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Claiming tenants like letting fees is a sick joke that underlines the need for change

A landlords’ spokesman’s claim that renters like paying letting fees shows how disgracefully lopsided our rental market has become, argues Madeleine Holden – and how desperately we need tenancy reform.

Earlier this week, Stuff ran a story with a headline perfectly crafted to make millennials choke on their avocado toast: “Renters ‘like letting fees’, property investor group says”. The quote came from Andrew King, head of the Property Investors Federation, who was discussing a raft of proposed changes to the Residential Tenancies Act on The AM Show, including a ban on letting fees. “Ironically, a lot of tenants actually like the letting fee,” he assured host Duncan Garner, explaining that about half of all properties don’t have letting fees, and (richer) tenants enjoy the competitive advantage that comes with being able to access the ones that do.

While it might be true that wealthier tenants “like” being above the poorest, most option-devoid renters – in the same way that a fish in the middle of a shoal “likes” not being on the outer edge, exposed and vulnerable to sharks – the idea that anyone would prefer to fork out even more of their hard-earned, stagnant wages to the rosy-cheeked profiteering class sounded to me like laughable, out-of-touch drivel, so I asked some actual tenants what they think of letting fees. The responses ranged from “They’re pretty crushing, really” to “they’re fucking dogshit”. One Auckland-based renter told me that about eight months after paying a $1,000 letting fee for a flat of four in Grey Lynn, his agent tried to charge the same fee again to alter the name of one tenant on the lease. With King’s logic in mind, I asked if he liked being offered not one, but TWO letting fees. “Funnily enough, no,” he responded. “I didn’t even like being asked to pay one.”

Property Investors Federation president Andrew King on the AM Show this week.

King went on to tell Garner, with a kind of “Aw shucks, our hands are tied!” resignation, that abolishing letting fees would make rents go up about $10 a week, because landlords would pass on the costs to tenants. It’s a statement he probably thought would cause renters to reassess the proposed ban, but which is perhaps more likely to engender support for additional protections like rent control, or a socialist uprising that immediately nationalises the country’s entire housing stock, or the dusting off and sharpening of the guillotine labelled “greedy landlords”.

(Mark Richardson, co-host of The AM Show, wouldn’t like that joke. He’s “starting to tire of being vilified” as a landlord, he sighed, telling the panel he simply “made an effort to try to get ahead” when he purchased his rental property. Richardson’s hurt feelings are a shame, but my heart bleeds more for Brett Johnson, breathing mould into his sick lungs in his damp Wellington flat, or the family of two-year-old Emma-Lita Bourne, who died in hospital last year after contracting a severe respiratory infection in her cold Otara rental, or Dawn Robbie, paying $520 a week to live among rats in a mosquito-infested swamp in Papakura, or one fifth of New Zealanders living in fuel poverty, i.e. spending more than 10% of their incomes on electricity to heat their damp, freezing homes – but I’ll try to remember to keep “vilified” landlords in my prayers, too.)

What is a letting fee, anyway? According to the Ministry of Business, Innovation and Employment, the fee covers the cost of a letting agent or solicitor putting a tenancy in place, such as the time involved in holding open homes, reviewing applications from prospective tenants, preparing tenancy agreements and conducting the initial property inspection. There’s no legal cap on letting fees, and they are customarily a whole week’s rent plus GST. Why should the tenant – typically poorer, and more powerless, than the landlord – bear this cost, you might ask? Doesn’t the landlord profit enough from having the tenant live in the building he owns, paying off his mortgage for him? Aren’t rents exorbitant enough without letting fees – and becoming even more so, rising 5.7% in Central and West Auckland in the first quarter of 2018, while wage inflation hovers at 1.8%? Isn’t it bad enough that 44% of all households in rental accomodation face rent stress, i.e. spend more than 30% of their incomes on rent? Isn’t it wrong for a tenant to foot the bill for the time it takes an agent to wave a few people through an uninsulated three-bedroom in Henderson, and then pay again for the privilege of freezing half to death in it the next winter? Are property investors taking the piss?

There’s good reason to think they are. New Zealand’s current rental laws overwhelmingly favour landlords and provide tenants with few rights and little security, leaving renters to feel desperate, dislocated, anxious, powerless and physically sick. I spoke to Joe Nunweek, a community lawyer who specialises in tenancy law, about how we stack up internationally. “I don’t think New Zealand’s rental system is fair at all,” he said, explaining that we lack both the longer lease periods and security of tenure found in Western Europe, and the regulations around rent levels and property conditions – not to mention the guaranteed right of counsel to low-income renters facing eviction – of places like New York and San Francisco. “It’s particularly galling that renters can be evicted ‘at will’ for no reason,” he continued, “given that we’ve mostly phased that out of things like the employee/employer relationship.”

Otara toddler Emma-Lita Bourne, who died last August after being hospitalised with pneumonia. The coroner said cold, damp housing may have contributed to her death.

Yet organisations like the Property Investors Federation consistently oppose regulation that slightly redresses this power imbalance, and landlords throw their toys out of the cot by raising rents in response to legislative change, both in retaliatory and sometimes just opportunistic ways. “If they make it harder for us to provide rental properties, it’s gonna make it more expensive for tenants,” King threatened on The AM Show. “We need laws that actually encourage people to provide rental properties in New Zealand.”

Do landlords provide rental properties, though? “Andrew King is pretending that having money is what causes housing to exist,” Emilie Rākete, a graduate student at the University of Auckland studying political economy, told me. “In reality, this is not the case. The labour of drawing blueprints, sawing planks, and pouring concrete is what creates housing.” She explained that, in a fairer economic system, ordinary working class people could build enough housing in New Zealand for everybody to have a warm, safe home. “The reason we can’t provide housing for everyone is that people like King profit from privately owning property,” she continued. “Working people are the ones who build houses, so landlords are an entirely unnecessary appendage to the process of producing houses.”

In other words, landlords don’t provide housing; workers use their labour to build housing from materials provided by nature, and landlords hold title to those buildings, and extract rent from people who hold no such titles, only because of a certain system of landlord-friendly laws that permits this arrangement – laws that ordinary people could collectively revoke at any time. (As I mentioned, the government is currently considering changing those laws with the express aim of making life better for renters, and you can share your views on the proposals in this online survey.)

So why does King expect tenants and lawmakers alike to snivel and grovel at the feet of landlords? Does he think we’ve so thoroughly absorbed the neoliberal logic that houses are private investments rather than a collective right that we’ll buy into his disingenuous, self-aggrandising nonsense? Does he think renters will continue to tolerate not only shelling out huge chunks of their income just to be sheltered, but limitless rent increases, no-reason evictions, and being made to beg, hat in hand, for basic things like owning pets or hanging pictures on the wall? Does he truly have the nerve to not only oppose the suggested reforms, but to propose new laws that are even tougher on tenants, such as being able to charge their credit cards if they don’t pay rent, and make them pay for water and minor property damage? Is he taking the piss?

Again, yes. “Opposition [to tenant-friendly reform] is mainly the preserve of wealthy, older investors who contributed to a housing shortage and climate of unaffordability,” Nunweek explained. “They won’t even countenance incremental changes to the status quo.” He stressed that the proposed changes are minor tinkerings to protect tenants, not significant macroeconomic changes. “We’re not even talking about setting rents or lending conditions for investment,” he said, “let alone expropriation and redistribution of private property.”

When it comes to housing, we have things much worse here than investors like King would have us believe, both internationally and according to standards of basic decency. More than 40,000 people live on the streets, in emergency housing or in substandard shelters in New Zealand, and thousands of children suffer from preventable diseases like whooping cough and rheumatic fever because they live in cold, damp, overcrowded homes; yet 33,000 vacant houses in Auckland alone gather dust, deliberately left empty by property speculators rubbing their hands with glee while prices increase. That’s fucked. Pardon me, but that’s absolutely fucked, and anyone with a functioning conscience should agree that it’s fucked.

The Labour government’s proposed changes to New Zealand’s rental system suggest bare-minimum protections for tenants, and we need them yesterday. Opposition by the Property Investors Federation is heartless and self-interested, and King’s suggestion that tenants actually enjoy the extra costs landlords heap on them is a sick joke. Property investors have got away with far too much for far too long in this country, lining their pockets at the expense of ordinary, working New Zealanders, and their greedy behaviour needs to be reined in. Renters like letting fees? Give me a break. Renters like rent control.

Once more with feeling: if you think New Zealand’s rental system could be fairer on tenants, say so in this government survey about the proposed changes to the Residential Tenancies Act.

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