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SocietyMarch 26, 2017

Slumlords beware – the government has a new taskforce and they’re after your dollars

Businessmen in lineup
Businessmen in lineup

As more and more young and vulnerable people are locked out of the market, the Ministry of Business, Innovation and Employment has declared war on bad landlords, releasing their tenancy compliance team into the wild. Don Rowe talks to their leader. 

Some time during Rent Week, it might have been around the time a doctor wrote our shitty houses are killing us, I thought ‘Man, there really should be some sort of, I don’t know, minimum rental standards, and like, a team to enforce them’. I wrote it off as the bleatings of an avo-infused millennial whiner and went back to my flat white.

Well, in a stunning display of governmental foresight, MBIE in fact predicted our series a full nine months ago, and in reaction to this premonition set about establishing a ‘Tenancy Compliance and Investigations Team’. Now in their third month of operation, the team has already awarded one Kiwi family more than $15,000 after finding they were paying rent to live in an unconsented garage, which sounds almost palatial compared to some of the hellholes we’ve heard of this week.

So how scared should slumlords be? Could landlords offering cheap rent to struggling youth be whipped with the same cane? Should we even have profit-motivated landlords in the first place? I spoke to team leader Steve Watson about all that and more, as presented in the excerpt below.

The Spinoff: Could you broadly describe the state of renting in NZ?

Steve Watson: I believe that over the next five years that there’s going to be an increasing number of people in the rental market and that the traditional journey through life for young people of perhaps study, partnering, travel, purchasing a house and then family and career, I believe that the home ownership aspect is going to be out of reach for some people, so there’s a need for some regulation and the government to hold people accountable for the quality of the rental stock. That’s what my team is setting out to do. That’s our broad strategic goal.

Cheer up, you’ve still got a rapidly appreciating asset on your hands

Why did MBIE see the need to establish this team?

We started as a project establishing the team in June last year, but we’ve only just reached full establishment. There was a six month lead in period. It was a ministerial directive to establish the team, but again basically it was the increasing number of rental properties. We saw some real issues with the lower end of the rental market in the quality of the rental stock – people living in garages, people living in unconsented dwellings, the overarching health and safety needs of uninsulated properties and properties with no smoke alarms. Those were the principal changes. It came about as a result of the real health and wellbeing issues in some rental properties.

Are you talking in terms of illnesses of poverty, things caused by damp housing, rheumatic fever and things of that nature?

That’s what the broad objective was, particularly for the insulation. Our strategic objective, or goal, can be encapsulated as warmer, safer, drier homes. That’s the banner that we operate under. The health outcome is one aspect of it, yes.

What sort of issues have you been seeing thus far? 

We have seen a number of situations where we’ve had to take some corrective action, or some warning action, or give landlords a nudge. Something else that we’re seeing is a real apathy in uptake for insulation. Insulation doesn’t have to be in place until July 2019, but our message to landlords would be that they should be doing it now rather than waiting until the last minute when the market won’t be able to meet their demands. And it’s a better social outcome for them to do it earlier rather than later.

Are most of the infringements you’re seeing a result of amateur landlords, or is it more of a problem with slumlords? 

It’s a little bit of both. We’ve identified three sectors that we want to work with. We have the government and community housing providers, you’ve got the property management sector and the private and individual landlord sector, but what we have seen is that private and individual landlords do not see their rental property as a business. Our view is that it’s an income generating asset and should be managed as a business with all of the compliance and regulatory stuff that you have to do when running a business. What we believe is that if people spent the time managing their rental properties, getting them to an acceptable, marketable standard, that a lot of these problems would be resolved.

How do the problems come to your attention? Are they reported by tenants?

Tenants can report things to our call centre or online, or we receive information from other government departments. We work very closely with other ministeries who, in the course of their work, come across situations that they think we should know about. We also have a proactive work program, particularly in terms of the larger property managers, or larger organisations, or individuals who have large property portfolios. We’ve started running an audit program which is in it’s early stages but we audit their operations and part of that audit is to see how they’re complying with the tenancy law.

What sort of protections do you think tenants should be afforded? Even if your house is up to standard in terms of insulation and a smoke alarm, if in five years there’s going to be so many more people who owning a home is out of reach, do you think that they deserve or require some sort of longer term security? 

I don’t really have a view on that. I have a personal view, but it’s not the role of my team to enforce the security of tenure. I think as a longterm outcome it would be desirable from a tenancy services point of view, but it’s not actually a regulation or a rule that we enforce. But my personal opinion is that if you have security of tenure you’re more likely to get a better landlord tenant relationship.

Is there a government initiative to look at that, or to assess the state of things in that area, considering your position that it’s going to be harder to achieve home ownership? 

I don’t know. That’s probably a policy question, and I don’t know the answer sorry.

The thing that concerns me a little bit when you say that people should view their property as a business is that it dehumanises the tenants a little. It makes them seem more like a source of income rather than people with their own concerns and needs.

That’s an interesting point of view. I do still believe that if landlords treated their properties as a business and the tenant as a customer, that takes away the dehumanisation aspect you’re worried about. As a customer you’re a valuable stakeholder in terms of you need to be looked after and treated with dignity.

What sort of power do you hold at the moment in terms of enforcement? 

One of the new changes gave the ministry the ability to act on behalf of the tenant, take action in the tenancy tribunal and act on behalf of the tenant even without the tenants consent. If we believe in the public interest that a landlord is acting particularly outside the law, and for whatever reason the tenants don’t wish to become involved, or they may have moved on, or they may have resolved the problem by leaving, we can still take action against that landlord without needing the tenant to formally complain. That’s useful because it allows us to stop the landlord treating the subsequent tenants in the same way.

Is there not a danger that it may antagonise landlords? While people might get insulation as a result, it’s not much help if you’re kicked out by a vindictive slumlord.

Absolutely true. The legislation also changed to make stronger retaliatory notice provisions, and I accept that that’s only part of the solution, but we’re fairly careful in the action we take. We’re quite selective. We will always act in the best interests of everybody concerned when we take action. The example I use where the tenant has moved on, that’s the most likely time we’d act without the consent of the tenant. Once the tenant has resolved the situation, they’re protected and safe, so they’re probably likely to disengage with the government because that’s just human nature, but we would still see benefit in taking action against the landlord as the regulator to prevent re-victimisation. I understand I’m talking as a regulator and as the government, but the state has a role in this.

In terms of the landlords, or slumlords because that’s essentially how some of them are acting, how afraid should they be of this new team? It’s all very well having standards, but in terms of enforcement and the powers you have, should they be concerned? 

Absolutely. Look, we will take a very tough line where there’s a serious or cynical breach of the law. Where we won’t be taking tough action is where it’s a mistake or the landlord is a genuinely good person who’s actually trying to do the right thing. We’re not out to get everybody, but we do want to send a very clear message to those deliberate and cynical landlords who seek to exploit vulnerable people basically.

It’s an interesting intersection because some people might say that housing is a right and not an investment opportunity. What would you say to that? Is there a middle ground here?

I think regardless of what you’re able to pay, there should be some minimum standards and a basic quality to the housing stock that is available for all people.

There is a way for landlords to approach you first to ascertain what their responsibilities are, correct?

The ministry has, through our website and information and education team, we want to make it easy for landlords to comply. I would be the first person to acknowledge that the majority of landlords are, on the whole, good people. They want to do the right thing by their tenants and they do have, for the most part, a good relationship with tenants. That’s the key to it. The key to it is having a good relationship between landlord and tenant. We would encourage tenants, if they are having problems, to talk to their landlord before they come to us to try and resolve it, and we would intervene as a last resort.

This post is part of Rent Week, a series about why the experience of renting a home in NZ is so terrible, and whether anything can be done to fix it. Read the entire series here.

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