Tenants for life? Open-ended tenancies suggested in wide-sweeping rent law reform

A landlord chief fears Government could introduce a radical new tenants-for-life regime.

Andrew King, executive officer of the NZ Property Investors Federation, said this morning, proposals being floated by the Ministry of Housing and Urban Development alluded to open-ended tenancies which would restrict landlords’ rights.

The change would mean renters could not be removed when places are sold and that they would have the right of renewal in their favour.

“Tenants for life is a possibility,” King said.

“There are some tenant groups who believe a landlord should never be able to end a tenancy unless the tenant is not meeting their obligations such as paying the rent.”

With 270,000 landlords owning 546,000 residential rental properties worth $171 billion and home to 1.5m tenants, a lot is at stake.

A ministry discussion document on reforming the Residential Tenancies Act floats the idea of open-ended tenancies saying there was a need to give renters greater choice and control over their situation.

The reform “proposes to remove the ability landlords have to end a tenancy at any time without having to give a reason. Landlords will instead only be able to end a tenancy for specific reasons and may be required to show evidence to support their decision to terminate,” the document says.

That worries King who has written a strongly worded 35-page submission.

“The discussion paper is careful not to say anything on tenants for life. Yet, it’s a possibility that some tenant groups are pushing – that tenants should have all the rights of a homeowner,” King said.

The document says that only if a tenant was not complying with their responsibilities would a landlord be able to apply to evict them, citing those who are 21 days behind in their rent as an example.

If introduced, the model wouldn’t be unique to New Zealand. German tenants already enjoy strong rental security, with indefinite tenancy agreements that only allow for eviction under certain conditions.

This increased security means that leasing tenures in Germany are 11 years on average, compared to only 2.5 years in England or about 12 months in New Zealand (between 2010 and 2017).

Robert Whitaker of grassroots tenants association Renters United said he was in favour of such an approach because of the security it offers the renter.

He used the analogy of employment agreements, saying employers have to give reasons for terminating employment and that a similar approach should be used in the rental market.

He questioned why landlords should be able to evict tenants without giving legitimate reasons.