Upston LouiseRESIDENTIAL TENANCIES (PROHIBITING LETTING FEES) AMENDMENT BILLIn CommitteePart 1 Substantive provisionsHon LOUISE UPSTON (National—Taupō): Thank you Madam Chair. I'm pleased to stand for what will be a number of calls on this Residential Tenancies (Prohibiting Letting Fees) Amendment Bill. I want to focus my efforts in the first part of this legislation and put on record a few of the myths that the Government have been spreading around this particular part of the legislation.The first myth is that this will do anything to alleviate the pressure on renters because it absolutely has zero guarantee of doing that. In effect the RIS or the regulatory impact statement that was prepared in association with this bill clearly states that one of the risks of this particular legislation—in that a letting fee will be prohibited—is that the equivalent of the letting fee which in some cases might be a week's rent will be spread out over the term of the tenancy and could be up to or around $10 a week additional rent that the tenant will now have to pay. So it is concerning that—you know it's the Residential Tenancies (Prohibiting Letting Fees) Amendment Bill and the intent of it might be acceptable but this legislation will not deliver on any policy promise to take financial pressure off tenants.The other thing that I wanted to address given that we only had the second reading of this piece of legislation last week is the incredibly compressed time frame in which landlords will have to adjust to changes proposed by this legislation. If I look at Part 1 specifically a letting fee is any fee or charge … in respect of services rendered by the letting agent". So basically what it means is if a landlord engages a professional property manager—and we do know that the vast majority of landlords in New Zealand are what we call mum and dad investors and they might have one or two rental properties. So actually in many cases it's a good idea for the landlord to engage professional services of a property management company or a property manager as an individual who can help them navigate what is actually quite a challenging piece of legislation to ensure they comply with it. I haven't met any landlords any investors that don't want to ensure that they comply with the legislation but we're seeing a series of changes to the residential tenancies legislation and this is another one. Their ability to engage a property manager and then the property manager charge a letting fee at the start of a tenancy to get new tenants in the property—that's the bit that's going to be prohibited. So if a landlord still wants to have a property manager deliver that service—and I'm hopeful that many will because it does add some comfort to the tenants as well as the landlord—their ability to recover the costs of that then get spread over the term of the tenancy. So if that's a tenancy for one year it might end up being the same amount of cost but if the tenancy is three or four or five years that extra $10 a week will be exorbitantly more than the letting fee would have been originally. So I just want to be clear in this Part 1 of what seems to be a straightforward piece of legislation but does have a significant impact. The reality is for those who are going to be captured by this legislation there's an incredibly short time frame for them to adjust to it.One of the examples that was provided through the process that the Social Services and Community Committee considered was the fact that this has been done in Scotland but actually other parts of the UK have decided not to take this step because of the wide-ranging concerns about the increase in rents. I believe Statistics New Zealand have just put out the household incomes report which has said incomes have gone up 41 percent since 2008 housing costs have gone up 43 percent. So there is a continued pressure on households for housing costs. I would have thought any measure that leads to the risk of an increase in rent is something that this Government would want to run a mile from.To be fair to give credit where credit's due the Government is undertaking a significant review of the Residential Tenancies Act—one of the many working groups that the Government has under way. So it's somewhat puzzling that the Government decided to do this piece of legislation in isolation. What it might mean is that you've got this piece of legislation that is out there and has an impact on removing the ability—or a disincentive for landlords to engage a letting agent—to engage in professional services that support them in setting up their tenancy and getting the right tenant in the first place and adds costs. On the other hand this more wide-ranging review of residential tenancies might work in a completely opposite direction.So for the matter of a couple of months because I think the tenancy—and the Minister hopefully will be able to answer this when he answers—question is: why was this not brought into the broader piece of review that the Minister is undertaking? So I do specifically want the Minister to address the timing of it and the fact that it is coming in on 12 December which is a very short period of time for landlords to adjust. As I said the majority of landlords in New Zealand are not what the Government might suggest from time to time as being fat cat landlords that are out to milk their tenants. That is not the majority of landlords. Yep there might be one or two that don't look after their tenants in the way they should and absolutely the Government should take steps to crack down on them. But the majority of landlords in New Zealand are mum and dad investors with one possibly two properties and to navigate the residential tenancies legislation to ensure that they are providing a warm dry rental property for their tenants—and of course there's been recent changes that have also had a big impact on them—it is really important to make sure that they do have the ability of in terms of this particular legislation a fee or charge that is now not able to be charged by a letting agent passed on to a tenant at the start of the tenancy. But instead what the landlord is likely to do is to recover the cost of the property manager's professional services over the term of the tenancy.One of the other comparisons is regarding countries in Europe. I think Germany was one of the ones that was referred to where the average tenancy in Germany is 14 years. Now I'm not sure if the Minister is able to answer a question in terms of the average length of tenancies in New Zealand and what this $10 a week added cost will mean over the lifetime of a tenancy but I think that's an important element of it.One of the aspects in the regulatory impact statement was that there was insufficient time for adequate consultation to be undertaken. Now this unfortunately is a bit of a similarity that is appearing in much of the Government's legislation. The oil and gas ban that is also going through committee at this stage is exactly the same which means insufficient scrutiny insufficient consultation and insufficient ability for any unintended consequences to be thought through and resolved. Instead we have a situation like this where in Part 1 of the Residential Tenancies (Prohibiting Letting Fees) Amendment Bill the unintended consequences as stated in the regulatory impact statement are likely to be an increase in rent for the very people that the Government purports to want to support in this legislation. So the Government can't have it both ways.So I am looking forward to the Minister answering the specific questions that I have asked so far. As I said it's a small bill but not an insignificant one and that's why it deserves the full scrutiny of the House particularly when it will be implemented very quickly with very little time for those affected to adjust. We argued strongly in Opposition to have a later implementation date but the Government has proceeded anyway."