Nobody's expecting Gareth Morgan's The Opportunities Party (TOP) to fare well in the upcoming election. It's likely it will nab a few populist votes from NZ First, but it will be surprising if the party gets over the five per cent mark (what with all of the interest being shown in the other parties right now).
As such, we can expect TOP to do everything it can to gain media airtime during “Jancinda-mania” and the “Green-pocalypse”. This week, the party has kicked off by announcing “strengthened” property renter's rights.
If you've been to France or Germany, you'll know of the concept of “renting for life”. That is, leases can literally not end until the tenant dies. They have the safety and security of knowing they won't have to move out, even if the property sells.
It's certainly a left-field way of attempting to change the way a housing market operates. What would happen to property owners if ever something like this model was to be adopted in New Zealand?
Eviction is only an option in cases of misconduct
Landlords wouldn't be able to end a tenancy after a certain period as it would never expire. Only in cases of damage, unpaid rent, or other serious misconduct could they evict those living in the property they own. This puts more power in the hands of renters, enabling them to feel like their house is a permanent home. However, it takes away much flexibility from the owner.
Tenants can still leave
Unfortunately for landlords, the long-term rental arrangements like you see in Europe aren't reciprocal: the tenant can leave whenever they want. In Germany a 90-day notice period is required, which is more than New Zealand's current three-week policy, but doesn't allow for two-way certainty of both parties in any rental agreement.
Landlords wouldn't have to pay for fixtures and fittings
Under the European model of life-long tenancy, the onus is on the renter to provide their own fixtures and fittings. Everything from carpet to the oven is the responsibility of the tenant, not the landlord, so upkeep by the property owner concerns only the building itself.
Capital gain would decrease
Aside from the fact the TOP wants to introduce a capital gains tax, this kind of rental model would see a big drop in the capital gains a person could make on a property. Any house or apartment would be valuable only because of its rental return. There's no chance of renovating a property and on-selling it to an owner-occupier who's willing to pay the premium – selling a property means selling the existing tenant's occupancy with it, which would make house sales all-the-more difficult.