What would just tenancy laws look like?

As public support for a building warrant of fitness for rental housing grows the Government does what it usually does – it comes up with half measures which appear to address the underlying concern but really does little to interfere with its neoliberal agenda.  

Phillipa Howden-Chapman and her colleagues at the Wellington Medical School have done an incredible job over the past 15 years researching and highlighting the impact which poor housing has on health and in particular children’s health[1].  The housing most often in the poorest condition is rental housing[2] and this housing is more commonly occupied by the poorest of families and more commonly occupied by children. 

It seems quite ludicrous then that taxpayers contribute around $1.3 billion in the Accommodation Supplement each year and that $1 billion of this goes into supporting private rental housing which is often of poor quality.  Of course private landlords are not the only ones providing poor housing on the taxpayers’ behalf as the Coroner’s report on the death of South Auckland toddler Emma-Lita Bourne in a state house testifies[3]. Surely if a landlord – public or private, is to receive a subsidy from the state, the state should be able to impose some quality controls to ensure it and the citizens the subsidies are meant to assist get well served? 

This was part of the justification for the call for a building warrant of fitness for rental housing although this call extends to all rental housing not just the one third or so which is subsidised by taxpayers.  It seems perfectly reasonable that if a person or business is to offer a service in the market that that service should be fit-for-purpose.  In other words a rented house, flat or apartment should offer the basic things that New Zealanders in the 21st century should expect to live with.  It should be warm and dry and safe, secure and sanitary. 

But our current tenancy laws do not ensure that such basic standards are met.  New Zealand’s housing standards are based on regulations which are almost 70 years old [4].  Furthermore the main tenancy law – the Residential Tenancies Act 1986 (RTA), doesn’t actually refer to a house or dwelling as the thing being rented but to premises.  Under the RTA a landlord is responsible for providing ‘the premises in a reasonable state of cleanliness’ and for providing and maintaining ‘the premises in a reasonable state of repair having regard to the age and character of the premises and the period during which the premises are likely to remain habitable and available for residential purposes’ [5].  Nothing about minimum standards for what might be called a house – in fact there is no mention of house or dwelling at all. 

Against such dismal expectations of rental housing the Government’s proposals for changes in the Residential Tenancies Amendment Bill 2015 must surely be welcome.  In announcing the changes, Building and Housing Minister Nick Smith claimed that this pragmatic package of tenancy law changes will make homes warmer, drier and safer for hundreds of thousands of New Zealand families without imposing excessive bureaucracy or cost’ [6].  Such a claim is doubtful on several counts.  There are serious loopholes in the Bill’s requirements which make compliance almost voluntary and on any account the standards being required are well out of date.  Moreover these requirements are not the same as those minimum housing standards which might eventually be brought about by a warrant of fitness system.  

Dr Smith at least makes it clear in his introductory statement that the main purpose of these changes – as minor and inconsequential as they are, is to minimise costs to landlords and investors.

The Amendment Bill’s flagship initiative of requiring landlords to install smoke alarms and insulation will actually be enacted through as yet still to be drafted regulations.  The Bill does however hint at exemptions (clause 38) although the circumstances of such exemptions and in particular who decides them remains unstated at present.  In its regulatory impact statement the Ministry of Business Innovation and Employment (MBIE) suggests that 100,000 of the approximate 280,000 rental properties requiring insulation would be exempt under the proposals currently being advanced [7].  It is literally cold comfort to tenants to know that under these amendments landlords will be required to indicate in a tenancy agreement the level of insulation in the premises they are renting (clause 6).  In the perfect world of competitive markets and free choice the only thing missing is information so with such disclosure the problem of poor quality rental housing is resolved. Based on the information provided by landlords tenants are able to choose to rent a cold damp house or a want dry one.

The real world of landlords and tenants is rarely as straightforward and ideal as this.  Tenants seldom have the power to exercise choice especially at the less expensive end of the market and in markets where supply is short.  They face a take it or leave choice which given that housing is a basic necessity leaves little room for choice.  And in a number of ways the Residential Tenancies Act and the propose amendments reinforce this power imbalance.

This imbalance is well illustrated by the fact that almost 90% of the cases taken to the Tenancy Tribunal are taken by landlords [8].  While it might be argued that such dominance by landlords merely proves how poorly tenants behave, there are practical reasons why tenants don’t use the Tribunal to assert their rights.  The most obvious is that in standard periodic tenancies tenants have no security of tenure – landlords can end a tenancy for no reason by giving 90 days notice which might in some circumstances be shortened to 42 days.  While there are protections for tenants against retaliatory actions by landlords, such protections are not enduring and require clear evidence of landlord’s intent on any account.

Perhaps the worst thing about landlords’ dominance of the Tenancy Tribunal is that it is tenants who pay for the Tribunal’s operations. During 2014/15 the cost of MBIE operating the Residential Tenancies and Unit Title Service was $24.8 million of which just $710,000 came from application fees while $23.2 million came from the interest on the $457 million in tenants’ bonds which is held by the Crown.  The Government may argue that some of these funds are expended on consumer education programmes such as those offered on MBIE’s website [9].  However the reality is that the bulk of the budget is spend on running tenancy mediation services and the Tenancy Tribunal which is almost entirely used by landlords and which from most accounts functions as an evictions court. 

The Residential Tenancies Act is now 30 years old and in need of overhaul.  The Act was the brainchild of Phil Goff the then Housing Minister in the neoliberal Fourth Labour Government of Lange and Douglas.  From its genesis the RTA was about mediating private property rights and not about promoting social rights such as the right to decent housing.  While the right to adequate housing exists in such conventions as the International Covenant on Economic, Social and Cultural Rights (ICESCR),to which New Zealand is signatory, this right is nowhere enshrined in New Zealand law.

The current review of tenancy law may have been far more comprehensive than the piecemeal patch-up job which the current Amendment Bill offers.  In general a comprehensive review could have tackled head on the obvious conflict between private property rights and social rights.  More specifically such a review could have three key elements:

  1. Straightforward and explicit minimum housing standards along with meaningful penalties to enforce these.  
  2. Rebalancing of power between landlords and tenants which should include using tenants’ bond money to support tenants’ advocacy services rather than the Tenancy Tribunal which largely supports landlords’ interests.
  3. Security of tenure perhaps with a prohibition on periodic tenancies and requirement that tenancies run for a minimum period after which tenants have automatic renewal rights. 

Of the 486,000 additional dwellings added to New Zealand’s housing stock since 1991 just 37% are owner-occupied while 63% are rented.  Over this period New Zealand’s home-ownership rate fell from 74% to 64% and seems likely to continue to fall.  We are some way off from becoming a nation of tenants although it is clear that more and more New Zealanders will remain as tenants for their whole adult lives.  This suggests that we need more sophisticated and socially just tenancy laws which allow tenants to have a place to call home and for this home to safe, secure and healthy.