The Residential Tenancies Amendment Act 2020 has resulted in significant changes to tenancy law in New Zealand. If you’re a landlord, it’s crucial to understand how the new laws will affect you.
With demand for rental properties higher than ever, the changes are designed to modernise tenancy law to better reflect the current realities of renting. The extensive changes are being implemented in three phases.
In this article, we’ll outline and explain some of the key changes that might be of concern to landlords specifically. We will then cover the changes from a tenant’s perspective in a later article.
The first phase came into effect on 12 August 2020 and delivered two key changes:
- Accommodation provided for transitional and emergency housing is now exempt from the Residential Tenancies Act.
- Landlords can only increase rent once every 12 months (as opposed to the 6-month limit previously enforced).
Phase two was rolled out on 11 February 2021 and contains the Act’s most substantial changes.
Here are some of the changes that will be of particular interest to landlords:
- Landlords can no longer end periodic tenancies (often referred to as month-to-month tenancies) without cause. We’ll cover this change in a seperate article next month, as it’s one of the most significant changes landlords will have to navigate.
- Fixed-term tenancies will convert to periodic tenancies at the end of the term unless otherwise agreed.
- Landlords can’t decline a tenant’s request to make a minor change to the property. Minor changes might include things like the installation of dishwashers, washing machines, curtains, TV aerials and shelving.
- Landlords aren’t allowed to advertise properties without a rental price or encourage tenants to bid against each other for higher rent. However, potential tenants can voluntarily offer higher rent to secure a property and landlords still have the right to accept these offers.
- Subject to limited exceptions, landlords must agree to a tenant’s request to install fibre broadband, if it can be done at no cost to them.
- Landlords need to consider all requests to assign a tenancy (i.e. transfer the tenancy to someone else) and they can’t decline unreasonably.
- Landlords will need to keep and provide new types of information (such as maintenance records and information relating to the healthy homes standards).
- Not providing a tenancy agreement in writing is now an unlawful act (which carries additional penalties such as exemplary damages).
Phase three will take effect by 11 August 2021, or possibly earlier depending on government agreement.
There are two key changes under this phase:
- Tenants who experience family violence will be able to withdraw from both fixed-term and periodic tenancies by providing two days’ notice and evidence of the violence. Under these conditions, there will be no financial penalty.
- Landlords will be able to terminate a tenancy by giving 14 days’ notice in situations where the tenant has assaulted the landlord, the owner, a member of the landlord’s family or the landlord’s agent. In these circumstances, the police must have laid a charge against the tenant for the assault.
Other considerations for landlords
The changes to the Residential Tenancies Act will also have implications on the processes used by landlords.
The new Act emphasises the need for prompt communication between landlords and tenants. This is largely a result of the introduction of fines for several different scenarios under the new law. Therefore, landlords will need to ensure they are responding to tenant requests in a timely manner and provide prompt notice where required.
It will be important for landlords to carefully consider the pros and cons of both fixed-term and periodic tenancies when renting their property. A fixed-term tenancy will provide landlords with greater long-term financial security. On the other hand, the flexibility of a periodic tenancy may be better suited to a landlord’s future needs and plans for the property.
The Government has also announced that it intends to change the tax treatment of interest on loans for residential property. Although this change isn’t directly connected to the Residential Tenancies Amendment Act 2020, it’s an important detail for landlords to bear in mind when making decisions about their properties.
Where to get help
We strongly encourage landlords to seek help as they navigate the new framework. If you need legal guidance, feel free to send me an email or give me a call on 09 489 9102.
P/ 09 489 9102
Jessica graduated with a Bachelor of Laws (Hons) and Bachelor of Arts at the University of Auckland and was admitted to the bar in August 2018.
She enjoys the diversity and thrives on the challenges that come with being part of the dispute resolution team.
Note: This post is brief and general in nature. You should not treat it as legal advice and should seek professional advice before taking any action in relation to the matters dealt with in this post. Armstrong Murray accepts no liability for losses suffered by any person or organisation who may rely directly or indirectly on this post.