.

      I was doing better as a contract pizza delivery driver.

      If your figures are correct then PMs shouldn’t actually exist as they’re not getting enough income to cover their expenses.

      • David Mac 7.1.1

        Ha, yeah exactly, as business models go, the margins are super model skinny.

        • Wensleydale 7.1.1.1

          If it’s such a shit gig, why does anyone do it? Genuine question. What do they get out of it other than stress and a meagre income?

    • Infused 7.2

      My fee is 3%. Landlords need to learn how to negotiate

  8. Draco T Bastard 8

    Minister Twyford doesn’t think tenants will end up paying more.

    “Landlords are already charging as much as they can within supply and demand. So it’s not at all clear that because the small minority of landlords who use property managers want to pass on those fees through rent, it’s not at all clear that they’ll be able to.”

    I think the Minister needs to be appraised of Steve Keen’s work on supply and demand. This short article at Unlearning Economics is probably a good place to start:

    The second reason is to show that, despite economist’s assertions to the contrary, it cannot be proved that a market economy will necessarily maximise social welfare, as, even on their own terms, it is logically possible to have multiple equilibria, some of which are more socially desirable.

    All in all, this is a small, but welcome step in the Government’s overall housing plan. Bringing fairness to the rental market by removing a significant financial hurdle for tenants shows that Labour is taking a global view of our accommodation needs and not just relying on the market to self regulate.

    The market has never self-regulated. When left to their own devices the capitalists become Robber Barons.

    IMO, it is the regulations that define the market and make it fair and even workable. It is only through proper regulation that all costs can be properly accounted for.

    • David Mac 8.1

      Unfortunately I don’t think rents are as high as the market will absorb.

      Any rental anywhere, 1000’s of Trademe views, 100’s of email enquiries, scores of application forms presented.

      Rental listings don’t stick around long, up one week, gone the next. Any rental listing that is up longer than a month is a white elephant.

      I think rental asks are about 25-35% cheaper than what the market is currently dictating. Demand is stomping all over Supply.

      Additional forces come into play: In times of abundant rentals, a $25 rent rise notice might prompt a search for a new place. In these times of rental scarcity we’re more likely to cop a $50 rise on the chin.

      I wouldn’t be holding your breath if you’re waiting for regulators to enforce how much someone can make from their private legitimate business Draco.

      Damn, I’d love to visualise a happy ending to ‘The next decade of rental housing in NZ’ but I struggle.

      • Draco T Bastard 8.1.1

        I wouldn’t be holding your breath if you’re waiting for regulators to enforce how much someone can make from their private legitimate business Draco.

        I’m not.

        Regulations are there to cover fairness, health and safety and to ensure costs are properly accounted for and that the right person is paying them.

        It’s supposedly competition that will reduce profit to zero and that’s never going to work as there simply isn’t enough resources or competition.

      • Antoine 8.1.2

        > Unfortunately I don’t think rents are as high as the market will absorb.

        Clearly not.

        We cannot really fix the rental situation until we improve the supply demand balance. All the power is on the supply side (landlords) and little tweaks like the letting fees thing will not really change anything.

        A.

  9. Pete 9

    I heard various grizzlers yesterday on about how the rental market would collapse because of the change. And that renters will see their rents go soaring. And I’m sure I heard someone intimate the world would end.

    • Muttonbird 9.1

      I heard Hades himself was to ride forth from the underworld on a chariot of babies’ skulls upon the passing of this law.

      I’ve been checking outside but still nothing.

      • Antoine 9.1.1

        I don’t think anyone is saying that this law is a disaster or will make things much worse. What we are saying is that it will not improve the situation substantially for renters, in some cases may make them worse off. We are rejecting TRP’s spin that this is something to ‘rejoice’ over.

        A.

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    1 week ago
  • Extra support for Ethnic Communities to share vaccination information
    Extra support is being made available to Ethnic Communities to help them share COVID-19 vaccination information within their communities, Minister for Diversity, Inclusion and Ethnic Communities Priyanca Radhakrishnan said. “We know we need to get every eligible person in New Zealand vaccinated. A fund being launched today will allow for ...
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    1 week ago
  • School holidays remain unchanged for Auckland region
    School holidays in Auckland will continue to be held at the same time as the rest of the country, starting from Saturday, 2 October, Education Minister Chris Hipkins said today. “I’ve carefully considered advice on the implications of shifting the dates and concluded that on balance, maintaining the status quo ...
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    1 week ago
  • Government continues crackdown on gangs and organised crime
    Operation Tauwhiro extended until March 2022 Since it was launched in February, Operation Tauwhiro has resulted in:   987 firearms seized $4.99 million in cash seized 865 people charged with a firearms-related offence Gangs and organised crime groups will continue to be relentlessly targeted with the extension of Police’s successful ...
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    1 week ago
  • Speech to Body Positive 'HIV Treatments Update Seminar 2021'
    E ngā mana E ngā reo E ngā iwi Tēnā koutou katoa Ka huri ki ngā mana whenua o te rohe nei. Tēnā koutou. He mihi hoki ki a tatou kua tau mai nei I raro I te kaupapa o te rā. Nō reira tēnā koutou katoa Acknowledgements It’s a ...
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    1 week ago
  • Power bill changes bring fairness to charges
    A key recommendation of an independent panel to make electricity charges fairer across all households will be put in place, the Energy and Resources Minister Megan Woods has announced. “Phasing out the regulations on ‘low-use’ electricity plans will create a fairer playing field for all New Zealanders and encourage a ...
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    1 week ago
  • NZ economy’s strong momentum will support rebound from Delta outbreak; COVID fund replenished
    The economy showed strong momentum in the period leading up to the recent Delta COVID-19 outbreak, which bodes well for a solid economic rebound, Grant Robertson said. GDP rose 2.8 percent in the June quarter, following on from a 1.4 percent increase in the previous March quarter. This was a ...
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    1 week ago
  • Projects create benefits into the future
    Making a well-known lake swimmable and helping to halt the decline of the endangered hoiho/yellow-eyed penguins are among a suite of new projects being supported by the Government’s Jobs for Nature programme across the southern South Island, Conservation Minister Kiri Allan says. “It’s no secret that many of our most ...
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    1 week ago
  • Opening statement for Whāriki Indigenous Small Business Roundtable
      Kei ngā tōpito e wha o te āo e rere ana te mihi maioha ki a koutou nō tawhiti, nō tata mai e tāpiri ana ki tēnei taumata kōrero mo te ao hokohoko arā mā ngā pākihi mo ngā iwi taketake Tēnā koutou, tēnā koutou katoa – Pai Mārire.  ...
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    1 week ago
  • New members appointed to Kāpuia
    The Government is adding four additional members to Kāpuia, the Ministerial Advisory Group on the Government’s Response to the Royal Commission of Inquiry into the terrorist attack on Christchurch mosques. “I’m looking forward to having Pamela MacNeill, Huia Bramley, Melani Anae and Katherine Dedo  join Kāpuia and contribute to this group’s ...
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    1 week ago
  • Timeline confirmed for Emissions Reductions Plan
    Cabinet has agreed to begin consulting on the Emissions Reduction Plan in early October and require that the final plan be released by the end of May next year in line with the 2022 Budget, the Minister of Climate Change, James Shaw confirmed today. “Cabinet’s decision allows organisations and communities ...
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    1 week ago
  • Pay parity pathway for early learning teachers confirmed
    Pay parity conditions and higher funding rates for education and care services will come into force on 1 January, 2022, Minister of Education Chris Hipkins confirmed today. The Government signalled this work in Budget 2021. “From 1 January, 2022, centres opting into the scheme will receive government funding and be ...
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    1 week ago
  • Speech to the New Zealand Nurses Organisation Conference 2021
    Kia Ora tatau katoa.   Ka tuku mihi ki nga nēhi, He pou Hauora o Aotearoa, E ora ai tatou.   Whakatau mai  I runga i te kaupapa o te ra Te NZNO conference.   Tena koutou tena koutou Tena tatou katoa   Good morning, and thank you inviting me ...
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    1 week ago
  • Government investment in farmer-led catchment groups sweeps past 150 mark
    171 catchment groups have now been invested in by the Government 31 catchment groups in the Lower North Island are receiving new support More than 5,000 farmers are focussed on restoring freshwater within a generation through involvement in catchment groups  Government investment in on-the-ground efforts by farmers to improve land ...
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    1 week ago
  • Fight to protect kauri on track
    The Government is pitching in to help vital work to protect nationally significant kauri forests in Auckland, Minister of Conservation Kiri Allan says. “Ensuring the survival of these iconic trees for future generations means doing everything we can to prevent the potential spread of kauri dieback disease,” Kiri Allan said. ...
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    1 week ago