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Are pets rental deal breakers?

Thursday, November 09, 2017

CREDIT: Rentberry.com 

A recent Stuff.co.nz article quoting Andrew King on behalf of the New Zealand Property Investors’ Federation (“the NZPIF”) prompted an email from G that is of interest and should spark discussions amongst landlords. Note that personal details are redacted to protect parties’ privacy:
 
    Attn of: Andrew King
    cc xxxxx
    Hi Andrew, having recently tried to find a rental home that would accept pets after arriving back in NZ, I read with interest the article in the NH News. I understand to a degree your comments about landlords being concerned about damage, annoyance to neighbours and fleas, but I wanted to put some other points to you for consideration:
    Social responsibility
    happy tenants
    length of tenure
    how many tenants the property appeals to
    property being empty for periods
    ROI
    Firstly, I’m not sure just how clearly informed landlords are about just how much New Zealanders love pets, so this article should help …

    64% of NZ households are pet owners (and even more that aren’t currently pet owners would like to be)
    pet ownership is even higher in households with children aged 9 to 17, with 78 per cent of such homes having a pet

    So addressing the points above…

    Social responsibility: Having been a landlord I understand that there is a natural desire to keep the property in as good a condition as possible, minimise issues and maximise returns but, it would be nice (for want of a better word) for landlords to also consider the importance of their role in providing a place to live for many people/families in NZ and to have a desire to make their tenants experience as positive and enjoyable as possible. Do the NZPIF promote this at all?

    Happy Tenants: Apart from the point above, surely happy tenants are inclined to stay longer in a property, appreciate it more and look after it as well or better.

    If the landlords aren’t really concerns about the ’softer’ points above, how about some harder fiscal points…

    length of tenure: I don’t know if there has been any research undertaken on this, but for various reasons, an educated guess would say that it is likely that tenants with pets stay longer in a property. This is ideal for a landlord avoiding the cost/time/risk of finding a new tenant on a more regular basis.

    how many tenants the property appeals to: if you take the figures from the article, owners that refuse to consider pets are limiting themselves to 36% of the available market or only 22% for larger family-type properties!

    property being empty for periods: during September we were hunting for a 4-bed+ family property on the North Shore of Auckland. There were 2 common factors for nearly all the properties we looked at..
    they wouldn’t consider having pets
    they were nearly all empty!

    ROI: surely… appealing to a larger audience, having fewer empty periods, longer tenures and more content tenants will have a significant impact to property investor ROI.

    I understand the desire to have the ‘ Perfect tenants' but I urge you to consider the perspective I have raised and if you feel there is some merit, please share this with your members for consideration. I suggest that if they weigh-up the potential risks against the potential economic benefits they may reconsider that pets aren’t such a big risk after all and, in fact, maybe people/families with pets could be their ideal tenants!

    In reality, how much harm/damage can a pet do? in my experience as a landlord humans can do a lot more damage!
    Hope you find this of interest and thanks for taking the time to read it.

    kind regards,
    G

    p.s. its also interesting that quite a few landlords allow cats but not dogs – would love to know the logic behind this; not sure if there is any reasoned logic?? 

 

 
All valid points. But an issue as complicated as the granting of residential tenancies (let alone an appropriate protocol for pet-owning tenants) cannot be adequately encapsulated in a media soundbite. In light of G’s email, we feel that it is appropriate to take this opportunity to clarify the following:
 
1. We do not advocate an anti-pet position but, rather, a responsible-landlord position

We encourage members to not deal in the absolute (i.e. either pet or no pet) and consider every tenancy application on its merits and weigh up the risk exposure it represents for the landlord. Sometimes that means the tenancy is granted to a pet-owner, other times, to a non-pet owner. It is also worth pointing out that in a recent membership survey when asked about their rental pet policies, 78% of APIA members are either indiscriminately pet-friendly or prepared to be selectively-pet-friendly for good quality tenants or increased rent. Only 2 % are against having pets in their rentals. 

2. We acknowledge that having a pet-friendly policy can, in some instances, present good commercial opportunities for landlords

To that end, we refer members to the extensive research carried out by our Property Management Partner, Barfoot & Thompson indicating a greater ROI for properties with pet-friendly policies. Barfoot & Thompson has also published helpful guides for landlords who want to rent to pet owners and pet-owning tenants who are looking for properties to rent. 

3. In this post-Osaki era, landlords have become vulnerable

When Osaki removed tenants' fiscal liability to repair damages and restore the property to its original state, it unequivocally instilled a tremendous amount of fear in the minds of landlords who do not feel that they have the financial robustness to sustain unpredictable damages. Not for nothing, but at the time, we did predict that this would be an unintended consequence that would ultimately hurt tenants (especially those with pets and families with small children). 

4. How much damage can pets do?

Very little and quite a lot.  There is no absolute.  Pet-inflicted-damages to the rental property often have very little to do with the pet itself and more to do with the owner (i.e., tenant). So we put forward the question - Are we unnecessarily fixating on pets when we should be more concerned about the quality of the tenant himself/herself? 

We suggest that landlords look beyond pet ownership and make the necessarily referencing inquiry as to the tenants living habits and general level of responsibility.  An owner of a rottweiler, for example, should not automatically be discounted as a viable tenant especially if he/she has a robust reference from previous landlords.  

5. Why are landlords leaving their properties empty?

Flipping G’s observation of empty rentals on its head, we feel compelled to ask the question ‘Why are landlords choosing to leave their properties empty when they could easily rent them out?’

True, there is the invariable capital gain argument. We are at the point of the market that properties are increasing in value by the natural forces of the property cycle giving landlords the illusory (if not actual) gain enough to forgo an actual cash return. But this line of argument only takes us so far and it would be cynical to consider it the sole reason for the empty-property phenomenon. 

Another equally valid, and often neglected, the reason is simply that the potential risk exposure of renting the property out far outweighs the benefits of cash return on the property for some owners. To put it more simply, some landlords are leaving properties empty because renting them out has become more hassle than it is worth. Is it a case that recent trend of bureaucratic, legislative, and judicial overreach has been met with commonsense response and resistance from the people?

This is by no means a pointing-fingers exercise but, rather, a contribution to the public discourse on residential tenancy. Legislatively and politically, you can only bash landlords so far before the industry reacts to protect itself.  When that happens, tenants sometimes get caught in the crossfire. We accept that there should be sensible regulations holding landlords socially responsible. We accept that there has to be a more equitable outcome for residential tenancy in New Zealand and that there is no place in our society for slumlords to operate. What we reject, is the use of emotive politics and knee-jerk reactions to push through catch-all regulations that have a detrimental effect on responsible landlords and their tenants.

6. Engagement and communication preempt a lot of problems

Acknowledging that insularity breeds groupthink and impedes growth as well as opportunity, we encourage members to actively engage with tenants. We love receiving emails like G’s because it gets us thinking about the issues we stand for, consider tenants’ perspectives, and reexamine or reaffirm our business protocol.

Residential tenancy has been mischaracterised as adversarial for far too long. At its core, it is an equal partnership between the landlord and his/her tenant working together for a mutually beneficial and sustainable outcome. So what do we suggest members do vis-à-vis pet-owning tenants? Stop dealing in absolutes and broaden your thinking about pets and their owners. Yes, there are risks to renting to pet owners, but there are also opportunities. Engage with potential tenants during open homes and examine their applications on the whole. Communicate your position as a landlord and your expectation for the tenancy clearly at the outset help minimise a lot of potential issues down the road. Talk to other pet-friendly landlords and find out how to mitigate your risk exposure. Actually put in steps to mitigate your risks (it could be understanding your rental insurance policy on damages and increased regularity of property inspection). Be present, listen to your tenant’s concerns, and respect the fact that while the property is your investment, it is also your tenant’s home. 

Do you have a rental pet policy?  Comment reply below and let us know how you are finding the rental market whether being pet-friendly or unfriendly is creating any opportunities for you.

 

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