New rental reforms are set to be introduced in New Zealand as the government pushes through the Residential Tenancies Amendment Bill.
Overseas property investors who rent out their property in New Zealand will need to be aware the changes that the Residential Tenancies Amendment Bill will bring.
As announced on 17 November 2019, the government claims that the changes will:
Improve tenant’s security by requiring the use of a justified reason to end a periodic tenancy, including new provisions to respond to anti-social behaviour and removing the use of no cause terminations to end a periodic tenancy agreement.
Flatten the inflated demand that has been created in some regions by tenancies all ending at the same time by mandating that fixed-term tenancy agreements must become periodic tenancy agreements upon expiry unless both parties agree otherwise, or certain conditions apply.
Improve compliance with the law by increasing financial penalties and giving the Regulator new tools to take direct action against parties who are not meeting their obligations.
Remove a disincentive for parties to use the Tenancy Tribunal by allowing for identifying details to be anonymised in situations where a party has been wholly or substantially successful in taking a case.
Make rental properties safer and more liveable by ensuring that tenants can add minor changes, such as brackets to secure furniture and appliances against earthquake risk, baby proof the property, install visual fire alarms and doorbells and hang pictures.
Prohibit the solicitation of rental bids by landlords and limit rent increases to once every 12 months.
The Bill also includes additional ultra-fast broadband proposals to:
Improve the process for the installation of fibre in rental properties by requiring landlords to permit and facilitate the installation of Ultra-Fast Broadband, subject to specific triggers and exemptions.
New Zealand has already seen the removal of letting fees, and the introduction of Healthy Homes Standards to provide adequate insulation, heating and ventilation, which will require compliance from 1 July 2021.
However, in particular the removal of no cause terminations to end a periodic tenancy agreement has met with the most criticism.
Currently landlords in New Zealand can remove tenants without giving a reason if they give 90 days notice. However, the Residential Tenancies Amendment Bill will remove that right, and has seen much opposition.
Property investors say it will make it much harder for them to get rid of problematic tenants – and people living in surrounding properties could suffer.
Bindi Norwell, chief executive of the Real Estate Institute, feels that a better solution would be to set higher exemplary damages for landlords who abused no-cause terminations.
She said: ‘We understand that the proposed removal of ‘no cause’ terminations is in direct response to perceptions that tenants are concerned to raise issues relating to the tenancy in case a landlord’s response is to terminate the tenancy. As ‘no cause’ terminations are used in so few instances we know this is not the case.
‘The majority of owners would rather have maintenance or safety issues brought to their attention so the issue can be fixed thereby protecting the value of their rental property and reducing any legal liability. Given the cost and administration involved in replacing good tenants, the less expensive option is almost always to fix the problem raised by the tenant, rather than replace the tenant.”
‘The current legislation already provides protection for tenants who believe a ‘no cause’ termination is retaliatory and landlords who misuse this provision can be ordered to pay damages of up to $4000. So we don’t believe the current situation needs to change.
‘In our view, removing ‘no cause’ terminations could incur significant administrative costs and the need to re-educate landlords, tenants and property managers. It could also cause a number of owners to sell their rental property as they are concerned that they would not be able to get rid of tenants for anti-social behaviour reasons.”
The Residential Tenancies Amendment Bill was this week introduced to the New Zealand Parliament.