26 November 2019
Government proposes changes to The Residential Tenancies Act 1986
The property industry is ever changing. Last week, the Government announced potential changes to tenancy law which will give tenants more rights in the homes they rent, in a bid to increase security.
We look at the proposed changes and how they could affect your investment property, or impact you as a tenant.
NZ Tenancy Law overhaul
The Residential Tenancies Act 1986 is the overarching tenancy legislation landlords need to comply with.
The Government’s proposed changes are set to encompass the shift in the rental market. In 1986, renting was often a temporary measure, with around 25 per cent of New Zealanders renting a property, as opposed to 2019 where 33 per cent of the population are in rentals.
People now stay in rentals for longer, buying homes later in life and then sometimes re-entering the rental market upon retirement. Statistics New Zealand estimate the number of households renting their homes is increasing at almost twice the rate of those who own their own home. And, with over 270,000 landlords in New Zealand, 546,000 rental properties and over 1.5 million tenants - this legislation is set to have a significant impact.
It will be harder to evict tenants
The proposed changes could see the end to the ‘no-cause’ 90-day termination of tenancy. Landlords will be able to give other reasons for eviction; however, they will need to be real reasons. For example:
- proposing to sell the house
- demolishing the property
- changing the premises use
Otherwise a tenant can only be evicted if they’ve been given three notices for anti-social behaviour – when a tenant behaves in a way that could result in alarm, intimidation or distress – or if the tenant is five days late on their rent payments on three occasions.
End of fixed term tenancy agreements
Basically, fixed term agreements will revert to periodic tenancies. Landlords will still be able to set a ‘fixed term’, however, a tenant could demand to stay in your abode beyond the length of the fixed term even if you don’t want them to.
Landlord consent for changes
It’s often said the difference between a house and a home, is the ability to add your personal style. Tenants will be able to install reasonable fixtures and fittings, if it is returned to the original condition at the end of the tenancy.
Under current law, landlords can raise the rent every six months. Under the proposed changes this would be limited to annual rent increases.
Tenants can assign a property to another tenant
If a tenant wishes to leave their agreement early, a landlord cannot unreasonably decline a request by tenants to assign a new fixed-term tenant. It’s important to note this is not subletting - a new tenancy agreement would be entered into with the landlord.
The tenancy tribunal will be able to make awards up to $100,000 against a landlord, double the current threshold.
Name suppression in Tenancy Tribunal
Tenants’ names will be removed from a Tenancy Tribunal decision, if the tenants are successful in their case against the landlord. This amendment is set to help inhibit discrimination from future prospective landlords.
Ban on rent bidding
In the new legislation, rent price is required to be advertised, and bidding above and beyond this price will be banned for prospective tenants – effectively to stop price wars.
How Lugtons can help with your property management
At Lugtons, we’re here to help. If you are concerned about the impact the proposed changes will have on your investment properties, you can contact our property management team to talk through the changes.