Proposed changes to the Residential Tenancies Act 1986

Following on from the changes to the Residential Tenancies Act 1986 which came into force on 1 July 2019, the Associate Housing Minister, Kris Faafoi has announced further proposed changes to the Residential Tenancies Act 1986, which will be introduced to Parliament in the first quarter of 2020.  He has stated that, “These reforms deliver on the Coalition Government’s promise to address out-dated rules for rental accommodation and are part of our plan to improve wellbeing for many New Zealanders who rent their homes.”

Here is a heads up as to what changes are being proposed:

1. Landlords will only be able to increase rental once every 12 months. Currently it is once every 6 months.
2. Landlords will not be able to solicit bids from prospective tenants for their rental properties, for example; by advertising for a property with no rental price. Rental auctions are also prohibited.
3. Landlords will need have to a good reason to end a periodic tenancy – the new legislation will specify “good reasons”, some of which include:
   • The landlord intends to put the property on the market in the following 90 days.
   • The landlord intends to carry out extensive alterations to the property and it would be unpractical for the tenant to continue to stay there.
   • The Landlord wants to change the use of the premises.
   • The premises are to be demolished.
   • The landlord is not the owner of the property and no longer has an interest in the property.
   • The landlord has issued the tenant with three notices for anti-social behaviour in a 90 day period and applies to the Tenancy Tribunal to end the tenancy.
   • The Landlord has given the tenant notice that they have been at least 5 working days late in paying rent on 3 separate occasions within a 90 day period and applies to the Tenancy Tribunal to end the tenancy.

     And the notice period will increase to 90 days (from 42 days).

4. Fixed Term tenancy agreements will automatically become periodic tenancies when the term ends unless both parties agree otherwise, or the tenant gives notice to end at least 28 days prior to the end of the fixed term, or there are specified grounds for the tenancy to end (being the same as those specified above).
5. The notice period which the landlord must give if they or a family member wish to live in the property will increase to 63 days (from 42 days).
6. Tenants will be able to make their rental properties safer and more liveable by being able to add minor fittings where the installation and removal of such fitting is low risk, for example; brackets to secure furnishings against earthquake risk, to baby proof the property, install visual alarms and doorbells and hang pictures. Currently landlord consent is required before a tenant can do any of these things.  The tenant will still be required to request consent, but the landlord can only decline for certain reasons including – it is not low risk, it will pose a health and safety risk that cannot be managed, or it will compromise the structural integrity of the building.  The tenant is responsible for the cost of the installations (and their removal at end of tenancy) and the landlord can specify conditions around how it is to be installed.
7. A party who takes a case to the Tenancy Tribunal will be able to apply to have their details remain anonymous on request before the decision is publicised. If a party is wholly or partially successful (in enforcing their rights or defending a claim against them) the default position will be that their details will be anonymous.
8. Landlords will have to consider all assignment requests and must not decline unreasonably. Currently fixed term agreements can prohibit assignment.  Landlords will also have to provide tenants with a breakdown of any fees to assign, sublet or end a tenancy.  This will give tenants the ability to determine if the fees are reasonable.
9. If requested, landlords will have to provide tenants with records relating to the healthy homes standards. Currently they only have to provide these to the Regulator (MBIE) on request.
10. A new infringement offence regime will be introduced for straightforward breaches of the Act. Penalty levels for exemplary damages and criminal offences will be increased by between 50 and 80 percent.  The Regulator (MBIE) will be able to issue improvement notices to correct a breach of the Act and these carry a penalty if not complied with. A new class of civil penalties will be introduced for the most serious breaches.
11. The Tenancy Tribunal will be able to hear cases and make awards of up to $100,000 (currently the limit is $50,000).

Clearly there are some big changes proposed to the Residential Tenancies Act 1986 and these have the potential to radically change the way landlords, tenants and property managers manage their relationships.  We will keep you updated on the changes to the Act when the bill is introduced and makes its way through Parliament.

If you are a landlord or a tenant and would like further information on your rights and obligations, please contact one of our Property Experts.