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Changes to Tenancy Legislation

7 August 2020

Major changes to tenancy legislation were passed by Parliament on 5 August 2020. The amendments make a number of changes to the Residential Tenancies Act 1986, which will affect both landlords and tenants.

It will now no longer be possible for landlords to issue 90-day “no cause” termination notices and fixed term tenancies will automatically rollover to periodic tenancies on expiry unless otherwise agreed.

Rent bidding has been outlawed, rent increases have been limited to once a year (as opposed to every six months), and landlords are required to allow tenants to make minor alterations to a rental property such as baby-proofing, hanging pictures, and earthquake proofing.

These are big changes. In fact, they constitute the most significant overhaul of tenancy law since 1986 and landlord advocates are not happy about them. Proponents maintain the reforms are aiming to get the balance right as between landlords' rights and tenants' rights. However landlord advocates believe that some of the reforms skew the relationship in favour of tenants and erode the rights of landlords. Many feel the Government has maintained an anti-landlord stance and not listened to feedback or taken it into account since the proposed reforms were first announced two years ago.

Timing

The bulk of the reforms will come into effect in six months to give tenants and landlords time to prepare for the new rules.
But the 12-monthly limit on rent increases will come into effect earlier in a bid to help tenants who are struggling financially as a result of Covid-19. Rent increase notices given from the day after the legislation gets Royal assent will have to comply with the 12-month rule.

Key changes at a glance

Below is a summary of the key changes:

  • Landlords will not be able to end a periodic tenancy without a reason. The legislation will set out specified reasons that a landlord may use to end a periodic tenancy.

  • Fixed-term tenancies will become periodic tenancies at the end of the fixed term. This applies unless the landlord and tenant agree otherwise, the tenant gives notice, or the landlord gives notice using one of the specified reasons.

  • Tenants who need to leave a tenancy quickly due to family violence will be able to provide the landlord with a family violence withdrawal notice.

  • Tenants will be able to add minor fittings to their premises where the installation and removal of the fittings is low risk.

  • The Regulator will have new compliance tools to take direct action against parties who are not meeting their obligations.

  • The penalty amounts will be increased in line with rental increases since 2006 when the penalty amounts were set.

  • Soliciting rental bids, for example, by advertising a property without a rental price, will be prohibited.

  • The minimum period between rent increases will be raised from six months to twelve months.

  • A party who is successful in the Tenancy Tribunal can have their identifying details removed from the Tribunal’s decision.

Despite the government claiming it will balance tenants’ and landlords’ interests, there has been quite a bit of criticism levelled from property owners.

We recommend that landlords join a property investors association such as the Tauranga Property Investors Association (https://tauranga.nzpif.org.nz/), and select tenants even more carefully because the ramifications and costs of getting it wrong have increased significantly. 

Need to know more? Call our team on (07) 578 0059

Disclaimer: the content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.