Tuesday, 22 September 2015

Rental Bonds in New Zealand - a case for Landlord bonds.

The view has always been that the owner of a house has more to lose when renting out the property than does the renter.

Seems logical. Obvious.

It's not.

Consider the case of a Landlord having a very tight budget. He will often feel that he has no option but to squeeze his tenants. In periods of low interest rates many will hop onto the property ladder by buying with minimum deposit and then trying to pay off or at least service the costs by renting out the property.

There is little or none left for maintenance and improvement. The Landlord hopes that the property will appreciate enough for him to be able to either sell at profit or to raise rents to where disposable income becomes available - often then ploughed into a new investment property.

While this is happening, in NZ, property management agents are making their living on "letting fees" - to the point where it becomes to their advantage for properties to be re-let as often as possible.

Throw in ever increasing numbers of new immigrants and you have a recipe for squeezing renters.

Agents and Landlords can tell a prospective renter that certain works will be undertaken such as repairs and maintenance. Unless these undertakings are added to the lease as a condition of the lease and a bond posted by the landlord there is nothing to stop the Landlord from simply then taking the rent until the renter gets sick of it and moves.

The property gets rented out again, the agent is happy, the landlord is happy and the poor renter is left with the costs.

Worse than this is that it can become somewhat of a game for the agents or landlords to try and get their hands on as much of the tenant's bond as they can. Unless the tenant has meticulously identified every fault, photographed them and lodged them in a way that time stamps them, they are likely to loose part of their bond.

It's a scummy self-reinforcing situation.

If you are going to rent you should take a LOT of photographs, immediately upload them to a site that timestamps them (like Flickr, Facebook etc).

Don't share them with the agent or landlord. Keep them for when they try to screw you and then present them in any way that generates a nasty unexpected cost to the agent and/or landlord - eg on a social network or in court.

All landlords should have to post a bond equal at least to the bond posted by the renter.

Renters should be able to make claims on that bond should landlords and agents fail to provide what they have contracted to provide.

Landlords squeezing tenants - unless tenants can squeeze back it will go on forever.