Residential Tenancy Reforrms

A raft of reforms to the Residential Tenancies Act 1986 (“RTA”) have been put into place in the past two years.

 

Landlords can be forgiven for being confused as to what exactly is fact and what is fiction. What has come into force and what is still being debated?

 

This series of blogs will discuss these reforms. My aim is to make things clearer, starting with two changes that are already in force:

 

The Healthy Homes Guarantee Act 2017 (“Healthy Homes Act”)

  • This was passed in December 2017. The amendment allows for the minimum standards for insulation, heating, ventilation, draught stopping, drainage, and moisture ingress in all residential rental premises. The amendments come into force on 1 July 2019 and compliance is required before 1 July 2024.

 

The Residential Tenancies (Prohibiting Letting Fees) Amendment Act 2018

  • This came into force in December 2018. The amendment prohibits letting agents, or any person, from requiring the tenant to pay a letting fee or any other fee, in relation to a tenancy. The aim was to reduce the up-front costs faced by tenants and improved fairness to tenants.

 

A balancing act

 

I’ve been a tenant and value having had a warm and healthy place to live, paying reasonable rent with landlords who were engaged and cared. I have also experienced living in cold and damp accommodation where mould settled where it pleased.

 

On the back of my experience, my view is that the Healthy Homes Act is well overdue. No one should have to live in housing that poses a threat to their health or worse – their shoes!

 

If we are to enjoy healthy rental homes throughout New Zealand and ensure continued supply, it will require some balancing of interests. The rental homes shortage is already at an unsustainable low level. Pushing landlords out of the market due to compliance costs could tip the balance in what is already a perilous housing shortage. Healthy home standards have yet to be formulated so it’s difficult to have an opinion on whether the compliance costs are unreasonable.

 

The regulations containing the standards must be in place by July 2019, landlords will have five years to comply.  If those costs prove astronomical, then we may see a drop in the supply of rental homes. This would make the shortage of housing in New Zealand a crisis and not just a social dilemma. The healthy home standards will need to strike a balance between commercial sense and providing tenants with acceptable housing conditions.

 

Complications

 

  • There are still unforeseen complications that may arise from the new Healthy Homes Act. For example, what is to occur in a cross-lease scenario where one property is owner-occupied and the other tenanted?  Depending on the lease, the owner-occupied property may be affected (yet another reason to consider converting your cross-lease into a fee simple).

 

  • Unit title developments may also be affected. Buildings may require upgrades pursuant to the new standards due to their state of repair. How will the levies reflect this if the works affect common property for example?

 

We wait with bated breath for July!

 

By Christine Cechova