‘Generation rent’ tenants need better security
Barriers to home ownership mean more New Zealanders than ever are renting - and they need to be better protected, argues Victoria University law lecturer Dr Mark Bennett.
What rights should a tenant have to stay in their rented home? Should they be guaranteed a certain period of time during which they can be sure they can stay? If so, how many years? In what circumstances should a landlord be able to ask their tenant to leave?
These are questions of security of tenure for renters, and we should re-examine them as part of comprehensive reforms to residential tenancy law. Victoria, Australia is currently engaging in such a comprehensive inquiry into how law can contribute to "fairer, safer housing", and we should follow their lead.
Why? Because we are witnessing the rise of 'generation rent'. High house prices mean that more New Zealanders are renting than before, and many people will never be able to buy a house to call their home. In 2012, a Government-requested report on housing affordability noted that renting should now perform a different role, to “provide secure, long term, quality, rental housing on a much larger scale”.
But the rental market is not delivering: after many years of low rents, there is now a scarcity of properties to rent, and rents are beginning to increase. People are living in overcrowded houses, camp grounds, converted garages and in cars.
Within our wider housing policy problems, renters’ rights are becoming more prominent. The economists Shamubeel and Selena Eaqub think we should consider the German and Swiss approach to renters’ rights, which are far more protective of tenants. Renting is also a hot political issue, with political parties (the Greens, Labour, the Opportunities Party) making improving renters’ rights key to their policy platforms
One aspect of renting often mentioned is security of tenure. This means a tenant’s ability to choose to remain or leave the house they are renting. When asked, tenants usually indicate that they want the option to stay, saying that this would provide them with a more stable home – and better outcomes for their community connections, psychological and physical health, education, and finances.
In New Zealand, some security of tenure is achieved by tenants and landlords agreeing to a fixed term lease, generally 12 months. Otherwise, the landlord must usually provide the tenant with 90 days' notice that the tenancy is being terminated.
This contrasts starkly with the situation in jurisdictions where tenants are given a number of years of secure tenure; for example, in New Zealand discussions of renters' rights there has been a focus on Germany's strong protections for tenants, under which tenants may stay indefinitely (with very limited exceptions).
But we should also take a close look at two other countries: Ireland and Scotland. Like New Zealand, they have traditionally favoured home-ownership, and have similar sized rental sectors — and perhaps have a more similar political culture to us than Germany — but they have recently moved to provide tenants with greater tenure security. In 2004, Ireland legislated to provide tenants with four years’ security, and just last year Scotland reformed its tenancy law to provide tenants with an unlimited right to remain. Landlords cannot terminate the tenancy during these periods without providing a specified reason to do so: in New Zealand terms, there can be no ‘90 day notices’ that terminate the tenancy without needing to state any reason.
To properly counter-balance the tenant’s security, the landlord’s control over their property is protected by providing them with an adequate number and kind of grounds for termination — as well as by ensuring tenancy adjudication processes are efficient and fair so landlords can enforce these grounds. Generally, Ireland and Scotland give landlords the power to manage their property, for example where they intend to sell, refurbish, change to non-residential use, or to occupy it as their own home. Other grounds protect the landlord from the tenant breaching their obligations, such as where the tenant fails to pay rent or breaches some other tenancy obligation (such as damaging the property) or commits criminal acts.
The point is not that Ireland’s or Scotland’s law should be replicated here, but that there are many options and mechanisms for balancing tenant and landlord rights. It’s not a matter of “the status quo versus the German approach”: we can pick and choose the best rules to suit our values and socio-economic context. But in re-calibrating the law, we should remember the context of generation rent. The landlord has the means to purchase a house and to use it as a financial asset. The tenant has likely been forced to rent rather than to own, but is trying to make the house their home. The control that the law relating to security of tenure provides them should reflect this.
If you think it’s fair that renters should have greater security, you should be vocal about it this election year to keep it on the agendas of political parties. Housing will be a major election issue, and security of tenure should not be overlooked as part of the solution to our housing problems.
See this paper for a more detailed discussion of Ireland’s and Scotland’s protections for security of tenure.
This article was originally published on Newsroom.