Caveat Rentor 2 - Tenancy Economics

Today's post is a guest entry from our Principal Solicitor, Grant Arbuthnot. Grant has more than 20 years experience advising tenants, their advocates, and has worked for the Tribunal and community legal centres as well as the Tenants' Union. Here are his thoughts on tenants as consumers.

Economists and accountants both agree this joke stinks. 

The assumption a healthy consumer market has suppliers competing on price, quality and service for the business of consumers allows another examination of our rental market.

At present, there is a shortage of supply of affordable premises for rent. Competition between prospective tenants for available premises is understandable.

Consumers competing for the business of suppliers is not healthy. Consumer competition means that pricing favours the suppliers, and that quality and service are not significant issues.

Tenants might expect that once a tenancy has been secured the competition will cease. However, this is not the case. Sitting tenants compete with prospective tenants to retain their tenancy.

In a fixed term tenancy, tenants are aware that they can be required to leave at the end of the fixed term. Fixed terms are rarely greater than a year. In a periodic tenancy the vulnerability is present and constant.

This is because the law allows landlords to dispose of tenants without having to give a reason.

Tenants who demand contract performance by the landlord risk being replaced from the surplus of prospective tenants.

This is usually about repairs. It is the most popular breach of contract by landlords. The likelihood of receiving a termination notice (without grounds) is increased by demanding repairs.

It is not surprising that many tenants put up with expensive and substandard premises to avoid the stress, cost and inconvenience of having to move house.

Amending the Residential Tenancies Act cannot undo the problems of supply and demand. But abolishing no grounds termination can relieve sitting tenants of the constant competition with prospective tenants. They might even get some repairs done.

To find out more about how tenants are affected by unfair evictions, visit Make Renting Fair.