Palmerston North Poverty Action Group

and the

Manawatu Tenants Union

9 February 2000

The Chairperson and Members

Low Income Sub-Committee

Palmerston North City Council

A Proposal for a Certificate of Fitness for Rental Accommodation in Palmerston North to be piloted by the City Council

1. Reason for this Report

Particularly since the introduction of “market rents” for State houses, the standard of some rental accommodation on offer in the city has been a major concern. This has applied to both some Housing New Zealand stock and some of that available from private landlords.

With the high demand for low priced rental accommodation in the city, the potential for exploitation and abuse of tenants is high and many people are forced into substandard accommodation..

Of immediate concern is that new immigrants and particularly overseas students and their families appear to be the current target for landlords with substandard rental accommodation. One way they are persuaded to accept such premises is that the landlord promises to make good repairs needed, the lease agreement is signed but the repairs are not done.

This situation could have considerable repercussions for the image of the city as it promotes itself as the “Knowledge City” and increasingly seeks to attract overseas students.

At present there is little to force a landlord to carry out basic repairs and maintenance when these are not directly related to health and safety requirements and the process can be stressful and costly. In the current situation where demand considerably exceeds supply there is little doubt the “market” does not operate to ensure that adequate standards are met. It is also obvious that the premises should be up to standard before the tenant signs the agreement to lease.

The concept of a Certificate of Fitness for rental accommodation has been around for some time and is currently receiving considerable attention and interest both around New Zealand and overseas.

The City Council would be the ideal “landlord” to introduce the scheme as it is a very good landlord with its rental units all to a good standard. It also has the infrastructure to administer the scheme and operate it as a pilot study.

2. Introduction

Palmerston North is the second highest renting city in the country, after Auckland Central, with 32% of properties for rent.

The City also has a very high proportion of its citizens on low incomes (45% of households). This places considerable pressure on low cost accommodation.

With the new Government’s approach to state housing it is hoped that the position with respect to Housing New Zealand stock will improve.

It is unlikely that any changes will improve the state of the private sector rental housing stock, especially when the flat to declining level of returns on investment to private landlords over the last 10 years is taken into account.

As with many areas of quality control, some form of regulation is necessary to protect consumers.

While there is a requirement under the Residential Tenancies Act (1986) for this, Section 45: “The landlord shall provide the premises and maintain the premises in a reasonable state of cleanliness, and provide and maintain the premises in a reasonable state of repair, during which time the premises are likely to remain habitable and available for residential purposes and comply with all requirements in respect of buildings, health and safety” there is no mechanism for implementing this requirement.

A Certificate of Fitness, covering such basic items as the structure and maintenance, facilities, and aspects relevant to health and safety issues, such as leaks, ventilation, sound flooring, wiring etc appears to be the most appropriate way to address the issue and traditionally such requirements are administered by the local authority..

3. Discussion

Equivalent certificates of fitness are required for other service providers, such as cafes and restaurants.

Other types of accommodation, camping grounds, motels and hotels, tend to be included in a rating scheme indicating the type, standard and quality of accommodation offered.

It appears anomalous that traditional rental accommodation is not covered by some such scheme.

Interest in such a scheme has grown both in New Zealand and overseas in recent years.

The Irish Government introduced such a scheme in 1993 (Housing (Standards for Rented Houses) Regulations, 1993). The detail of the specifications is attached.

It is very similar to the approach taken in New Zealand many years ago with the introduction of the Home Improvement Regulations in 1947 (attached).

These were administered by the local authority.

The infrastructure still remains for this to happen with details of all properties held in the rating files and the Health and Building Inspectorates. (The Fire Service has also indicated support).

The Council’s rental units are maintained to a high standard. They would provide the ideal stock to pilot the scheme on with the objective to determine and systematise the mechanics of the scheme.

The response from around the country to the re-introduction of a certification Scheme has been considerable and indicates that the work of the Council in this area would be both welcomed and closely monitored.

The introduction of such a scheme would therefore have considerable benefits for the Council and the City in an area of considerable concern and of considerable importance to a major proportion of the City’s residents.

In Christchurch, private landlords are apparently enthusiastic about a grading system for rental accommodation with possibly one star for basic level units in lesser desired locations, to five stars for top of the range units in the most desired locations. Such a proposal could be a future development following the establishment of the Certification Scheme.

4. Recommendations

1. That the City Manager report on the practicality of introducing a Certificate of Fitness scheme for Council rental units.

2. That the City Manager report on a time frame for introducing the scheme.

Ian Ritchie

Independent Researcher

for the Poverty Action Group

Kevin Reilly

Manawatu Tenants Union