Global finance helping you navigate through the tenancy changes
Royal Assent on 11th August 2020 made way for changes to the Residential Tenancies Amendment Act 2020. This reform looks to modernise and bring New Zealand up to speed in terms of aligning the present-day realities of renting in New Zealand, so they say. With first signs of a new Bill announced August 2018
However, there is huge controversy amongst the main players in the market. Property owners have expressed their concerns over how impactful these changes will be on current land lordship. Various media outlets have also noted the controversial and what seems un-thought of risks this passing of this bill poses on owning a rental property.
It also makes way to some problems potentially with supply and the number of rental properties available on the market. It seems also directed at shutting down landlords who may not be adhering to correct conduct as far as leasing their properties to tenants are concerned.
There hadn’t been a large-scale reform since 1986 – the Minister for housing mentioned that the Bill had been written in a time where rentals were only a thing for students or young professionals and people looking to move on relatively quickly. However, thirty-four years later we see that people are now staying in rentals much longer and for extended periods of time which have different requirements. People have families and differing more potentially challenging needs to be met.
Renting versus homeownerships according to Statistics New Zealand 2019 estimated that there were just under 1.8million households at the end of June of which 62 percent of those people owned their own homes according to Radio New Zealand. Around 604,000 rented and an estimated 66000 lived in free accommodation (such as living in a sleepout on the back of Mum and Dad)
These circumstances are vastly different to the early 90’s where homeownership peaked at more than seventy percent. Cost of renting has increased as well.
The act predominantly gives tenants more rights in their flats or homes. The Act also highlights a scripted way in which a tenant could be evicted.
One of the most significant changes is that renters’ names will be removed from tenancy tribunal records if they win their dispute effectively anonymising themselves if wholly or partially successful in a tenancy claim.
Another point to note is the residentially tenancies Amendment Act 2020 addresses matters concerning rental bidding. It sets the idea that has been prominent for a long time that a potential tenant would turn up to a property being shown to other potential tenants and have an opportunity to bid against other potentials. This Bill effectively makes that illegal to do so. Meaning Landlords must stick to a price that has been set and you cannot have an auction for a rental price.
There is widespread concern that these changes could effectively shrink the number of properties available, as a result increasing rental pricing. We do not agree with this view. In Global Finance we believe more rental properties will come to the market.
The Residential Tenancies Amendment Act 2020 also strengthens the notion that a rental property is somebodies’ home, their, family, they are part of society, and addressed deeper concerns such as wellbeing. Are the regulations as good as they can be? It also begs the question are we, as a society providing healthy homes for people?
One of the larger changes is eliminating the practice of no-cause terminations, where landlords can kick out tenants with 90 days’ notice without having to provide a reason.
What this means is that they will have to show a pattern of what is deemed anti-social behaviour over a three-month period. This evidence must also be presented at the Tenancy Tribunal.
The decoupling of house prices relative to income, a lot of that has stemmed from significant amounts of money being placed into the residential property market over the years and now is a time to bring policies up to standard deemed fit for the property market.
With the banning of letting fees, increases once per year its purpose was to make the market a bit fairer for tenants. Having not had an overhaul since 1986 it poses a supply scare indicating a knock-on effect to rental prices and jobs
So, the question is who does this affect, how and why.
The Residential Tenancies Amendment Act 2020 affects both tenants and landlords.
These changes are made to the Residential Tenancies Act 1986.
The Act is broken into a three-phase approach which sees the first phase go into effect as of the 12th August with two major changes taking effect from this day.
What do you need to know?
The first phase focuses on two key changes that look at both transitional and emergency housing alongside rental increases.
What this means it that accommodation currently being provided under transitional and emergency housing funded by the Government is exempt from the Residential Tenancies Act.
Landlords can only increase the rent once every 12months instead of the current 6-month period. There are still freezes on rent increases which stay in effect until after 25th September 2020. Rental increases that are given to tenants from the 12 August must follow and comply with the new 12-month rule.
Summary
Second phase – 11th February 2021
- Security of rental tenure: Landlords will not be able to end a periodic tenancy without cause by providing 90 days’ notice. New termination grounds will be available to landlords under a periodic tenancy and the required notice periods have changed.
- Changes for fixed-term tenancies: All fixed-term tenancy agreements will convert to periodic tenancies at the end of the fixed-term unless the parties agree otherwise,
the tenant gives a 28-day notice, or the landlord gives notice in accordance with the termination grounds for periodic tenancies. - Minor changes: Tenants can ask to make changes to the property and landlords must not decline if the change is minor. Landlords must respond to a tenant’s request to make a change within 21 days.
- Rental bidding Prohibited: Rental properties must have a rental price listed when advertised, and landlords cannot invite or encourage tenants to bid on the rental
- Fibre broadband: Tenants can request to install fibre broadband, and landlords must agree if it can be installed at no cost to them, unless specific exemptions apply.
- Privacy and access to justice: A suppression order can remove names and identifying details from published Tenancy Tribunal decisions if a party who has applied for a suppression order is wholly or substantially successful, or if this is in the interests of the parties and the public interest.
- Assignment of tenancies: All requests to assign a tenancy must be considered. Landlords cannot decline unreasonably. If a residential tenancy agreement prohibits assignment, it is of no effect.
- Landlord records: Not providing a tenancy agreement in writing will be an unlawful act and landlords will need to retain and provide new types of information.
- Enforcement measures being strengthened: The Regulator (MBIE) will have new measures to act against parties who are not meeting their obligations.
- Changes to Tenancy Tribunal jurisdiction: The Tenancy Tribunal can hear cases and make awards up to $100,000. (Increased from $50,000.)
Third phase – 11th August 2021
- Family violence: Tenants who are victims of family violence will be able to withdraw from a fixed-term or periodic tenancy without facing financial penalty.
- Physical assault: Landlords can issue a 14 days’ notice to terminate a fixed-term or periodic tenancy if a tenant physically assaults the landlord, a member of the landlord’s family, or the landlord’s agent and the Police have laid a charge against the tenant
With all these tenancy changes taking place now might be a great time to review your chances if you are thinking to buy and investment property or would like to make changes in your existing loans to make it more efficient through Global Finance or you would like to be Mortgage free as soon as possible that too within your capacity through our Mortgage Genius Plan. At the same time look at your insurances.
If you are looking to get sound advice from expert advisers who can get you closer to reaching your financial goals talk to the team at Global Finance today. 09 255 5500
**These are general guidelines and are by no means a reflection of bank or lending policies