Just as election campaigning begins, the government has rushed to pass new tenancy laws that will have a impact on you, your investment and tenants. We explain below the laws you need to be aware of.
Fixed Term Tenancy Agreements Will Convert to Periodic Tenancies
When a fixed term tenancy comes to an end, it will then automatically become a periodic tenancy unless:
A landlord gives notice using the reasons listed in the Residential Tenancies Act for periodic tenancies (outlined below).
A tenant gives notice for any reason at least 28 days before the end of the tenancy.
The parties agree otherwise e.g. to renew the fixed term or to end the tenancy.
Terminating Periodic Tenancies
Periodic Tenancies can only be ended by the landlord for one of the following reasons:
The landlord issued a tenant three notices for separate anti-social acts in a 90-day period.
The landlord gave notice that a tenant was at least five working days late with their rent payment on three separate occasions within a 90-day period.
The landlord will suffer greater hardship than the tenant if the tenancy continues.
Landlords Can Give 14 days' Notice When:
The tenant physically assaulted the landlord or their family and the Police laid a charge.
Landlords Can Give 63 days' Notice When:
The owner, or their family, requires the property to live in.
The landlord customarily uses the premises for occupation by employees or contractors and the premises are needed for that purpose (and this is stated in the tenancy agreement).
Landlords Can Give 90 days' Notice When:
The owner intends to put the premises on the market.
The property has been sold with a requirement by the owner for vacant possession.
The landlord is not the owner of the property, and the landlord’s interest ends.
The premises need to be vacant to facilitate the use of nearby land for a business activity (and this is stated in the tenancy agreement).
The landlord wants to change the use of the premises to a commercial use.
The landlord intends to carry out extensive renovations at the property and it would be impractical for the tenant to live there during that process.
The premises are to be demolished.
Reasons specific to social housing tenancies.
In addition, tenants who are experiencing family violence can withdraw from a tenancy by giving two days’ notice, accompanied by appropriate evidence of the family violence.
Tenants Can Make Minor Changes to Property
Where a tenant requests a change that is minor, the landlord cannot withhold consent, and must respond in writing within 21 days. Keep in mind however, the landlord can impose reasonable conditions around how that minor change is carried out, such as requiring the tenant to change the location of the change, or requiring a certain installation method or material to be used that will minimise the risk of damage.
When the tenancy ends, The tenant must return the property to a condition that is similar to the state it was in before the change was made. If a tenant wants to make a change to their rental property, then they will have to pay for it, and they will also be liable for the cost of any remedial work required as a result of any minor changes they have added to a rental property.
But what is considered a minor change? The government has clarified that a change is minor if:
It will present a low risk of damage to the property.
It will be of a nature that allows the property to be easily returned to a reasonably similar condition at the end of the tenancy.
It will do not pose a health and safety risk that is not able to be sufficiently mitigated, including during installation and removal.
It will have no impacts on third parties.
It will require no consent under law (e.g. a building consent), or breach bylaws, body corporate rules, covenants, or other obligations or restrictions relevant to the premises.
Annual Rent Increases Only & Rent Bidding Forbidden
Rent can now only be increased once every 12 months. However the freeze on
rent increases put in place through the Covid-19 legislation still remains in place until 25 September 2020.
In addition, landlords will not be able seek rental bid. This includes advertising rental properties with no rental price listed. However tenants are still allowed to offer to pay more for a property if they want.
Tenant Assignment Requests
Assignment is a term used when a tenant transfers their interests and responsibilities under a tenancy to a new tenant. The new amendment means all assignment requests must be considered, landlords cannot decline unreasonably, and in fixed-term tenancy agreements landlords cannot prohibit assignment.
Tenant Fees & Healthy Homes Records
Landlords must provide tenants with a breakdown of fees charged on agreement to assignment, subletting or ending a tenancy. If requested by tenants, landlords will also have an obligation to provide the records relating to healthy home standards.
Existing Penalties Increased 50% - 80%
In addition to this, the Tribunal can hear cases and make awards up to $100,000. Higher infringement fees and fines are applicable to landlords with 6 or more properties.
Name Suppression
If the party has been wholly or substantially successful, the Tribunal can order suppression of names and identifying details in published Tribunal orders.
When Will These Laws Come Into Affect
The only amendment that comes into play effective immediately is the amendment stating that rents can only being increased once every 12 months. The remaining laws will come into effect in six months time in February 2021.
Final Thoughts
With the Second Reading and amendment changes being debated and passed in a single day, there is certainly a general feeling of these law changes being very much rushed. The law that will cause the most worry is requiring fixed term tenancy agreements automatically converting into periodic tenancy agreements at the end of the fixed tenancy, and the potential difficulties in breaking tenancies as a result.
The best course of action to avoid any difficulties is to ensure you have great tenants from the very beginning. Our Quinovic offices thoroughly review all prospective tenants using industry-lead background checks, including credit, landlord and employer checks, as well as online screenings. It's important to make sure to get the best tenants into your property.
If you're considering Property Management get in touch with us today. Locally owned and managed, we offer residential property management services across the entire Wellington & Hutt Valley region.
We take care of investments, offering peace of mind and a personal service to investors and tenants alike. Our solutions are backed by industry-leading technology and proven systems that promote both excellent property care and strong investment returns. Taking on all aspects of the landlord’s role, we guide our clients with professional, tailored advice using our extensive experience and insight in the rental market that can only be built over time.
If you would like to chat about the possibility of working together, or to receive a no-obligation, FREE Rental Appraisal get in touch with our team today.
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