RTA Bill

Residential Tenancies Amendment Bill

PROPOSED CHANGES

REINZ VIEW Anti-social tenants

Landlords will no longer be able to evict tenants without reason, after 90 days.

To remove tenants who are engaging in antisocial behaviour, landlords will now need to issue the tenants with 3 breach notices and then head to the Tenancy Tribunal to obtain an order terminating the tenancy.

This is problematic because neighbours of antisocial tenants often do not want to disclose their name when making a complaint to the landlord (usually due to concerns for their personal safety). This would also apply to appearing as a witness in the Tribunal. So, it will be difficult to provide evidence of the behaviour.

In terms of the 3 breach notices, the landlord would have to outline the details of the complaint and this could inflame the situation with an already anti-social tenant.

Also, the tenant will then have a Tenancy Tribunal decision against them which has the potential to limit their ability to obtain future accommodation given that most property managers check a tenant’s Tenancy Tribunal history as part of the tenancy application process.

Requiring a landlord to apply to the Tribunal will result in a larger volume of Tribunal applications and the timeframe to resolve claims will extend with further backlogs likely to occur - this disadvantages both tenants and landlords, who will be faced with longer periods of uncertainty.

Fixed-term tenancies to convert to periodic tenancies unless contrary notice given Fixed-term tenancies will become periodic when they expire unless: The landlord gives notice using the reasons listed in the RTA for periodic tenancies; A tenant gives notice for any reason at least 28 days before the end of the tenancy; or The parties agree to extend, renew or end the fixed-term tenancy.

REINZ is concerned by this proposal as it will impact areas with large student populations. Students often let fixed tenancies roll onto periodic tenancies as they don’t know if they want to extend or renew the tenancy. Under the new rules, students can decide to terminate the periodic tenancy at will, potentially leaving the landlord to find another tenant at a time when students are all housed and are not looking for accommodation.

Terminating periodic tenancies on notice Landlords will no longer be able to evict tenants without reason, on 90 days’ notice. The new justifications for terminating a periodic tenancy on 90 days’ notice are that: the property is to be made available for sale within 90 days after the tenancy terminates; the owner is required to give vacant possession under an unconditional agreement for sale and purchase of the property; extensive alterations or repairs are to be carried out or the property’s use is to change from residential to commercial; or the premises are to be demolished; the landlord is not the owner and the landlord’s interest in the property ends; the landlord has acquired the property to facilitate nearby land for a business activity and the premises are needed to facilitate that use.

REINZ does not support increasing the notice period from 42 to 90 days where a property is being sold because: a. The settlement date for the sale of a tenanted property will need to be 90 days from the unconditional date, yet tenants only need to give 28 days’ notice. b. Many tenants will give 28 days’ notice upon receipt of the landlord’s 90 day notice to vacate. c. The property is then left empty (and the landlord is without income) for over 2 months while the landlord waits for the sale to settle.

If the change goes ahead, vendors may wish to mitigate this risk by adding a clause to the agreement for sale and purchase whereby the parties can mutually agree on an earlier settlement date.

42 days’ notice has increased to 63 days to end a periodic tenancy where: The landlord, or their family member, requires the property to live in; or The property is needed for an employee (and this is in the tenancy agreement).

Extension of tenant’s notice period Tenant’s notice period extended from 21 to 28 days

REINZ supports this change.

Terminating periodic tenancies via Tribunal A landlord can apply to the Tribunal to terminate a tenancy where: a. The tenant has, on 3 occasions in a 90 day period, been late with their rent on 3 or more occasions for 5 working days or more. The landlord needs to give notice on each occasion specifying various information; or b. It would be unjust or unreasonable for the landlord to continue the tenancy due to hardship.

This will be problematic for landlords who have tenants who pay fortnightly. In these cases, the shortest timeframe in which a landlord could bring the matter before the Tribunal following the first default is approximately 5 weeks (based on arrears notices being issued over 3 consecutive rent periods), instead of the current 21 days. This time frame in addition to the length of time to get a Tribunal hearing could result in substantial rental arrears. In these cases, the bond amount would not be enough to cover arrears and could result in a tenant having a debt registered against their name.

Landlords may also require tenants to pay rent weekly to try and mitigate the risk of rent arrears accruing.

The new requirements for rent to have been in arrears for 5 days before an arrears notice can be issued exacerbates delays.

REINZ supports the ability for landlords to terminate for reasons of injustice or hardship.

Installing a fixture Tenants can make minor changes such as fitting brackets to secure furniture and appliances against earthquake risk, baby-proofing the property, installing visual fire alarms and doorbells, and hanging pictures. Tenants must request permission to install a minor fitting and landlords can only decline for specified reasons. Landlords can place reasonable conditions around how the minor fitting is installed. Tenants must remove the minor fittings and remediate the property when the tenancy ends if the landlord does not agree to the fittings staying.

REINZ supports the requirement for tenants to restore the property to its original condition at the end of the tenancy.

REINZ believes the Bill needs to make it clear that tenants must pay for the installation cost.

Broadband fibre installation Landlords to permit and facilitate the installation of a fibre connection in the premises where it can be installed at no cost to the landlord.

The tenant must first request the installation. The landlord must respond to the request within 21 days.

REINZ supports this change, noting that the grounds on which a landlord can refuse to install fibre are fair and appropriate (e.g. installation would damage the premises, or a third party has refused installation).

Rental bidding and advertising rent Landlords cannot advertise or offer a tenancy unless the amount is stated in the advertisement or offer, and landlords cannot invite or encourage bids for rent from prospective tenants.

REINZ supports these changes.

REINZ has discouraged the practice of rental bidding by landlords as it drives up prices in an unfair and unethical manner for tenants.

Rents should be disclosed in advertising as it ensures transparency.

Rent increases Rent can only be increased every 12 months instead of every 6 months.

REINZ supports this change as it will allow tenants to have more certainty but notes that in a tight rental market, it could result in landlords seeking higher rents at the beginning of a tenancy, to mitigate any market movements over the 12 month period

Privacy and access to justice A successful party can apply for their identifying details to be removed from Tenancy Tribunal decision prior to publication.

REINZ supports this change.

Providing information Landlords will have an obligation to provide the records relating to the Healthy Homes Standard within 21 days of a request for the same from a tenant.

REINZ supports this change as landlords are already required to hold this information under Reg 40 of the Residential Tenancies (Healthy Homes) Regulations 2019.

Assignment and subletting All assignment requests must be considered, and landlords must not decline unreasonably or attach unreasonable conditions to their consent.

Clauses prohibiting assignment are of no effect.

Landlord can offer to accept a surrender instead of agreeing to an assignment.

Landlords will be required to provide tenants with a breakdown of any fees charged for an assignment, subletting or ending a tenancy.

This will provide tenants with an opportunity to consider if the fees are reasonable.

REINZ supports this change as it already occurs.

REINZ Members need to be aware that such clauses will no longer apply.

REINZ supports this change.

REINZ supports this change as it ensures transparency.

Enforcement of the RTA Regulator (MBIE) can issue infringement and improvement notices to correct a breach of the RTA and these carry a penalty if not complied with.

REINZ supports higher penalties and MBIE issuing infringement and improvement notices but wants to see landlords who repeatedly fail to comply prevented from operating.

Tenancy Tribunal Jurisdiction The Tribunal will be able to hear cases and make awards up to $100,000.

Larger claims can present more complex legal issues, increasing the need for certainty and consistency in decision making. Tribunal Adjudicators are not currently required to follow decisions of other Adjudicators, which could create inconsistencies, resulting in higher appeal rates, longer resolution times and more cost to both tenants and landlords.