Residential Tenancy Act Reforms Now Law, What Does That Mean For You?

Updated 7 August 2020 Marina George Director Renthub

On 5 August the New Zealand government passed under urgency amendments to the Residential Tenancies Act effective in six months from now.

So what will this mean for you as an owner of a residential investment property in New Zealand?

Removal Of 90 Day ‘No Cause’ Tenancy Termination

Current: A landlord is able to give a tenant on a periodic tenancy 90 days notice to end the tenancy without any reason being given.

Amendment: 90 day ‘No cause’ terminations have been removed. When this law comes in approximately six months from now owners can end a periodic tenancy for a limited number of reasons such as (but not limited to):

-To allow the owner or family member to move in (63 days notice). The owner or family member must move into the property within 90 days and reside in the property for at least 90 days.

– To allow property to be renovated/repaired provided extensive alterations such as replacing a bathroom or kitchen were taking place and it wouldn’t be practicable for the tenant to remain. The alterations would have to begin within 90 days of the termination date or reasonable steps towards the alterations have started within 90 days e.g. consent applied for or a hefty deposit paid.

Giving notice so that the landlord could for example paint a room would not be regarded as an extensive alteration.

Changes To Fixed Term Tenancies

Current: A fixed term tenancy rolls automatically into a periodic tenancy unless notice is given. Both the tenant and the landlord has an equal right to end the tenancy.

Amendment: An expiring fixed term tenancy will roll automatically into a periodic tenancy unless both parties agree otherwise. If your tenant wishes to stay the tenancy will automatically become a periodic tenancy and you as the owner will not be able to stop this.

Termination For Anti-Social Behaviour

Current: A landlord is able to give a tenant on a periodic tenancy 90 days notice to end the tenancy without any reason being given or if on a fixed term tenancy not renew the tenancy without any reason being given.

Amendment: A tenant must have exhibited anti social behaviour on three separate occasions within a 90 day period and the landlord must have given the tenant written notice each time. These notices will be able to be challenged at the Tenancy Tribunal by the tenant.

The landlord can then apply to the tribunal to evict the tenant/s within 28 days after the third notice.

If the tenant challenges the notice at the tribunal the onus will be on the landlord to prove that the anti-social behaviour had occurred.

Housing New Zealand and social housing providers will still be able to end a tenancy without having to give a reason.

Assignment Of Tenancy

Current: Current tenancy agreements either prohibit assignment or state they will be considered on a case-by-case basis.

Amendment: All assignment requests must be considered by the landlord. The tenant will have to submit their request in writing and identify and include contact details for the proposed assignee. The landlord will have to respond to the request in writing within a specified time period and may not withhold consent unreasonably. It will be an unlawful act if the landlord fails to comply and will be subject to exemplary damages.

Associated Persons Test

New section: The infringement penalty bill will mean that landlords with six or more tenancies would be subject to higher penalties than those with less than six properties.

So that landlords don’t structure their affairs to avoid the higher costs an associated persons test would be introduced. It would be deemed that one person would be associated with another if they were the spouse, de facto or civil union partner of the other person.

Fibre Connections

New section: Landlords would be required to permit and facilitate the installation of fibre broadband services to properties unless:

– The weathertightness of the building was materially compromised

– The character of the building is materially compromised

Infringement Penalty

Current: Fines and pecuniary penalties are based on what Section of the Residential Tenancies Act was breached.

Amendment: The maximum penalty has been increased to $50,000. The infringement penalty will now be based on the number of properties you own not on what the breach was. A landlord with six or more tenancies or boarding house will be classed as a ‘large scale’ landlord and subject to

higher infringement fees and pecuniary penalties. The reason for this is that it is deemed that ‘large scale’ landlords should be fully aware of their obligations under the Act.

To clarify, any tenancies related to a room-by-room tenancy would be classed as one tenancy not individual tenancies.

Minor Changes To A Property

New section: Tenants will be able to make minor alterations to the property without prior consent such as putting up shelves or picture hooks to make it more like their home. At the end of the tenancy the tenant must return the property to a condition that is substantially the same as it was before the changes were made.

Rental Bidding

Current:  A landlord can ask a prospective tenant what the maximum amount of weekly rent they can afford is and whoever can pay the most is chosen as the tenant.

Amendment: Rental bidding would be prohibited and a landlord will have to state the amount of rent when the property is advertised.

Rent Increases Only Allowed Once Per Year

Current: Provided there is a clause in the tenancy agreement a landlord is entitled to increase the rent every six months

Amendment: Rent increases will be limited to once every 12 months. This takes effect immediately.

Click here to read the Residential Tenancies Amendment Bill 218-1 V2

How a Bill Gets Passed Into Law

Leave a Comment

Your email address will not be published. Required fields are marked *