Changes proposed to the Residential Tenancies Act

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Power to the people? Change is coming for landlords and tenants

Change is coming for the 1.5 million people currently renting their home in New Zealand. Amendments proposed to the Residential Tenancies Act (RTA) will put more power in the hands of tenants. The RTA is the primary piece of law governing landlords and tenants renting houses in New Zealand.

What is proposed?

Terminating tenancy agreements

Currently, when a landlord wishes to end a non-fixed-term (periodic) tenancy agreement, they must simply provide 90 days’ notice to the tenant – they do not need to give a reason or explain why they wish to end the tenancy (a ‘no cause’ termination). The notice period is only 42 days if the landlord needs to use the property for themselves, their family or their employee, or the property has been sold and must be vacated.

Under the proposed changes to the RTA, landlords will no longer be able to do this. They MUST provide a reason to validly terminate the agreement. The permissible reasons are listed in the Act and include:

  • the landlord intends to sell or alter the property 
  • the tenant has had to be issued with notices of anti-social behaviour on three separate occasions within a 90-day period AND the landlord has applied to the tenancy tribunal to end the tenancy, or
  • the tenant has been at least five days late on rent payments on three separate occasions within a 90-day period AND the landlord has applied to the tenancy tribunal to end the tenancy.

Extensions are also proposed to the standard notice periods for ending a tenancy if a landlord requires the property for themselves, their family or employee (63 days) or if the property has been sold and the tenant is required to (90 days). 

Converting tenancy agreements

The proposal will also give more power to tenants when it comes to ending fixed-term tenancies.

Presently, when a fixed-term tenancy agreement is nearing its end, the agreement will convert into a periodic tenancy (which has no end date) unless:

  • the landlord or tenant gives notice that they wish to end the tenancy for any reason at least 21 days before the term ends, or
  • both parties agree to extend or renew the fixed-term.

Under the proposed new rules:

A fixed-term agreement will convert to a periodic tenancy, unless:

  • a landlord gives notice that they wish to end the tenancy using a listed reason (this will be the same list of reasons available to a landlord when they wish to terminate a tenancy agreement) to explain why, or
  • a tenant gives notice that they intend the tenancy to end for any reason at least 28 days before the agreement is scheduled to finish, or
  • both parties agree to extend or renew the fixed-term.

Fixtures

The proposal also loosens the rules around installing fixtures and safety equipment into rented accommodation, to allow the increasing number of tenants in New Zealand to feel more at home in their properties.

Currently, tenants must get the landlord’s consent before making any alterations to their rental property, however minor. Landlords must not unreasonably withhold their consent.

Under the proposed new rules:

  • Tenants will be able to install minor fittings to the property and the landlord may only deny their ability to do so under certain conditions listed in the act. Such conditions include, among other things:
    • the fitting will pose a health or safety risk  
    • installation or removal of the fitting is not low risk
    • it will be difficult to return the property to its original state at the end of the tenancy if the fitting is installed
    • the fitting will impact unreasonably on a third party, or
    • the fitting will compromise the safety of the building.

What will the changes mean for landlords?

  • The end of no cause terminations and stricter processes mean it will be more difficult to evict troublesome tenants, such as those who participate in anti-social behaviour or who are late on rent payments.
  • Landlords will have less control over the ending of fixed-term tenancies, unless you require tenants to leave for one of the specified reasons, as the decision to continue a fixed-term tenancy will be primarily the tenants’.
  • You’ll need to prepare in advance when intending to terminate a tenancy, due to the longer notice periods required and stricter rules around the reasons you can give for termination.
  • You’ll need to ensure that any fees charged for changes to the tenancy agreement are reasonable, as tenants will have access to your reasoning and can contest it if they think it is unreasonable.
  • Landlords will need to make sure they understand their responsibilities under the RTA, as there will be greater focus on enforcement and higher penalties for those who do not comply.

Good and bad news for tenants

Tenants will benefit from:

  • greater stability and security in housing as landlords become limited in the reasons they can use to end a tenancy
  • increased access to justice – any complaints made to the tenancy tribunal and upheld will be anonymised by default, meaning tenants can complain without fear of affecting any future rental arrangements, and
  • better quality of housing due to increased penalties for sub-par properties and the increased ability to install minor fittings.

However:

  • rental prices will have the potential to increase as rental bidding becomes prohibited, and the quality of properties increases due to the higher enforcement of RTA standards, and
  • stricter renting requirements are also likely as it becomes more difficult to evict problem tenants.

It’s not too late to have your say

The changes to the RTA are not set in stone yet. They are expected to be introduced in a Bill to Parliament (the first step to creating new law) in the first quarter of next year.

You may like to make a submission on the Bill.

If you have any questions about the proposed changes or would like help to make a submission, please do not hesitate to contact our Property team.

Our thanks to Kezia Purdie and Alice Chapman for writing this article.