Residential Tenancies

New obligations and rights of tenants and landlords

The Residential Tenancies Act 1986 has been amended with the result being that New Zealand law is now, even more, tenant-friendly. If you are a landlord, you may want to take note.

On 5 August 2020, the Residential Tenancies Amendment Bill passed its 3rd reading in the House and will come into effect as the Residential Tenancies Amendment Act 2020 (Act) after Royal Assent. Although the majority of changes will only kick in after a six-month period, giving time for tenants and landlords to be aware of their new obligations and rights.

The Act will see a number of significant changes introduced which have a direct impact on both tenants and landlords.

 

Three key changes for you to be aware of

1. It is now harder for a landlord to end a periodic tenancy agreement

A 90-day, no-cause eviction is no longer legal for periodic tenancies.

Section 51 of the Act is amended so that a landlord may terminate a periodic tenancy by giving at least 63 days’ notice for a set number of reasons, such as:

  • the owner requires the premises for their own principal place of residence within 90 days of the termination date of the tenancy;
  • the landlord customarily uses the premises or has acquired the premises, for occupation by employees of the landlord (etc).

A landlord may terminate a periodic tenancy by giving at least 90 days’ notice for a number of provided reasons, such as:

  • the property is to be put on the market within 90 days of the termination of the tenancy agreement;
  • the landlord is not the owner of the premises and the landlord’s interest in the property is about to end;
  • extensive development works are to be carried out on the property; and
  • the property is to be demolished.

Tenants can continue to give notice on any grounds as per usual. Although as per section 51(2A) of the Act, at least 28 days’ notice must be given to the landlord rather than the usual 21 days’ notice.

Tenancies are still able to be brought to an end – but there now does have to be a reason for it. This change will likely not have a major impact on the market as no-cause evictions are fairly uncommon anyway. This provides some certainty; tenants now know that they can’t be kicked out just because the landlord doesn’t like them. However, no cause evictions are sometimes used and now landlords may more carefully consider who they offer to rent their properties to. In doing so they thereby cut out some who they may perceive to be high risk. It’s likely these will be the very people the amendments are seeking to safeguard.

2. The frequency of rental increases are limited and rental bids banned

The Act provides more certainty to tenants around how much rent they will have to pay.

Section 24 of the Act is amended to read that, “rent must not be increased within 12 months after the date of the commencement of the tenancy; and the rent must not be increased within 12 months after the date on which the last increase took effect”.

New section 22G of the Act states that rental bidding is no longer allowed. More specifically, “a landlord must not invite or encourage a prospective tenant or any other person to offer to pay an amount of rent for residential premises that exceeds the amount of rent stated as part of the advertisement or offer of the premises”. As per section 22F, the rental must be shown on advertisements for the properties. This prevents landlords from shopping around potential tenants for the highest possible rent.

3. Tenants are to have more control over the property

Previously, tenants were required by law to get the landlord’s permission in writing (unless it was already authorised within the tenancy agreement) if they wanted to affix, make any renovation or addition to the property. This has been loosened up by the Act.

New section 42B of the Act defines what a “minor change” to the property is. It also states that it would be unreasonable for landlords to withhold their consent to these changes being able to be made. These are changes which (among other conditions):

  • present no more than a low risk of material damage to the premises; and
  • would allow the premises to be returned easily to substantially the same condition; and
  • would not compromise the structural integrity, weather tightness, or character of the property.

These allow for changes such as hanging pictures up on walls or inserting child safety measures onto stairs. Some might see this as a further loss of control for landlords. Objectively, it is. However, tenants need to live in these properties – they are their homes and from time to time people need to alter their homes in minor ways to be able to live in them. This seems like a sensible amendment.

 

Final thoughts

Questions remain. Off the back of Covid-19, these changes come in at a time of economic hardship for many New Zealanders. On the face of it, these changes are in favour of many who may be more vulnerable to this economic shock. There is certainty as to when rent might increase. Rental properties are to be more liveable, with tenants able to make minor changes to suit their needs. There are even amendments that take into account situations whereby a tenant may be a victim of domestic violence. They attempt to make it easier for them to exit tenancies where there is a risk of such abuse.

However, it might just be that this Act actually makes it even more difficult for everyday Kiwis to rent a property. Coming down on landlords might incentivise some of them to sell their rental stock. This would decrease an already short supply of rental properties. As a result, the price of renting a property would go up.

Regardless of the merits of this new law, if you have any queries please feel free to get in touch. We can advise on how this may impact you as either a landlord or a tenant.

 

By Matt Smalberger