Simpletons At Work

Leftist Politicians Can Do Considerable Damage To The Poor

When left wing political parties win power at the ballot box one usual consequence is that the government starts to be run by politicians who are ignorant about markets, business, commerce, and the way "things work".  But no worry.  The Left has a reflexive faith in rules, regulations and laws to make all things right.  

Usually it has no sensitivity at all as to how free markets work.  But markets do not change.  They work-either for good or bad.  Thousands upon thousands of people out in the "real world" think about the impact of new rules and regulations upon their businesses.  They then take prudent commercial decisions to maximise their returns and reduce risks--in the light of the new realities brought in by the new government.  Leftist regimes, on the other hand, almost always have no clue about the unintended consequences of their rules and regulations.  

We are presently seeing an apt example of this phenomenon in New Zealand.  The Leftist government decided that residential tenants were getting a bad deal.  They needed protecting.  Therefore, the State has decreed minimum standards of comfort to be met in all rental properties throughout the country.  Typical, classic Left wing magic wand stuff.

Result?  You guessed it.  The supply of rental houses reduces, sharply.
  As the supply reduces, competition amongst those seeking rental housing rises.  Ergo, rents go up.  Fewer and more expensive rentals lead to more homeless.  Result: the Left--erstwhile champions of the poor and needy--end up facing the unintended consequences of their actions:  rising homelessness amongst their core political constituency.

Carmen Hall is a senior writer at the Bay of Plenty Times.  She describes how this phenomenon is unfolding in "her patch".  

Some landlords are selling up their rental portfolios as the Government looks to introduce tougher regulations that will beef up tenants' rights.  The Government has a raft of proposals including heating homes, taking away a landlord's right to say no to pets and axing letting fees but industry experts say it was a knee-jerk reaction and ''catered to a segment of tenants who have had bad experiences''.

Gary Prentice from Rentals BOP said the agency had lost more than 20 properties in the past 12 months as clients sold their rental properties.  He said implementing changes when there was a shortage of rentals was ''crazy''.

''It's the same deal with most of the landlords, they are saying it's getting into the too hard basket, and it's not worth owning rental properties any more, so let the government do it.''  Ultimately, the tenants would foot any costs, Prentice said.

His experience follows that of an Auckland landlord facing a $42,000 bill to repair a damaged rental property - who has questioned whether it's worth being a property investor under new tenant-friendly Government laws.  Tauranga Rentals owner Dan Lusby said he had advised landlords that his company could not manage properties if they failed to meet new insulation rules which would kick in on July 1.  ''It's forcing them to do it because we won't be lumped with a $4000 fine if it's not done.''

Housing conditions needed to improve, he said, but landlords were in for a further shock as heat pumps could be required in main living areas, panel heaters in every bedroom and extractor fans in the bathroom and kitchen, he said.  Spending up to $5000 to cover those expenses would wallop some landlords, he said.

Tauranga Property Investors Association president Juli Anne Tolley said she was concerned about a new clause in which landlords had to give a reason when giving a tenant a 90-day notice to vacate a property.  ''If you have a tenant situation that is threatening or uncomfortable for neighbours, what do you do?''  Property investors were looking at other investment options like commercial properties, she said.