Rental agreement form with signing hand and pen.

What do you do when one of your tenants is moving out and a new one wants to take their place?

If a tenant is leaving but wants to replace themself with a new tenant (assigning a tenancy) in the change of legislation to the Residential Tenancies Act that came into effect on 11 February 2021 all reasonable requests must be considered. If the tenancy started prior to 11 February 2021 and you aren’t comfortable with assigning a tenant then you are legally within your rights to terminate the tenancy which means all the tenants will have to leave.

What’s reasonable?

Essentially what this means is that provided the tenant has good credit, their references check out, they are able to afford the rent and the other tenants are happy with the new tenant then you aren’t able to deny their request nor can you add in any unreasonable conditions.

Here are the steps to follow to ensure the change of tenancy goes smoothly.

  1. Tenant to notify you in writing: Your current tenant needs to notify you in writing that they wish to assign their tenancy to a new tenant. Here’s the link to the form to send them https://www.tenancy.govt.nz/assets/forms-templates/request-for-assignment.pdf
  1. Reply to tenants request: Reply within a ‘reasonable’ timeframe and let your tenant know if you are considering their request or not. Unfortunately if you don’ t reply within a reasonable timeframe Tenancy Services may say it’s an unlawful act which could see you facing a fine of up to $1500.

When you reply to the tenant also let them know that they will be charged for the completion of the assignment (see point 10 below).

  1. New tenant to complete a tenancy application:

It’s very difficult to terminate a tenant if you aren’t happy with them sobefore deciding on whether to accept the new tenant we highly recommend that a new tenancy application be completed. This is so that you have a record of who they are, where they work, contact details for next of kin etc so that should the worst happen and the tenants disappears into thin air leaving behind unpaid rent and damage then you have people to contact if needed.

  1. Credit and reference checks: Complete both credit and reference checks for the new tenant.
  1. Accepting the assignment: If you are happy to proceed with the assignment then you notify your current tenant in writing using this form: https://www.tenancy.govt.nz/assets/forms-templates/response-to-request-for-assignment.pdf
  1. Complete an inspection before the current tenant moves out.

It’s truly best practice to complete an exit inspection so that damage (if there is any) can be rectified before the new tenant moves in. This then draws a line in the sand and leaves no wriggle room at the termination of the tenancy for other tenants to say ‘we didn’t do that damage it was caused by Renee (the tenant who assigned the lease and is now long gone).

  1. Bond transfer form. Don’t forget this step which is to get the bond transferred from the old tenant to the new one and sent to Tenancy Services within 10 working days. https://www.tenancy.govt.nz/assets/Forms-templates/change-of-tenant-form.pdf
  1. Tenants assign lease without notifying you: If your tenants simply assign the lease to a new person without notifying you then they will be in breach of their tenancy and face a fine of up to $750.
  1. Refusing the assignment: If you aren’t happy with accepting the new tenant then you are able to refuse their request but will need to let them know in writing by using this form https://www.tenancy.govt.nz/assets/forms-templates/response-to-request-for-assignment.pdf
  1. Charging the tenant for your time to complete the assignment

As you can see it’s a bit of a process to go through to ensure that the change in tenancy goes smoothly so Tenancy Services do allow you to charge the outgoing tenant for any ‘reasonable’ costs that you incur. You will need to let the tenant know what these charges are prior to them proceeding with the assignment and provide them with a detailed invoice which shows the breakdown of the expenses you incurred

Link to Tenancy Services about assigning leases https://www.tenancy.govt.nz/law-changes/phase-2/assignment-of-tenancies/

Renthub offer a service to assist self managing landlords with this process. Click here to find out more here: Tenant Finding Service in Auckland

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