Tenancy Tribunal interfering with rents
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Articles by Salesh Chand
An October 2022 Stuff article revealed that the Tenancy Tribunal has been ordering landlords to lower the rent on their properties. As I see it, this is worrying evidence of unnecessary interference and creeping socialism, and it must be stopped.
In his book The Theory of Moral Sentiments, famous 18th-century philosopher and economist, Adam Smith, proposed the idea of the ‘invisible hand’, whereby markets regulate themselves due to competition, supply and demand, and self-interest. For example, if a landlord asks for rent that is way above market, tenants will not lease the property in the first place. It is self-limiting, and such landlord would need to lower an unreasonably high rent in order to attract a tenant.
Dictating what rents landlords must charge is tampering with the free market. And because free markets are naturally self-regulating, they do not need “help” from government organisations in order to function properly. Government interference is not just unnecessary, it is actually counterproductive because it stifles supply signals (e.g. premium rents indicating high demand, which leads to new supply).
We are aware of one landlord who challenged the right of the Tenancy Tribunal to reduce his rent. The adjudicator mentioned in his findings that the rent level was correct and appropriate at the beginning of the tenancy, but became unfair to the tenant when the market cooled and more properties became available. How have we got to a position where the Tenancy Tribunal would think it is appropriate to intervene like this? We need to appeal every such adjudication on principle, and get New Zealand back to free market principles.
This is just more evidence of a dangerously socialist government that thinks it knows best, condoning actions that are in fact damaging in the grand scheme of things. We need to reject the nanny state socialism, centralised authoritarianism, and get New Zealand going again.
Salesh Chand
Partner/Business Advisory Director
© Gilligan Rowe & Associates LP
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