Benefits of fixed-term tenancies becoming recognised: Howden-Chapman

More tenants are opting for security and fixing their tenancies rather than going open-ended, a property manager says.
ALEXANDER RATHS/123RF.

More tenants are opting for security and fixing their tenancies rather than going open-ended, a property manager says.

A healthy housing campaigner says renters are increasingly asking for longer leases so they can minimise the impact on themselves and their children.

New data from Auckland real estate and property management firm Barfoot & Thompson shows that about half its tenancies are now fixed term agreements, rather than open-ended lease.

That's risen from 35 per cent in 2013. 

A Green Party members' bill currently before Parliament calls for fixed tenancies of three years, unless otherwise agreed, and first right of refusal to be given to existing tenants when leases expired.

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Philippa Howden-Chapman, professor of public health at Otago University, said the social cost of moving frequently was beginning to be recognised.

"It's indicating that it's disruptive to have to leave the house when your family is settled there and when your children are at school. People increasingly realise the cost of that.'

"Many people in Germany and European countries can stay in [the same] housing their whole life." 

Barfoot director Kiri Barfoot said defaulting to a "periodic" or open-ended tenancy at the end of a fixed term lease used to be commonplace.

"Now people are opting to re-sign another fixed term."

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Part of the reason, she felt, was the rising number of people renting, which had heightened the debate over security of tenure.

But on the Auckland market, there were also a lack of properties to choose from, illustrated by the fact that rentals on her books were only vacant for about four days a year.

And with the hot housing market, renters were keen to avoid having to move on again too quickly.

"With the sales market as it is, they don't want to move into a rental property and find out six months later that it's sold."

Shanon​ Aitken, team leader at Crockers city office, said fixed term leases were the landlord's preference in Auckland's CBD apartment market.

"What we find is, it's the apartments which are definitely all fixed term ... whereas houses tend to be a lot more periodic.

"In [CBD] apartments, the tenants tend to be much more transient. A lot of tenants go straight into apartments till they figure out where they want to live."

According to Barfoots' data, the most common fixed-term tenancies in Auckland were for six to 12 months, followed by more than 12 months and less than six months.

The average period for a tenancy across Auckland and all property types was just under two years, falling slightly from 24.8 months in October 2012 to 23.6 months four years later.

Tenancies hovering around 17 months in the inner city where there were a high number of students and a growing number of apartments.

Tenancies were longer in the city's central suburbs, where the average tenancy was 27 months, and South Auckland at 26 months. Overall, one in ten renters had lived in their home for more than five years.

The most stable suburbs – those with average tenancies over three years – included Balmoral, Lynfield, St Johns, Paerata (Pukekohe North), Mangere Bridge, Devonport and Green Bay.

"Unsurprisingly these suburbs are popular with families," Barfoot said.

One in ten renters had lived in their home for more than five years.

But many people still liked the flexibility of an open-ended lease, Barfoot said.

"Many landlords would like their tenants to stay longer but tenants are reluctant to sign for more than a year, so it goes both ways."

Tenancy types:

A periodic tenancy is one that continues until either the tenant or the landlord gives written notice to end it.

A fixed-term tenancy only lasts for a set amount of time - for example, one year. The amount of time must be written on the tenancy agreement.

A short fixed-term tenancy is one that lasts for 90 days or less, and these have their own special characteristics.

 - Stuff

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