The Residential Tenancies Act is changing - here’s what landlords need to know
Sept 29, 2020
Making sure the 1.5 million+ New Zealanders who rent have a secure place to call home is one of the driving forces behind a major overhaul to the Residential Tenancies Act (RTA).
Currently around a third of New Zealanders live in a rented property, a number that has been steadily rising over the 30 years since the Act first came into force. In 1991, 26% of Kiwi children lived in rented homes. By the 2013 Census that number was 43%.
There’s also evidence to suggest people are renting for longer, as home ownership rates fall for those aged in their 30s and 40s.
What’s changing?
One of the key changes reflects a desire to provide renting Kiwis with greater security in a tenancy. Previously a landlord could end a periodic tenancy by giving 90 days’ notice, without giving a reason to the tenant.
Now landlords will only be able to end these tenancies for a range of “fair and justified reasons”.
The Ministry for Housing and Urban Development (HUD) says this means “tenants will always know why their tenancy is ending and be able to challenge this at the Tenancy Tribunal if they consider their landlord does not have a justified reason or has not followed due process.”
There’s been controversy around the amended Act, with the opposition party dubbing it “anti-landlord”. The legal profession however has taken a much more measured stance. Yes, there are greater obligations. But, as Housing Minister Kris Faafoi described it, the bill amendments are designed to “give all people a place to call home and put down roots.”
Is it true tenants won’t be able to be evicted for anti-social behaviour?
No. Landlords however must be able to prove 3 instances of anti-social behaviour in a 90-day period before they can issue a notice to end the tenancy. The Act describes “anti-social behaviour” as:
(a) Harassment, or
(b) Any other act or omission (whether intentional or not), if the act or omission reasonably causes alarm, distress, or nuisance that is more than minor.
Clearly this is open to interpretation about what constitutes “more than minor” - and there has been criticism over the lack of clarity. As cases come before the tribunal and courts, a clearer threshold of what constitutes anti-social behaviour will no doubt emerge.
Will a landlord still be able to remove a bad tenant?
Yes. There are provisions for landlords to end a tenancy for breaching their tenancy agreement or the RTA in a serious way - including persistent late rent payments, anti-social behaviour, assault, and intentional damage to the property.
Let’s take a look at the key changes before heading into some Q & As.
Key changes to the Residential Tenancies Act you need to know about
Rent increases
Rent rises limited to once per year (previously limited to once per 180 days)
Inviting rental bidding banned (this includes advertising a property without a price)
Notice period
Tenants must give 28 days’ notice to end a tenancy (previously 21 days)
Reasons for ending a tenancy
Landlords can terminate periodic tenancies by giving 63 days’ notice (up from 42 days) where:
The owner, or a family member, requires the property to live in. They must move in within 90 days of the termination date AND must live in the property for minimum 90 days.
The property is needed for an employee (this also needs to be specified in the tenancy agreement).
Landlords can terminate periodic tenancies by giving 90 days’ notice when:
They want to put the property on the market (this must occur within 90 days of the tenant leaving).
Due to an unconditional sale agreement, they need to give the purchaser vacant possession.
The landlord is not the owner of the property (for example, it is leased), and the landlord’s interest in the property ends.
The landlord wants to change the use of the premises or the property needs to be vacated for a business activity (it must have originally been acquired for that purpose).
Renovations are happening and these are extensive enough that it would be impractical for the tenant to live there (renovations must begin within 90 days of the tenant leaving).
The property is being demolished.
Domestic violence
Victims of domestic violence can end their tenancy with 2 days’ notice.
Anti-social behaviour and assault
Landlords can end a tenancy with minimum 14 days’ notice if a tenant is convicted of assaulting them, their family, or a property manager. There is also an existing provision which allows landlords to seek a Tenancy Tribunal order to end the tenancy if an assault happens, whether or not the person is convicted of the offence.
Landlords must prove 3 instances of anti-social behaviour in a 90-day period before they can issue a notice to end a tenancy. (Previously landlords could issue a no-fault 90-day eviction notice without reason.) A written notice regarding the anti-social behaviour must also be issued to the tenant for each occurrence.
Fixed term tenancies
Fixed term tenancies automatically revert to periodic tenancies at the end of the fixed term, unless the tenant and landlord agree otherwise.
Tenancy Tribunal
The Tenancy Tribunal can now preside over claims of up to $100,000 (previously $50,000).
Landlords who own 6 or more properties will be subject to greater fines than those with fewer properties.
Penalties are generally increasing for all infringements.
Late rent payments
The first thing landlords should do is to discuss the late rent with their tenant to try to reach an agreement.
A tenancy can be ended if the rent is late by 5 working days three times within 90 days OR 21 days behind on one occasion (previously only the 21-day rule applied). The tenants must be issued with a written notice that includes specific details about the late rent.
Minor property alterations
Tenants can generally make minor changes to the property. Examples include hanging pictures, installing child safety features, adding shelving, curtains or securing furniture for earthquake proofing.
Landlords must agree to having fibre installed (applies only if the fibre installation is at no cost to the landlord and there are no relevant exemptions, for example the installation affecting the weathertightness of the building.)
Q & A
Wasn’t the Act just updated last year?
Yes. Changes included
limiting tenants’ liability for careless damage (read our blog on the 2019 changes for more detail).
meth testing (landlords given the ability to test while the house is tenanted).
providing an insurance statement in all new tenancy agreements.
ensuring the rental property meets legal standards.
Does this override the changes that happened during the Covid-19 lockdown?
On 23 March 2020, the Government announced a temporary addition to the RTA to keep people in their homes. This included a freeze on rent increase and limiting the reasons to end a tenancy. The rental freeze remained in place until 26 September, however the tenancy termination restrictions expired on June 26.
What can landlords and tenants do if they have a problem?
As always, the best way to resolve any issues is to communicate positively and work together to find a solution. If this doesn’t sort the matter, there are 3 other options for resolving disputes.
FastTrack Resolution – this is a service provided by Tenancy Services to help landlords and tenants formalise an agreement that’s been reached after a dispute.
Mediation – A professional mediator is appointed to help the parties talk about and solve their problems.
Tenancy Tribunal – For when an issue can’t be resolved. The Tribunal will hear both parties’ views and can issue an order which is legally binding.
If you want to find further details about specific changes, we highly recommend taking a read of the Ministry for Housing and Urban Development’s FAQ guide.
A final word
There’s a lot to take in here for landlords or those thinking of buying a residential investment property. It’s crucial to keep informed with the changes so you know your obligations. If you have any queries, seek out the advice of your lawyer. You can also follow our Facebook page for relevant updates on property law.
The information in this article is provided to summarise this topic and is of a general nature. If you have any residential property/tenancy questions that we can help you with, please get in touch.