Political support for longer term leases

Barfoot & Thompson City branch manager Sandra Forrester told an Auckland Property Investor Association pre-election meeting on Tuesday that a growing number of tenants want longer term leases.

The latest Barfoot & Thompson latest rental data shows there has been a decline in the number of bonds being lodged in Auckland, despite more people renting.

This indicates that people are staying in rentals for longer.

Further, the data shows that the average tenancy has now increased to two years from 18 months.

Forrester said there are lots of people who can’t afford to buy a house and are stuck in the renting cycle.

“But they don’t want sub-standard rental properties. What they really want are homes. There is a real need out there for rental property that people can create a long term home in.”

Traditionally, New Zealand’s rental market has been dominated by periodic tenancies, rather than fixed term, and shorter leases, rather than long term leases.

But it seems there is political support for longer term rental agreements.

At the pre-election meeting both Building and Construction Minister Nick Smith and Labour Party housing spokesperson Phil Twyford supported longer tenancies.

Twyford said Labour is looking at ways to increase security and length of tenure in rental agreements, but they wouldn’t do anything that impinged on a landlord’s right to sell their property.

“We think many landlords would like longer tenancies. So a policy encouraging that could be a win-win for both landlords and tenants.”

Smith said National shares the view that both landlords and tenants are better off with longer term leases – but doesn’t believe that a law to compel them is the answer.

“We think there is a reasonable case for having something in the MBIE rental agreement template to encourage longer tenures.

“But I don’t think that it should be legislated for as that could result in rental properties being withdrawn from the housing market.”

The issue of security of rental tenure has already been raised in the lead-up to this year’s election.

One of The Opportunities Party’s policies would change the residential tenancy law so that leases make it easier for a tenant to remain in a rental property long term.

Investor advocates have said that most landlords prefer long term leases but that changes to tenancy standards and regulations would put off many landlords.