14 February 2021
Property Investment Changes to tenancy law: what landlords need to know
1986… the year Halley’s Comet reached its closest point to Earth for just the second time in the 20th century; the same year The Oprah Winfrey Show debuted in the USA; the year in which the devastating Chernobyl disaster occurred; and the New Zealand’s Residential Tenancies Act was enacted.
A lot has happened in the past 35 years, particularly in New Zealand’s housing market, so it was to be expected changes would occur when the New Zealand Government reviewed the Residential Tenancies Act 1986 last year. The first of those changes, the limiting of rental increases to once a year, was implemented last year, but this month further changes are being rolled out.
Lugtons’ Residential Property Manager, Annette Day, looks at the changes to tenancy law and how they affect landlords.
The changes
1. No cause no longer a reason
What’s the change? If a landlord wishes to end a tenancy, they must provide the tenant with a reason. A ‘no cause notice’ is no longer sufficient.
2. Rental properties listed within 90 days
What’s the change? If a landlord issues an end of tenancy notice for the purpose of selling the rental property, the property must be listed within 90 days after the tenancy termination date for the purposes of a sale.
3. Fixed-term tenancies now periodic tenancies
What’s the change? When a fixed term tenancy ends, it will automatically roll over into a periodic tenancy, which has no set end date. This means the tenancy will continue on until either the tenant or the landlord mutually agree to renew or extend the fixed term; or agree not to continue with the tenancy.
4. Increased 28-day notice period
What’s the change? Should a tenant wish to end a tenancy before the agreed date, they must now provide the landlord with 28 days’ notice. This is up from the previous 21-day notice period.
5. Reassignment of tenancy
What’s the change? If a tenant wishes to reassign their tenancy to another party, they can request this in writing to the landlord, who must have a compelling reason for declining the reassignment. Tenants commit an unlawful act if they reassign a tenancy without prior consent.
6. Minor DIY acceptable
What’s the change? Tenants can request to make minor alterations to the rental property they’re residing in. These minor requests, for example the hanging of artwork, can’t be declined.
Other changes include:
- outlawing of rental bidding
- leeway for tenants to ask landlords to install fibre broadband if it comes at no cost to the landlord
- the ability for both landlords and tenants to apply for name suppression if they are successful in a tribunal decision.
Further changes to the Act will be implemented in August. These allow tenants who are experiencing family violence to withdraw from a tenancy with two days’ notice and without financial penalty. Should a tenant assault a landlord, then the tenancy can be terminated within 14 days.
What do the changes mean?
According to Lugtons’ Residential Property Manager, Annette Day, these changes to the Residential Tenancies Act do provide tenants with better protection, but it’s important to note they don’t restrict or disadvantage landlords.
“What we’ve seen is an increase in landlords utilising our property management services,” says Day. “We focus specifically on ensuring we place the right tenants in the right property, so achieving that partnership from the outset usually ensures none of the above changes needs to be enforced.”
Day hopes the Act’s changes, and the Healthy Homes Standards announced in 2019, don’t dissuade home buyers from becoming landlords. The new Healthy Homes Act will provide tenants with warmer, drier homes, reduce mould and mildew damage, therefore protecting a landlord’s investment.
“Property still remains a very good investment option, and with the large number of tenants looking for viable rental properties, it’s an excellent time to consider an investment property purchase.”
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