Periodic tenancies cannot be terminated without a reason(Periodic Term Tenancy)
Currently, landlords can terminate a periodic tenancy without giving a reason by providing tenants with 90 days’ notice. Once the new amendment takes effect, landlords will be able to terminate periodic tenancies only in the following circumstances:
- When a landlord applies to the Tenancy Tribunal to terminate a tenancy for the following reasons, the Tribunal will determine the notice period.
- The landlord has issued the tenant with 3 notices of antisocial behaviour within 90 days;
- The landlord has notified the tenant on 3 occasions within 90 days that rent is at least 5 working days late;
- Continuing the tenancy would cause the landlord greater hardship than the tenant;
- Other existing provisions concerning rent arrears, intentional damage, malicious assault and breaches of tenancy agreements will continue to apply.
- A notice period of 14 days applies where:
- The tenant has physically assaulted the landlord or a member of their family, and police have laid charges.
- A notice period of 63 days applies where:
- The landlord or a member of their family needs to move back into the rental property;
- The landlord customarily provides the property to employees or contractors and now needs it for that purpose. This provision must be stated in the tenancy agreement.
- A notice period of 90 days applies where:
- The landlord intends to put the property on the market;
- The property has been sold and the new owner requires vacant possession;
- Following a change in ownership, the landlord named in the tenancy agreement will no longer have a beneficial interest in the property;
- The property needs to be vacant so nearby land can be used for business activities. This must be stated in the tenancy agreement;
- The landlord wants to convert the property from residential to commercial use;
- The landlord intends to undertake extensive renovations that would make the property unsuitable for tenants to live in during construction;
- The property is to be demolished;
- Or certain special grounds relating to social housing tenancies apply.
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Changes to the rules for ending fixed-term tenancies
Currently, a fixed-term tenancy cannot be ended early unless both parties agree or the Tenancy Tribunal orders it. Under the new amendment, if a tenant physically assaults the landlord or a member of their family and police lay charges, the landlord can terminate the fixed-term tenancy by giving the tenant 14 days’ notice.
Previously, a landlord or tenant could give notice at any time before a fixed-term tenancy expired to end it at expiry. Under the new rules, tenants must give at least 28 days’ notice. Landlords who do not wish to renew a fixed-term tenancy must still provide a reason based on the grounds for ending periodic tenancies listed above, or negotiate with the tenant. They cannot terminate the tenancy without a reason simply because the fixed term has expired.
New provisions allow tenants experiencing family violence to withdraw from a tenancy
The new amendment specifically adds protections for tenants experiencing family violence.
- Tenants experiencing family violence can withdraw from a tenancy by giving the landlord just 2 days’ notice, but must provide appropriate evidence of the violence. The specific forms of acceptable evidence will be established later under tenancy law.
- Tenants who remain after another tenant withdraws may be entitled to a temporary rent reduction calculated using a rent-reduction formula.
- The provision also protects victims’ privacy and prevents unauthorised disclosure of the reason for withdrawal and information relating to associated Tenancy Tribunal hearings.
Landlords must allow tenants to make minor changes to the property
Tenants will inevitably want to make some changes to a property for greater convenience or comfort. Currently, tenants must obtain the landlord’s permission before making any changes, although landlords cannot refuse reasonable requests without a reason.
Under the new amendment, the obligation shifts to the landlord:
If a tenant requests a minor change to the property, the landlord must grant permission. The new amendment will outline which changes qualify as minor.
Landlords can, of course, impose reasonable conditions on how changes are made. At the end of the tenancy, tenants must remove alterations made during the tenancy and restore or remedy the property.
Consent to fibre broadband installation is required except in special circumstances
Previously, landlords had no obligation to install fibre broadband at a property. Even where installation was offered free under the ultra-fast broadband programme, both parties had to agree.
Once the new amendment takes effect, landlords must agree to installation if a tenant requests it and the broadband provider can install it free of charge.
Landlords may refuse a tenant’s installation request only in the following circumstances:
- Installation would significantly affect the property’s weathertightness or character.
- Installation would compromise the property’s structural integrity.
- Installation would breach an obligation relating to the property.
- The landlord plans to undertake extensive renovations.
Strict limits on rental bidding and rent increases
The new amendment strictly prohibits landlords and agents from seeking tenants through rental bidding, although tenants may still voluntarily offer to pay more than the advertised rent.
The rule allowing rent increases every six months will also change, with no more than one increase permitted within any 12-month period.
Clearer privacy protections for those applying to the Tenancy Tribunal
The new amendment clarifies the rules on anonymity in judicial proceedings.
- The Tenancy Tribunal may suppress a party’s name and identifying details at either party’s request or in accordance with their wishes.
- If a party succeeds wholly or substantially in a Tribunal ruling, their identifying details may be removed from the published decision.
Landlords cannot unreasonably refuse an assignment of tenancy
Previously, assignment of fixed-term tenancies was prohibited. Under the new amendment, tenants can request assignment of any tenancy, and landlords must consider the request and cannot refuse it without a reason.
This will give tenants an opportunity to consider whether these charges are reasonable.
Stronger enforcement powers and penalties
The new amendment clarifies and strengthens the enforcement powers of the tenancy regulator, the Ministry of Business, Innovation and Employment (MBIE).
- It establishes a system classifying direct breaches of tenancy law as infringement offences.
- Penalties will increase by 50%–80% from current levels.
- The regulator, MBIE, will have the power to enforce voluntary agreements reached between landlords and tenants on matters covered by tenancy law. Non-compliance will attract penalties.
- MBIE will have the power to issue improvement notices to remedy breaches of tenancy law. Failure to comply with an improvement notice will attract penalties.
Correspondingly, the maximum amount the Tenancy Tribunal can award will rise substantially, from NZ$50,000 to NZ$100,000.
The amendment also specifies that landlords with 6 or more tenancies, including boarding house tenancies, will face higher and stricter civil penalties.
Transitional and emergency housing will fall outside tenancy law
Previously, jurisdiction over transitional and emergency housing was unclear. The new amendment clarifies that the Residential Tenancies Act does not apply to transitional and emergency housing provided under the Special Needs Grants Programme, or to housing funded wholly or partly by a government department.
The Government will introduce an industry code tailored to the needs of transitional and emergency housing.
Taken together, these changes clearly bring landlords more disadvantages than benefits. The Government’s purpose in urgently passing this amendment is to increase tenants’ security and stability, while attempting to ease the pressure it faces over New Zealand’s housing crisis.
- The tenancy law amendment makes it harder for landlords to end tenancies, leaving them with less control over the management of their rental properties to some extent.
- Privacy protections for tenants’ information, particularly information about tenants with poor records, will create significant obstacles for landlords seeking good tenants. This measure will help problematic tenants slip through the net and find rental properties more easily.
- As many applications to terminate tenancies will need to be resolved through the Tenancy Tribunal, its backlog will grow substantially, further increasing the average time needed to resolve problems.
REINZ chief executive Bindi Norwell said a recent survey found that nearly half of landlords and investors (46.3%) were likely or very likely to sell their rental properties if the right to issue 90 days’ notice was removed.
Property professionals and many landlords believe that although tenancy law reform will benefit tenants, it may also have unforeseen consequences.
Of course, measures such as banning rental bidding, limiting rent increases to once a year and allowing tenants to make minor changes to rental properties also have a positive role in making New Zealand’s rental sector more regulated and bringing it into line with other countries.
In responding to the new law, all landlords can do is—work with their property management company to take greater care when selecting tenants, doing everything possible to minimise risks and choose the most suitable tenants.