A landlord’s guide to latest tenancy reforms
One of the most fundamental criteria in becoming a successful property investor is staying plugged-in to the market and the investing landscape.
And if you own property from an investment point of view, it’s likely that you’re a landlord. Even if you have a great property manager in place to look after your asset, it’s still your responsibility to be across the rules and regulations that apply for both tenants and landlords.
This can be difficult when it feels like speculation and conversations around law reforms are constant – which is why we’ve summarised the latest changes to the Residential Tenancies Act 1986 that came into play in August.
The new laws will be rolled out across three phases.
Phase One
Phase one of the new law changes are effective immediately and limit landlords from increasing their rent to only once every 12 months. Previously rent increases were permitted once every six months. On top of this, there continues to be a freeze on rent increases. This means landlords cannot increase rent until after 25 September 2020.
According to Tenancy Services New Zealand, “Any rent increase notices given to tenants from 12 August must comply with the new 12-month rule”.
Furthermore, from now on any accommodation provided for transitional or emergency housing which is funded by the government or is part of a special needs grants programme, is exempt from the Residential Tenancies Act.
Phase Two
Phase two of the law changes, which take effect from February 11th 2021, include the following reforms as stated on the Tenancy Services New Zealand website.
- Security of rental tenure: Landlords will not be able to end a periodic tenancy without cause by providing 90 days’ notice. New termination grounds will be available to landlords under a periodic tenancy and the required notice periods have changed.
- Changes for fixed-term tenancies: All fixed-term tenancy agreements will convert to periodic tenancies at the end of the fixed-term unless the parties agree otherwise, the tenant gives a 28-day notice, or the landlord gives notice in accordance with the termination grounds for periodic tenancies.
- Making minor changes: Tenants can ask to make changes to the property and landlords must not decline if the change is minor. Landlords must respond to a tenant’s request to make a change within 21 days.
- Prohibitions on rental bidding: Rental properties cannot be advertised without a rental price listed, and landlords cannot invite or encourage tenants to bid on the rental (pay more than the advertised rent amount).
- Fibre broadband: Tenants can request to install fibre broadband, and landlords must agree if it can be installed at no cost to them, unless specific exemptions apply.
- Privacy and access to justice: A suppression order can remove names and identifying details from published Tenancy Tribunal decisions if a party who has applied for a suppression order is wholly or substantially successful, or if this is in the interests of the parties and the public interest.
- Assignment of tenancies: All requests to assign a tenancy must be considered. Landlords cannot decline unreasonably. If a residential tenancy agreement prohibits assignment, it is of no effect.
- Landlord records: Not providing a tenancy agreement in writing will be an unlawful act and landlords will need to retain and provide new types of information.
- Enforcement measures being strengthened: The Regulator (the Ministry of Business, Innovation and Employment) will have new measures to take action against parties who are not meeting their obligations.
- Changes to Tenancy Tribunal jurisdiction: The Tenancy Tribunal can hear cases and make awards up to $100,000. This is a change from $50,000.
Phase Three
Lastly, the third phase of the law change will see tenants who experience family violence able to withdraw from a fixed-term or periodic tenancy without financial penalty by giving two days’ notice and evidence of the family violence. If they are the only tenant, the tenancy will end.
And, a landlord will be able to issue a 14-day notice to terminate the tenancy if the tenant has assaulted the landlord, the owner, a member of their family, or the landlord’s agent, and the police have laid a charge against the tenant in respect of the assault.
Phase three will take effect from August 11th 2021, if not sooner.
Create the financial future you want to live
For more information on these changes and how they will effect you as a landlord, you can check out the Tenancy Services website here https://www.tenancy.govt.nz/about-tenancy-services/news/residential-tenancies-amendment-act-2020-now-in-force/
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