Twyford PhilHon PHIL TWYFORD (Minister of Housing and Urban Development): Thank you Madam Chair. I want to just briefly respond to a number of points that have been made in the debate so far. Let me start off by addressing the point raised by the member Louise Upston and in fact by her National colleagues Nick Smith and Alfred Ngaro as well that the risk—or the likelihood as they suggested—is that as a result of the changes in this bill costs will be passed on to the tenant. Nick Smith notably said that we should stop pretending that at the moment it's a transparent charge and that all this bill will have the effect of is to shift that charge from letting fees into the rental costs. Our view about this issue all the way along has been that the problem with the current system with letting fees is that as the member Chlöe Swarbrick just pointed out at the moment there's a contractual and commercial relationship between the landlord and the property manager. The custom of letting fees that has arisen in recent years has seen those two parties in a contractual relationship charge a third party who is outside that contractual relationship. The property manager is working for the landlord but charging the tenant. Now that is the opposite of transparency. It's obvious to anybody I think that property managers—engaged by landlords to help them run their businesses and manage the tenancies—provide a service and of course property managers should be properly recompensed for that service. Our argument and the view that underpins this bill is that the real costs of that service should be accommodated within the landlord's business model—not simply charged at the equivalent of one week's rent to the hapless tenant when in fact the real costs of the services that are provided by the property manager may bear no resemblance whatsoever to the equivalent of one week's rent. So it's a much sounder economic and financial proposition from the point of view of the Government that the real costs of the property manager's services are incorporated into the landlord's business model. Of course they will be to some extent passed on to the tenant but as we know in this House rents are set by supply and demand and it was only the Reserve Bank in New Zealand who most recently published argument and commentary on this point of view. So any attempt by landlords to pass on those costs to tenants will be mediated by supply and demand. A landlord can't just randomly add a whole lot of extra costs to the rent and think that the tenants will be able to pay that. It comes down to supply and demand. I want to respond to Louise Upston and Alfred Ngaro's comments about the very compressed time frame associated with this bill. They argued that it provided too short a time for the sector to respond and that there was a lack of consultation. They also raised the question about why this bill isn't being dealt with as part of the wider review of the Residential Tenancies Act. So to address that first question the answer is that the current overhaul of the Residential Tenancies Act is a large ambitious and complex undertaking and we're currently doing a public consultation exercise with landlords with tenants up and down the country. As a result of that consultation exercise and the feedback that we get from landlords and tenants about the range of proposals that we put on the table we will then draft legislation and we will take that legislation through a full parliamentary process because it is a serious and complex undertaking. So that will take us probably all of next year to take that bill through the House.Now the reason that we split off the measures to deal with letting fees is that we believe that dealing with letting fees is a relatively simple undertaking. We don't believe there's any justifiable moral or financial rationale for the current way that letting fees are dealt with. It's a relatively simple undertaking. The bill is a relatively simple bill. We want to ensure that in this summer season when so many tenancies turn over—we want to lighten the load on renters and there are millions and millions of dollars that are spent every year on letting fees. That's money that we can in the short term spare tenants.I want to come back to the argument that Opposition members made before that all we're doing is transferring the cost of letting fees from letting fees into the rents. The other reason why it's much better for renters if these figures are incorporated in rents to the extent that they may or may not be is that letting fees come at exactly the worst time for renters. They come when renters are having to find four weeks' rent in bond rent in advance all the costs of moving house and then they have to find letting fees on top of that. That is a terrible impost on renters at the time they can least afford it.Louise Upston asked about other parts of the UK and why they haven't followed Scotland. The member may be interested to know that England has followed Scotland and has introduced legislation to ban letting fees. Alongside rent and deposits agents and landlords will only be able to charge tenants fees associated with the change or early termination of a tenancy. Wales has also started to follow Scotland's lead with the Renting Homes (Fees etc.) (Wales) Bill which was introduced on 11 June 2018. Also in the state of Victoria in Australia there are moves under way to prohibit letting fees.There was one thing that the member Louise Upston said that I agreed with and that is that bad landlords are not a majority. I disagree with her assertion that the Government characterises bad landlords as being the norm—quite to the contrary. A great number of the landlords are good decent New Zealanders trying to provide a service trying to save for their retirement and trying to do the right thing. This Government is not in the habit of demonising landlords. Our goal with this legislation and with the review of the Residential Tenancies Act is to reset the mix of balances of rights and responsibilities that landlords and tenants share to modernise this relationship because we know that no matter how successful we are at turning around the declining rate of homeownership a lot of Kiwis for the foreseeable future will be renters.I want to comment on one of Nick Smith's arguments that he made. He tried to say that the winners of this move will be short-term tenants because they are incurring extra costs through a rapid turnover of tenancies and they will end up under this law subsidising long-term tenants who don't incur so many costs associated with the turnover of tenancies. With respect I think the member is not seeing the wood for the trees. The way that letting fees currently operate are a burden a financial burden on renters. Actually the effect that they have is to incentivise short-term tenancies. There is plenty of anecdotal evidence particularly here in Wellington where the revenue stream for property managers from letting fees encourages and incentivises them to promote short-term fixed tenancies which lock in the very insecurity of tenure that we are trying to avoid.Finally the point I want to make is to address the point made by Louise Upston and Alfred Ngaro about the lack of consultation. I want to point out that submissions were received by the Social Services and Community Committee—187 of them. That is a pretty fulsome response by the community and the majority of those submitters supported the bill.