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From housing law to Airbnb

29 March 2018 - By Thomas Gibbons

Housing law has seen a rapid pace of change over the last few years. Various pieces of legislation, case law, and law reform include:

  • The Housing Accord and Special Housing Areas Act 2013, which creates a regime for the creation of special housing areas outside normal RMA processes.
  • The Productivity Commission’s reports on Using Land for Housing (2015) and Better Urban Planning (2017), which are not law, but are relevant to housing issues.
  • Holler v Osaki [2016] NZCA 130, on landlord responsibility for tenant negligence: the decision landlords love to hate.
  • The Auckland Unitary Plan, which is mostly about housing.
  • HIF – the Housing Infrastructure Fund for high growth areas, with the initial $1 billion of loans to local government now fully allocated.
  • The National Policy Statement on Urban Development Capacity, which requires local authorities to provide for suitable levels of development-ready land.
  • The Healthy Homes Guarantee Act 2017, providing for landlord obligations in relation to tenanted housing.
  • The Overseas Investment Amendment Bill 2017, which restricts the purchase of houses by overseas persons (for comment, see my article in LawTalk 914, February 2018).

Supply, demand and short stays

Policy-wise, it seems we want more houses, better use of land (that is, more intensification); and then to make sure we allocate rights and responsibilities between landlords and tenants in the tenant’s favour, and to restrict some purchases to ensure the levels of supply remain appropriate. Enhance supply, limit demand, and make sure tenants are looked after. The KiwiBuild programme, still taking shape, may provide further reform in this area.

There are further topics for consideration. It is worth noting that, during the last few years, we have also seen significant increases in house prices, and latterly increased rents and rental availability constraints, particularly in cities. The tools described above mostly enhance supply; only the OIA changes are designed to curb demand.

But there are other demand levers. The last few years have seen a massive increase in Airbnb and short stay arrangements. Why, some media stories ask rhetorically, would a person rent a flat through normal channels for $250 a week when they can rent it through Airbnb for $100 a night. There have been stories of scams, but also stories of a belated recognition by local authorities that these type of arrangements are having an impact on rental and housing supply. Auckland Council has proposed additional rates to capture these arrangements; Queenstown Lakes District Council has consulted on resource consent requirements, with many submitters noting the housing supply impacts.

It could be argued that it makes little sense to restrict purchases by overseas persons while not restricting short stays. The former is a demand-management tool, the latter a supply management tool, but each will affect both supply and demand. The fact that local authorities are seeking to step in suggests that short stays are a serious supply issue.

Short stays and unit titles

DIY regulation does not always work. A live issue is the extent to which bodies corporate can restrict short stays, or short/term letting. At present, the preferred position is that a body corporate cannot do so: that the Unit Titles Act 2010 is, drawing on its predecessor, designed to allow unit owners to sell and rent as they see fit. Potentially, effects can be managed through body corporate operational rules, but not rental arrangements themselves. Land covenants remain an option for those who want to completely prohibit short stays, but these remain an instrument for individual owners to be bound, not a body corporate tool.

The preferred position in New Zealand – that there is no ability to use body corporate operational rules to restrict short stays – is largely the same in Australia, where a growing number of cases have come to this conclusion. Where their unit title laws go, we often follow.

However, in late 2017, a decision of the Privy Council, on appeal from the Turks and Caicos Islands, a Caribbean jurisdiction, suggested that a body corporate rule could restrict short stays. O’Connor v The Proprietors, Strata Plan No. 51 [2017] UKPC 45 is not binding precedent in Australia or New Zealand, and can be seen as context specific – even perhaps poorly reasoned – but may yet influence the next generation of short stay decisions.

Conclusion

Housing law remains an active area of reform. Supply, demand, quality, and responsibility levers are all being pulled. In the meantime, a test case on the regulation of Airbnb within a body corporate is yet to be taken. Watch this space.


Thomas Gibbons thomas.gibbons@mccawlewis.co.nz is a director of Hamilton law firm McCaw Lewis. He has written and presented extensively on property law and is author of A Practical Guide to the Land Transfer Act 2017.

Last updated on the 29th March 2018