Royal Assent Given

On August 11th 2020, the Residential Tenancies Amendment Bill 2020 received Royal Assent on and became law. This follows a long list of changes for landlords in the past 5 years.

The background

It has been two years since the controversial tenancy law reform has been announced, the new law has passed and certainly re-wrote the rules for NZ landlords. This bill aimed to make a range of changes to make the Residential Tenancies Act 1986 so it was more appropriate for modern renting situations in New Zealand by increasing security of tenure for tenants and promoting good-faith relationships in the renting environment

The Changes

The reforms contained in the Bill are:

1. The removal of 90-day no-cause terminations.

Landlords won’t be able to end a periodic tenancy without reason making it more difficult and time-consuming for landlords to remove problematic tenants. The list of approved reasons for terminating tenancies under the RTA will include: Tenants are 21-days behind on rent (application to the Tenancy Tribunal) Repeated rent arrears. Tenants have been over 5 days behind on rent at least 3 times in a 90-day period (application to the Tenancy Tribunal) Repeated anti-social behaviour. Tenants displayed anti-social behaviour at least 3 times in a 90-day period (application to the Tenancy Tribunal) Hardship relief (application to the Tenancy Tribunal) The property owner or a family member is moving into the property (63-day notice) The landlord's employee needs to use the premises (63-day notice) The property has been put for sale (90-day notice, which has been extended from 42 days) The property was sold, and the new owner wants to move in (90-day notice) The landlord is planning to conduct extensive alternations, repairs or redevelopment of the property making it impracticable for tenants to continue living on the premises (90-day notice) The property is going to be demolished (90-day notice) The property is to be used for commercial purposes or was acquired to facilitate the use of nearby land for commercial purposes (90-day notice).

2. Fixed-term tenancies will automatically convert to periodic

Tenancies on expiry unless both parties agree that the tenancy will end. If the landlord doesn't want to continue with the tenancy, then they must use one of the grounds specified above to end the tenancy. If the tenant doesn't want the tenancy to continue, they can give notice between 28 days and 90 days before the end of the fixed term period.

3. Rent bidding is banned.

The landlords can no longer encourage tenants to bid on the rental (pay more than the advertised rent amount). Advertising a property without a rental price will also be prohibited.

4. Rent increases are limited to once a year

The minimum period between rent increases will now be twelve months as opposed to every six months.

5. Tenants are allowed to make minor alterations

to a rental property and Landlords will be required in most instances to permit the installation of ultra-fast broadband and allow other minor alterations to houses such as baby-proofing, hanging pictures, and earthquake proofing.

6. Tenants may request assigning a tenancy to someone else

All requests to assign a tenancy (including fixed-term tenancy) must be considered. Landlords cannot decline unreasonably. If a residential tenancy agreement prohibits assignment, it will be of no effect.

Uncertainty for landlords

These are big changes that certainly will affect both tenants and landlords. The bulk of the reforms will come into effect in six months on 11th February 2021 to give tenants and landlords time to prepare for the new rules. But the 12-monthly limit on rent increases came into effect as of 12th August 2020 to help tenants who may be struggling financially as a result of Covid-19.

These amendments, although well meaning, have made it more difficult, more expensive, and more risky for landlords. In recent times there have been multiple cases before the tenancy tribunal(internal link) with the landlord involved being fined for their misconduct. Whether it was by accident or with malicious intent it is not easy to navigate the legislative changes going on. Property management has never been more difficult or more risky.

Reducing the fear

The first best solution for this uncertainty is education. The Tenancy services are constantly putting out new information about the changes. You can read and learn till your heart is full. This requires lots of time. If, however, you don’t have the time then you may prefer the second solution.

Hire an expert

The second best option is to use a professional. Dunedin Property Management are experts(internal link) and are constantly training and upskilling our team. We have to stay on top of the game in order to provide best service for our owners and tenants. Why not give us a call and discuss it.