Rental law could change next year if proposals go ahead. Photo / file
Rental law could change next year if proposals go ahead. Photo / file
Proposed Government changes to the law for landlords - affecting about 600,000 properties which are home to around 1.5 million New Zealand tenants - is specific, precise and detailed.
If these go ahead, the law will swing firmly further into the tenants' favour.
The chances of success depend partly on how strong the landlord lobby is: they oppose these changes and will battle hard to stop all or some, or have them weakened.
Kris Faafoi, Associate Minister Housing for Public Housing announced one of the biggest changes to the Residential Tenancies Act since it was passed in 1986.
Associate Housing Minister Kris Faafoi announced changes yesterday. Photo / Andrew Warner
Andrew King, NZ Property Investors Federation executive officer, said today: "The Government says good landlords have nothing to fear. But it's the neighbours who could have something to fear. What if a tenant next door upsets your tenant and the neighbour's landlord can't do anything about it - and your tenant leaves?"
Faafoi said the act was passed more than 30 years ago when renting places was often a temporary measure but King predicts up to 50,000 landlords will sell if the changes come in. That is based on a survey conducted last month by the federation, he said.
"That could mean up to 100,000 rentals will be sold," King predicted, based on the survey.
Faafoi said around 25 per cent of New Zealanders rented in 1986 but now that was around 33 per cent. People were also renting later in life and more children were living in rental properties: in 1986, children in rentals were 26 per cent, but in 2013, it was 43 per cent.
Ending tenancy agreements
• Now: Periodic or non-time-fixed rental agreements can be ended by landlords within 90 days without any reason or a requirement to tell the tenant why. A landlord must give a tenant 42 days notice if they want to sell or move in a family member. Landlords now must give 90 days notice if they want the tenant out, but don't need to give a reason for the end. That is called no-cause termination.
• Proposed: Will be much harder to evict a tenant and no-cause termination could end. The agreement can still be ended if the landlord proposes to sell but instead of the landlord giving 42 days, must now give 90 days' notice. Landlords will be able to give other reasons for eviction but they will need to be real such as demolishing or changing the premises use. They can end a tenancy if they have given three notices for anti-social behaviour or if the tenants is five days late with the rent on three occasions.
King says if 90-day notices can't be given, anti-social tenants will be hard to evict. The risk will increase "exponentially" and riskier tenants will not get places. Neighbours could be intimidated and threatened "and it will be nearly impossible to remove a tenant". He estimates New Zealand has around 7000 anti-social tenants.
Real Estate Institute chief executive Bindi Norwell has welcomed many of the changes, supporting tenants' right to alter their places and for rent bidding to be outlawed. But she does not support an end to no-cause terminations.
"The proposed changes could incur huge administrative costs and the need for re-education and could lead to more landlords offering shorter tenancies or be deterred from leasing properties at all. Our preferred approach is to provide for higher exemplary damages to penalise landlords who abuse no-cause terminations," Norwell said.
Andrew King of the federation is concerned. Photo / file
Ending fixed-term tenancy agreements
• Now: If a fixed-term tenancy is going to end - perhaps a year is up - the tenant and landlord must reach an agreement about what happens next. They might agree to extend or renew.
• Proposed: Tenant will get more power and could demand to stay.
King says that is unfair and skews the law even more firmly against landlords and in favour of tenants. Landlords get even few rights in attempting to control their rental properties and have a say about who lives there and for how long.
Changes to the property
• Now: Landlords must give consent if the tenant wants to install a fixture.
• Proposed: Tenants will get more freedom to change their places, but will need landlord permission. Landlords can only decline applications under certain conditions, for example, if the changes are illegal.
A federation survey showed many landlords were happy for tenants to get vegetable gardens and Sky aerials as of right, but a significant number thought there needed to be conditions. Change of curtains, picture hooks, shelving, appliances, power points, carpet or lino, paint, pet doors, kitchen cabinets, decks and windows were other aspects the federation asked its members about and where tenants had requested changes to properties.
Norwell of REINZ said: "The difference between a house and a home is the ability for tenants to make changes to their rental property such as adding a dishwasher, washing machine or curtain."
Rent rises
• Now: Rents can be put up once every six months;
• Proposed: Rents will only be able to rise annually.
King says: "It's annoying. We'd prefer to have more ability to raise rents if needed but it's not the end of the world. It cuts down on our ability to manage the property. We would have to wait an extra six months."
• Now: The Tenancy Tribunal can make awards up to $50,000 against a landlord.
• Proposed: Threshold is proposed to be doubled to $100,000.
King says: "Landlords will become criminals because the Ministry of Business, Innovation and Employment will issue infringement notices with fines and these will be criminal notices."
Assigning a property to another tenant
• Now: Tenants can ask a landlord if someone else can take over a fixed-term tenancy. Landlords have to agree.
• Proposed: Landlords cannot unreasonably decline a request by tenants to assign a fixed-term tenancy.
King said the federation initially feared tenants could sub-let but was told by the minister an assignment would mean a new tenancy started and "in most cases that's what happens anyway so it should be okay."
• Now: The Tenancy Tribunal has the right to prohibit the publication of proceedings but the Government sees a lack of clarity in that.
• Proposed: Tenants' names can be removed from a Tenancy Tribunal decision.
King said the federation was not too concerned by this change "and as long as the tenant has largely or in full won their case, it does seem reasonable their names don't appear".
Norwell of REINZ is worried the Tenancy Tribunal workload will increase.
"Of concern is whether the tribunal will have the workforce to deal with the additional caseload that will now need to be seen. The current wait time for a tribunal hearing is around six weeks and our concerns is that this could stretch out even longer, causing further damage to a landlord's property in the meantime or further stress for neighbours having to deal with anti-social behaviour," Norwell said.
