Rental Law Changes are half-hearted

noun_128705_ccResidential tenancy laws are being revised but will not include a full warrant of fitness (WoF) for housing, which Deputy Prime Minister Bill English rejected as “extreme”. The initial outlines for proposed changes released in July show only very limited improvements in tenant rights. Legislation is being drafted and was expected to be in Parliament during October. This article puts together some analysis and critique of the proposals to help all those who wish to support the call for stronger tenancy rights and a full WoF for housing.

There are four main elements to the proposed changes (the full details are on the MBIE website):

  1. requirement for smoke alarms in all rental properties from July 2016
  2. requirements for ceiling and underfloor insulation on all rental properties by July 2019
  3. stronger protections for tenants against retaliatory notice and strengthened enforcement provisions for Government to act against landlords
  4. faster resolution of tenancy abandonment provisions to allow faster re-letting.

Professor Philippa Howden Chapman and the team of researchers at Healthy Housing – He Kainga Oranga have produced an excellent analysis of the 2015 Budget and subsequent rental housing quality announcements in a recent Policy Quarterly article: “What effect will the 2015 Budget have on housing?. Other helpful analysis has come from housing advocate Eleanor Chisholm, as well as Wellington Community Law team members and Lyndon Rogers, author of Paper Walls  and legal researcher for Anglican Social Justice in Christchurch.

Half-Hearted Insulation & Cold-Hearted Heating

Every winter 1600 extra deaths occur among people aged over 65 in New Zealand that are attributable to housing conditions and most of those people are likely to be living on low incomes in a rental property. Professor Howden Chapman and her team are strong in their criticism of the minimum standards proposed because they set lower standards for the most vulnerable groups. The proposed standards ignore the evidence of extensive research about the benefits of better housing quality. They argue that no plausible reason is offered by the Minister of Housing Nick Smith as to why he has chosen to use almost 40 year-old housing insulation standards as a minimum, that is just over half of the modern building code minimum requirement (70mm cf 120mm). Even Housing NZ has managed to refurbish most of its properties built before 2000 to the current energy efficiency standards.

At the same time no requirements for heating of houses are included, even though the full health benefits of insulation are only achieved when there is also efficient and cost-effective heating available. The Minister argues that heating is already required under existing law but those regulations date from 1947 and include only the requirement for a “fireplace or approved form of heating in the lounge” and this is apparently often interpreted as simply meaning there has to be an electric socket!?

Half-hearted Enforcement

The Ministry of Business, Innovation and Employment (MBIE) is being given more power to investigate breaches of the Act under the proposed changes. The Paper Walls report however points out that MBIE already has powers to take over tenancy proceedings from the tenant but has only used it twice in the last 20 years. The proposed law changes will also enable MBIE to act without requiring the co-operation of the tenant.

Tenants who make complaints can find themselves the victims of “retaliatory notice” when a landlord responds by issuing a 90 notice to end the tenancy. The changes around retaliatory notice offer some improvements on current law because tenants will have 4 weeks instead of 2 weeks to apply to the Tenancy Tribunal for help and the penalty to landlords is increased to $2,000. The problem still remains that the law still relies on tenants being willing to complain, which they largely are not at present. In the absence of further support and measures to assist them, it is unlikely that many more tenants will be willing to challenge such behaviour.

Positive Cost Benefit Analysis Ignored

Housing researcher and advocate Eleanor Chisholm has taken a close look at the cost benefit case for a housing WoF prepared by Sapere research consultants for MBIE that was included in the background papers for the proposed tenancy law changes.

She notes that the total benefits of introducing a rental WoF would be almost $1 billion. This is effectively the cost society will bear of NOT taking action over the next 20 years, with savings lost in health and safety costs, fire fatalities avoided, and energy savings. This amounts to subsidy of $7,534 for each of the around 131,000 landlords in NZ from our health and ACC system. In effect the worst landlords are getting a free ride on the taxpayer while good landlords receive no reward for providing good quality housing.

In contrast, the costs of repairs to WoF standard are estimated $1,811 per dwelling ($653 million), although this excludes a fixed form of heating that would add to the cost. But overall, there is a very positive cost-benefit ratio for a full WoF.

The actual proposed changes do not go even halfway to realising these benefits. The 1978 insulation standard is lower (just over half) than the current standard that was used for the research used to estimate the benefits of a WoF.

Similarly, a weak enforcement approach is being taken that relies on “market forces”.  Tenants are told what the state of the house is and they can take the landlord to the Tenancy Tribunal if the standard is not met. It is expected that only two-thirds of landlords would comply (and probably the more responsible ones?) compared to an approach along the lines of vehicle WoF  that would attain 90% compliance.

Thus it is unlikely that most of the health benefits will be achieved by the proposed changes. Even Treasury was moved to comment that the proposed changes fail to meet quality assurance criteria.

Things We Could Do Right Now

Paper Walls logoCommunity Law centres around the country are familiar with the issues around existing tenancy law and Community Law Wellington & Hutt shared good blog post on existing legal rights that need to be better enforced. This is also the theme of the Paper Walls report as well. Both these resources emphasise the need for:

  1. active enforcement of the law and current standards by regulatory authorities. This would require them to have the staffing and direction from leadership and management to do this.
  2. Rights of tenants to be more actively supported through education to know their right to stop landlords re-letting sub-standard housing.
  3. Publishing of Tenancy Tribunal proceedings so that lawyers and advocates can see decisions and precedents and use them to support tenants.