Mandatory pricing on For Rent signs is utterly ridiculous protects nobody and highlights a ‘paternalistic nanny state’ approach towards being a landlord and the Property Management industry argues David Faulkner.

Some things that appear to be rather minor can be really, really irritating. Let’s take having to put the rental price on a For Rent sign for example. I had first heard grumblings about this after a number of people had contacted me towards the end of last year asking me my opinion on the matter. This is after they had been advised that this is what they had to do after they had attended a Residential Tenancies Amendment Act roadshow. My answer at the time was ‘don’t be ridiculous!’

But no, this advice is apparently correct. Tenants have become so endangered that now you cannot put a ‘For Rent’ sign on a property without displaying what the price is. Can someone please explain to me how this is apparently protecting tenants’ rights? I do not know who comes up with these ideas in the depths of the public sector amongst the corridors of Wellington but someone has come up with an absolute pearler here!

On the whole, I am very supportive of the changes to the Residential Tenancies Act. Attitudes to how we treat tenants and renting, in general, have to evolve. I was one of the first in the Property Management industry to publicly say the changes were necessary and tenants do deserve a valid reason as to why they have been given notice. However, we are seeing a small but disturbing trend towards a paternalistic approach in regards to the implementation of legislation and governance of renting and property management.

What do you think? Should prices on For Rent signs be mandatory?

How having to state the price on a For Rent sign is protecting tenants is beyond me. No one seems to be able to give me a valid reason as to why such an approach is being taken. You may rightly ask why is this such a big deal and what is the problem with putting the price on a For Rent sign anyway?

In terms of practicality, it is more an inconvenience than anything else. To me, it is the principal of stance which irks me so much. In my opinion, it actually contradicts what is stated in the amendments. There are also issues around such a stance. The public sector sometimes fails to take into consideration the added time and costs that companies have to bear by following such a stance.

  • The ‘For Rent’ signs cannot be recycled and used again meaning more cost.
  • If the price changes, someone has to travel out to the sign and adjust the price on it. In some cases, this could be a considerable amount of time as well as another vehicle unnecessarily being placed on a road. In some cases, particularly in rural New Zealand, this could mean a two hour round trip.
  • There will be added costs in such an exercise. More signs being used, more petrol and travel time as well as a lack of productivity.

If this is to be enforced and god forbid it will be, what will likely happen is that companies will stop putting ‘For Rent’ signs on properties. And yet, throughout all of this, nobody can explain to me how it actually protects tenants.

It wouldn’t be such a contentious issue if the legislation said this is what you had to do. On the contrary, the new legislation says something completely different.

Section 22F: Landlord must state amount of rent when advertising residential premises

(1)        A landlord must not advertise or otherwise offer a tenancy of residential premises unless the amount of rent is stated in the advertisement or offer.

Firstly the landlord does state the amount as this is clearly displayed on multiple websites. It also does not say all advertising. It says advertisement or offer, not advertisement and offer. There is a big difference between an advertisement and an offer. We are clearly not offering the property to everyone who views it, the prospective tenant first has to apply for the property before an offer is made and background checks have to be carried out. There is also another issue here. Under section 123A of the RTA, a landlord now has to keep copies of the advertisement of the property for rent for up to 12 months after the end of the tenancy. If we are going off the advice we have been given, we are now going to have to keep a copy of the ‘For Rent’ sign for up to 12 months after the end of the tenancy as well. Let’s say there is a large Auckland company that has 4,000 managements with the average length of a tenancy being two and a half years. This means this company will have to store an average of 1,600 signs per year. After three years they will have to have stored 4,800 For Rent signs securely stored labelling what the property was and what the price is.

I can picture the scene now! Some large Property Management companies will have to lease commercial warehousing so they can store the thousands of For Rent signs that will have to be kept so they remain compliant. This is how ridiculous things have become. Whatever happened to common sense?

How did we get here?

This issue made news when an Auckland Property Management company proudly promoted the fact that they would not put prices on properties For Rent and would tender rental properties to the highest bidder. The capatlist in you may think ‘fair enough’ this is the basic rules of economics at play with supply failing to keep up with demand. However, most people thought it was somewhat unethical and the idea was never really going to take off.

This article by The Spinoff in March 2018 was not kind to our industry as it highlighted the practice of rent bidding

The reality was very different from what the media latched onto. This was only one company taking such an approach. If anything, it was more a distraction than outrage and the reality of this becoming mainstream was highly unlikely. However, a Labour party who at the time had recently formed the Government made a political gain from the headline with Phil Twyford calling the practice of rent bidding ‘unacceptable’. In fairness to Phil, nobody really objected to the ban on rent bidding as it wasn’t seen as a problem and yes, it probably is an unethical practice. This was very similar to increasing the period for rent increases from 180 days to 1 year. The vast majority of people within the industry were actually very supportive of this change.

When the amendments were finally announced, all the focus was on the security of tenure and the end of no cause terminations rather than something as paltry as having to state the price of the rent on your advert.

But now, it has become an issue and everybody I have spoken to within the industry says the same thing. It is ridiculous.

The stance is such that anybody new to the country looking in must think that the internet does not exist in New Zealand and every Saturday morning there is a frenzy of poor tenants being forced to make bids on rental properties that they cannot afford with the greedy money hungry agent driving up the price, not caring about the impact of their actions. Whilst all of this is going on, hordes of ‘out of luck’ tenants are left frustrated, angry and feeling exploited.

This is a classic case of a divide between the private and public sector. A team of bureaucrats write a policy but they have no understanding or idea in regards to the complexities and challenges that businesses face on a day to day basis. Yet, despite this, they fail to actively engage with the industry before making such a policy.

This is similar to the overly excessive ‘Tenancy Services Healthy Homes statement’ that is 13 pages long. This turns the Tenancy Services Tenancy Agreement into a painful 22-page document.

I for one like the adage of ‘keeping things simple’. There will be many tenants across the country who would struggle to read and fully understand such a complex document. Why do we have to make things harder than they actually are?

This is similar to a Heating Calculator that is failing ‘new builds’ which pass the Building Act, are fully consented and are fine for an owner-occupier to live in. But god forbid a tenant risk their health by living in such a dangerous dwelling.

Change is needed to protect tenants and I am fully supportive of initiatives that give greater security to tenants as well as ensuring that they live in warm, safe and compliant homes. However, once a change becomes so oppressive, they fail to serve the purpose that it was designed for and they cause more damage than good. Instead of focusing on such petty matters such as prices on For Rent signs, they should be focusing on matters such as finally setting containment standards for rental properties. Last month we highlighted the fact that standards were due to be set by the 31st of January 2021, a deadline set by the executive. They had a timeframe of eighteen months to set standards and it failed to achieve the deadline. These are standards that need setting and we are still waiting.

 

David gives his opinion on the Government failing to set standards for contaminants

In the latter years of her leadership, former Prime Minister Helen Clark’s government was accused of becoming a nanny state. This was primarily because of the backlash from the anti-smacking bill. But it went further than that with her Government telling people what size showerheads and which lightbulbs they could use. Ultimately, they did not recover and National came to power soon after. I am not suggesting that this will happen with this Government, but the level of bureaucracy has increased exponentially since Labour came to power. Ultimately, the cost of this is paid for by the tenant as increased costs with increased compliance are passed on by the landlord.

So I end this article with a plea for common sense to prevail. We all make mistakes from time to time. The Privacy Commission openly admitted that it got its first attempt to set guidelines for selecting a tenant wrong. They listened to stakeholders and made the appropriate changes. Can the people in charge of administering the act please do the same thing?

I for one would have no intention of following their guidelines and if Tenancy Compliance and Investigation Team have nothing better to do than waste taxpayers money by taking someone to Tribunal for such a trivial matter, then all it does is highlight the failure of the system.

The motivation should be about protecting tenants rights, not enforcing a punitive policy that serves nobody. Wake up and let common sense prevail.

David Faulkner

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