In August, Parliament made numerous changes to the Residential Tenancies Act. The changes were passed under urgency, with only hours of Labour’s first term in Government remaining. With Labour’s big election win, we can now be certain that these changes will be coming into effect.
Most of the changes favour tenants, with the stated aim of giving them more certainty. Whether that is a good thing, or whether the changes have gone too far, is something we’ll leave you to debate……
Most of the changes come into force on 11 February 2021 (with the remaining changes coming into effect from 11 August 2021). The changes are significant, so we have provided a brief overview below:
- Rent Increases – Rent can now only be increased once every 12 months. Previously this was every 6 months. This change has already come into effect. Any rent increase notice given to tenants must comply with the new 12-month rule.
- Rent bidding – Properties will need to be advertised with a set rent price. Landlords are not allowed to encourage potential tenants to ‘bid’ or pay more than that advertised price.
- Periodic Tenancies – A landlord will not be able to give notice to end a periodic tenancy (without Tenancy Tribunal involvement) unless an exception applies. These exceptions have different notice periods, and include:
- 63 days’ notice
- The owner (or a member of the owner’s family) wishes to move into the property. Note, companies and trusts don’t have families.
- The property will be required by the employees or contractors of the owner.
- 90 days’ notice
- The property is being sold with vacant possession. This is longer than the current 42 days and means there will now need to be at least 90 days between confirmation date and settlement.
- Extensive alterations are to be made to the property that require the premises to be vacant. You can’t just use this exception to get around the law changes – extensive alterations or redevelopment must actually occur!
- The property is being converted into commercial premises or being demolished.
- 63 days’ notice
Unless one of these exceptions applies, the termination of a tenancy can only be ordered by the Tenancy Tribunal. However, tenants can still end a periodic tenancy by giving the landlord 28 days’ notice (which is an increase from 21 days).
- Fixed Term Tenancies – All fixed term tenancies will now automatically roll over into periodic tenancies at the end of the fixed term. Only tenants can give notice to avoid this, whereas previously landlords could give tenants 3 weeks’ notice. A landlord will have to give notice using the same reasons listed for periodic tenancies above. A landlord and tenant can agree to renew the fixed term; however, if they fail to agree, the tenancy will still become periodic.
- Failure to pay rent or anti-social behaviour – There will be limited other grounds allowing landlords to end tenancies. For these, you’ll need to apply to the Tenancy Tribunal. These grounds include:
- If the tenants are more than 5 working days late paying rent, 3 times within a 90-day period, or if they are more than 21 days late in rent once. Each time they’re late, the landlord has to give them a formal notice.
- The landlord has issued the tenant 3 notices for committing separate acts of ‘anti-social behaviour’ within a 90-day period.
- The tenants have caused significant damage or used the premise for unlawful activity.
- Assault by a tenant – You’ll be relieved to know that a landlord can give a tenant 14 days’ notice to end any tenancy if a tenant physically assaults the landlord, their family or agent. However, this only applies if the Police formally charge the tenant, so Police reports and witnesses will likely be required.
With these big changes coming into force in the near future, it’s particularly important that investment property owners and their agents know the law, especially the timeframes involved.
More information can be found on the Tenancy Services website www.tenancy.govt.nz.
As always if you have any questions, feel free to get in touch with us.
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