There’s a major problem with maintenance in New Zealand rental housing. Independent assessors of a representative sample of New Zealand housing found that 32% of rental housing was poorly maintained (Buckett et al. 2017:26).
Research recently published by Auckland Council, and based on interviews with Auckland property managers, showed that a major challenge in working with landlords was landlords’ refusal to discuss or pay for repairs and maintenance. Examples of issues that property managers struggled to get landlord agreement to pay for were: fixing broken toilets and light fittings, addressing leaks, and replacing ovens. Property managers reported that some landlords were not interested in maintaining properties or did not have funds available to make repairs. The report notes that:
These comments indicate two things: investment in rental properties in Auckland’s buoyant housing market for capital gain, often at high levels of personal borrowing; and the absence of statutory requirements on owners to have sufficient funds with which to maintain rental stock to a high standard in New Zealand’s broader housing system (Young 2017:34).
Writing about the Australian version of the problem yesterday, Jennifer Duke proposes a solution: a landlord bond.
Simply, regardless of the cost of rent, tenants should get what they pay for – a safe and well-maintained place to live.
While this is already mandated in most state’s Tenancy Acts, it’s well-documented that many landlords take far too long to attend to maintenance issues.
One way to fix this is through a simple mandatory sum of money provided by landlords as a “sinking fund” for maintenance, or a bond, paid by the investor.
Property managers would have the ability to tap into this fund as needed to fix reasonable maintenance and repair requests, without being delayed by landlords who, for whatever reason, are not getting to the work in a timely manner (Duke 2017).
As Duke suggests, this fund could be accessible by property managers in order for them to arrange repairs. Alternatively – and perhaps preferably, given the fact that most landlords do not use property managers – this fund could be held by MBIE or another body, and tenants and landlords (or their property manager as their agent) could both apply to use the bond paid by that landlord for that home to make necessary repairs. The fund would have to be kept at a certain minimum level, and the remainder paid out to the landlord at the end of the tenancy.
It’s an interesting idea. Could such a fund be one part of the solution to the maintenance problems in New Zealand’s rental sector?
Buckett, N. R., M. S. Jones, N. J. Marston, and Saera Chun. 2017. BRANZ 2015 House Condition Survey – Condition of House Comparison by Tenure. Judgeford: BRANZ Ltd. Retrieved (http://www.branz.co.nz/cms_show_download.php?id=53af2b0c2e5ca5169a0176996bba7ee88de082c0).
Duke, Jennifer. 2017. “The Part of the Rental Equation We Are Missing: A Landlord Bond.” Domain, August 7. Retrieved (https://www.domain.com.au/news/the-part-of-the-rental-equation-we-are-missing-a-landlord-bond-20170807-gxcsvt/).
Reid, Alison. 2017. Residential Property Management in Auckland. Auckland: Auckland Council. Retrieved (http://www.knowledgeauckland.org.nz/assets/publications/TR2017-018-Residential-property-management-in-Auckland.pdf).