This article originally appeared in LawNews (ADLS) and is here with permission.
New Zealand is becoming a nation of renters and the latest iteration of residential tenancy law is helping the legislation catch up with social reality.
But not everyone is happy. The new Residential Tenancies Amendment Act 2020 (RTA) Act has been dubbed the “I hate landlords bill” by National MP Alfred Ngaro, whose party voted against it – a suggestion described as “Neanderthal” by barrister and property law specialist Des Wood, who says Ngaro’s approach fails to recognise that the new Act is part of a continuum, designed to keep pace with the changing nature of tenancy in New Zealand.
One of the most controversial changes to the law is the removal of no-fault 90-day eviction notices, which in the past could be issued to tenants without reason. Now landlords need to prove three instances of anti-social behaviour within a 90-day period (s 55A) before they can evict.
Tenants groups such as Renters United and the Tenants’ Protection Association (Auckland) have hailed the new Act and its increased security of tenure as a move in the right direction. Landlords, however, if those on social media are representative, are crying into their lattes.
Carolyn Ranson, a partner at Smith and Partners Lawyers, says the new laws will give landlords pause for thought. But she doesn’t think they have cause for the sort of concern some are voicing. “They are just going to need to plan better,” she says. There are other provisions in the new law for notice to be given.
In the first 24 years of the RTA’s existence there was only one minor amendment. That changed in 2010, followed by more amendments in 2016 and 2018. Since 2010, Wood says, the RTA has become “a not infrequent attendee” in both the High Court and the Court of Appeal.
“In the past 10 years it is quite likely that no other New Zealand statute has been subject to the scrutiny that has fallen on the Residential Tenancies Act 1986,” he says. “The legislature has become very active in turning to legislation to tidy up perceived defects.”
Changing society
Wood says the latest round of amendments was designed to be “highly aspirational” and to align with present-day realities.
In the 27 years from 31 December 1991 to 31 December 2018, occupation of rental homes increased by 108.34%. During that time, the number of owner-occupied dwellings increased by only 21.9%. Another way to view the change, Wood says, is the number of children living in rental accommodation in the same period. This has increased from 26% to 43% of the population.
The law is catching up with these changes in demographics but also moving to reflect the views of those who occupy the property, says Wood. He cites a judgment of the High Court from 1989 where Justice Sir Alan Holland stated: “There cannot be the slightest doubt that the Residential Tenancies Act was designed substantially to protect tenants and any cases of ambiguity should be interpreted in that light.”
Wide-ranging changes
- As well as removing no-cause evictions and the new rules around anti-social acts, some of the other key changes include:
- Rent rises are limited to once a year, instead of 180 days
- Tenants now need to give 28 days’ notice to vacate, up from 21
- Eviction is permitted if rent is late by five working days three times within 90 days or is 21 days behind on one occasion. Previously only the 21-day rule applied
- Tenants are now allowed to assign tenancies unless the landlord has a “reasonable” reason to decline
- Parties can request anonymity after a Tenancy Tribunal hearing
- Rental bidding is banned
- Landlords must give 63 days’ notice instead of 42 to move themselves, family, or employees into the property and prove “genuine need”
- When tenants are removed for renovation or demolition of the property, the work must begin within 90 days
- Tenants can make minor changes to the property such as hanging pictures and installing fibre connection in most instances
- Fixed-term tenancies revert to periodic at their end unless both landlord and tenant agree otherwise
- The tribunal can now handle claims of up to $100,000 – double the previous figure
- Penalties are increasing and landlords with six or more tenancies face greater fines than those with fewer properties
- Victims of family violence can end their tenancies with two days’ notice
- Landlords can terminate tenancies if a tenant is charged by the police for assaulting them
Anti-social behaviour
One of the provisions most likely to be disputed is the lack of clarity around what constitutes antisocial activity.
The new Act defines anti-social behaviour as:
(a) harassment; or
(b) any other act or omission (whether intentional or not), if the act or omission reasonably causes alarm, distress, or nuisance that is more than minor.
Wood questions the inclusion of “any other act or omission”. Admirable as the changes appear to be, he says, this aspect seems designed to invite litigation. “How do you define anti-social behaviour? It’s pretty difficult. Anti-social behaviour is in the eye of the beholder. Is it inviting your mates around every night for a party and boozing up? Excessive use of cannabis? That sort of stuff?”
The issue for the tribunal and the courts, says Ranson, will be defining the threshold for antisocial behaviour. “What falls above and what falls below the threshold?”
Barrister and solicitor Nick Kearney of Schnauer & Co also has questions about the anti-social behaviour provisions and believes the new law might prove especially difficult for landlords of tenants in multi-unit dwellings governed by bodies corporate.
“If you have landlords who have got tenants in these complexes who are rowdy, making a noise, difficult, problematic and you haven’t got a 90-day provision to get rid of them, conceivably you are going to have body corporates, neighbours who are getting very annoyed” he says.
“[The landlords] will be in breach of body corporate rules. They will be saying ‘I can’t get rid of them because they have to commit three [anti-social] acts’. That will be interesting.”
Despite his predictions of more work for lawyers, Wood describes as “nonsense” comments from the New Zealand Property Investors’ Federation that “neighbourhoods around the country will have to put up with anti-social, loud and offensive behaviour from difficult tenants if the government removes the 90-day notice period for evictions”.
He says anti-social behaviour “is actually referred to as an area where landlords can [evict]. It’s hyperbole and nothing else, frankly.”
Ranson says existing reasons for eviction such as threat or damage to property remain. The new antisocial behaviour provisions add a new, lower tier now that landlords need a reason to evict.
More litigation
The tribunal and courts will inevitably see more cases, Ranson says. “But I think we will pretty quickly get some indication from the tribunal of what that threshold [for anti-social behaviour] is and what can be expected.”
Kearney agrees that the new law will lead to more cases in the tribunal. “Landlords trying to get rid of tenants. Tenants complaining that landlords haven’t complied with [orders]. If you introduce more regulation, you get more litigation. I just hope the government increases the man-hours, the numbers, more money and resources to the tenancy tribunal.”
Ranson points out that provisions in the Residential Tenancies Amendment Act 2019 around methamphetamine and intentional damage, for example, increased the tribunal’s workload a year ago.
Insipid assault
New rules about tenants assaulting landlords, their families or their property managers could also prove problematic, says Wood, who used the word “insipid” multiple times.
Section 55AA states that a landlord may terminate a fixed-term or periodic tenancy by giving at least 14 days’ notice to the tenant if the landlord or owner or a member of their family, agent or neighbour is assaulted by the tenant.
The big ‘but’ is that s 55AA kicks in only if police charge the tenant. All too often, police take alternative interventions such as diversion, Wood says. “It needs a little more teeth. It’s like any relationship, be it a tenant-landlord relationship or a commercial relationship. Where there is an assault, the whole commercial relationship is dead in the water.”
Ranson says, however, that s 55AA is in addition to existing provisions that allow landlords to seek a tribunal order should assaults occur. Those provisions don’t require the laying of a charge. “[The new provision] is an extra provision. There are two ways if an assault occurs that the landlord could terminate the tenancy.”
Family violence
Ranson wonders if the new provision allowing victims of family violence to end a tenancy with two days’ notice will lead to work for the tribunal.
Victims will need to provide qualifying evidence, the details of which is yet to be spelled out. Whether landlords will want to challenge their tenants on their evidence is another question. When similar provisions were added to employment law, they didn’t result in the rush of work for lawyers that some anticipated, Ranson says.
Ramifications
Landlords have been vocal in complaining that the new law was rushed through under urgency, claiming the reason was to avoid scrutiny.
Both Kearney and Wood point out that the law was several years in the making. Says Kearney: “All they have done in terms of rushing it through was implementing it in the last week of parliament. In terms of the substance of it, it has been ongoing for quite a while.”
Landlord groups have also been full of dire predictions of mass exists from the business. Many claim the law will backfire and make it harder for less-than-desirable tenants to find a home.
“I think there is going to be a lot more vetting of tenants,” says Kearney. “Landlords are going to have to be a lot more careful about who they choose, which invariably is going to lead to [potential tenants] missing out. People need somewhere to live. If you make it harder, it will affect people and tenancies will be harder to come by.”
There is no doubt it will become more onerous to be a landlord, especially if you have more than six properties, Ranson says. “You are going to be exposed to extra penalties.”
For this and other reasons, Kearney is sure some landlords will hand their properties over to professional property managers who are more experienced and can deal with these sorts of issues. The flip side of that is property managers are not regulated, he says.
The final word goes to Wood: “It is what I would call a maturing piece of legislation, heading towards matured. Like anything else, you won’t know the effects of everything until it has been in place for a year or two or three.”
Recent changes to the Residential Tenancies Act
2010
- Tenancy agreements in unit title properties became subject to body corporate rules and boarding house tenancies were brought under the law
- Ten-working-day notices to remedy became 14-consecutive-day notices
- Landlords absent from New Zealand for more than 21 consecutive days were required to appoint a New Zealand-based agent
- New procedures added for disposal of tenants’ abandoned goods Several unlawful acts were added, such as exceeding the maximum number of people who could reside at a property and interference with the supply of services, such as electricity
2016
- Minimum standards set for installing and maintaining smoke alarms
- Requirements set for insulation
- New rules about abandonment, allowing landlords to enter a property 24 hours after giving notice of their suspicions that the property was empty
2019
- Tenants’ liability limited for careless damage in rental properties
- Protections given to tenants living in premises that fail to meet minimum requirements for renting such as garages and sleep-outs
- New rules about how methamphetamine contamination of rental properties is tested and managed
Diana Clement is a freelance journalist. This article originally appeared in LawNews (ADLS) and is here with permission.
152 Comments
I'm a property owner and all this news of no cause terminations has only changed us by not signing up the people on the margins.sometimes you'd meet people that were a bit rough around the edges but like them and want to give them a chance seeing that they seemed descent people.but with these new rules we've taken up to four to five weeks to find the "perfect"tennants.now all these others have missed out on a well priced warm dry home just because they were a bit rough around the edges.
I have never rented to beneficiaries and never would. Professionals and young working families are they way to go. Basically anyone who would suffer by a bad credit rating. Anyone who doesn't care about their credit rating e.g. beneficiaries, young people with no kids or solo parents, stay well clear.
We've had a few different tenants over the years and only had to evict two sets. Most tenants have been good but as the good ones leave I think selling is best as we won't be able to guarantee good ones or give notice to not so good ones.
The worst tenants for disrupting the neighbourhood and causing problems were students, and on another occasion a single mother with tons children and huge extended family who all moved in and then got a puppy. The children pissed on the carpet so that got destroyed and had to be replaced as couldn't get the smell out. Tenants with huge extended families seem to come with problems.
In other instances tenants graffitied the exterior such that I enlisted someone to speak to them in their language about expectations and conduct. Same lot also cut down all the trees which had taken years to grow, denied they'd done it despite evidence from the neighbours, then built a structure attached to the house which had to come down. A few derelict cars have had to be towed away now and then. These properties were not in bad areas just average working middle class areas.
Absolute best tenants have been single working guys, sickness beneficiaries, pensioners and single mothers with pets (but not the one with the puppy). Also weed smokers are pretty good as they just lie around all day watching TV although I insisted on them smoking outdoors. In every case rent was way below market to the value of about $50-80/ wk under market, none ever missed rent and all more or less looked after the place bar a bit of wear and tear/ the occasional ding in a wall/ foot through ceiling/ broken shower screens. We've had excellent relationships with these ones, bought them Christmas presents, paid to help them dispose of rubbish to the dump, provided op shop furniture to them at no cost, accommodated gardening aspirations (not weed growing though) and allowed additional outdoor pets like chickens and chicken sheds. We've maintained property to way above minimum standards long before healthy homes and responded to maintenance as quick as possible.
It's been an interesting experience meeting and working with all sorts of different people. Some are current or former home owners. We've always had a property manager but they've always been pretty useless. Keeping good communication and being reasonable and understanding of people's challenges has helped smooth the tenant LL relationship.
However the new legislation makes it very difficult to build trust on either side I believe.
I think Green have done a good job making it so risky for landlords many will gradually sell up now. That won't solve the rental problem of course but that was Greens misguided thinking that it would.
Our tenants will continue to get way below market rent and well maintained homes but as they leave I can't see any other option to sell as risks are just too high now.
The new legislation will and already has resulted in higher rents and house prices. Well done Green and Labour for punishing your supporters the most.
Socialism at its finest as usual.
You sound like a good bloke and a good landlord Theoracle. I also do my best for my tenants. I put in the best heatpumps, the best R4.0 insulation. My tenants live in a better house than I do. Likewise I was disappointed when the tenants cut down a beautiful cabbage tree that probably took decades to grow. There have been other issues too. Not telling me about a slow leak behind the wall until it did very costly damage, spraying the garden and Buxus hedge with roundup. Nailing ugly shelves to the wall. Building structures. Stuff like that. Maybe in light of these new regulations it’s just better to only own dumpy rental properties that cant be ruined.
Yes agreed, I'd never advise having high end rentals, or just any house you're not prepared for a bit of destruction. Too heartbreaking seeing destruction.
We wouldn't be surprised if rentals get burnt down (one tenant did their own DIY oven wiring as we later discovered), or failing that if we get the house back with just the roof, walls and floor intact that's a good result but we know it'll probably have to be totally gutted inside and redone before selling.
Yep we went for years living in lesser quality houses than our tenants did.
I also lived in about 80 rentals in my youth so I've been on the other end of things too. However back in the day I never recall my flatmates causing damage and not one of us ever got behind on rent. I think it was different expectations from tenants then.
Yes different expectations. I don't think it's just a generational thing either. One of the more fundamental problems in New Zealand that nobody is really held responsible for their actions. I only started to understand this after coming to Germany and seeing the opposite. It's epitomised by our no-fault-no-liability ACC system which i was once proud of, but now I suspect may be part of a bigger problem pervading NZ society. Tenants, for example, already know they can get away with bloody murder, and now they wont even have their names recorded at the tenancy tribunal. The outcome is fairly predictable.
Because the women get boyfriends then the boyfriends bring their mates over... nek minnit.
However where solo parent beneficiaries are defrauding WINZ, like not declaring income/ partner living with them those are also some of the best tenants as you can always threaten to report them and they know that so they usually behave well.
Ironically a Green MP had a tenant doing this and was complicit in not reporting them and extracting maximum rent.
Your comment is one of the reasons why our tenancy laws need shredding and completely re-writing, and the housing of people who will never be able to own their own are able to rent/lease a HOME, not just a roof over their heads. This will look a lot more like European models or even more like commercial leases, where the tenant has something more akin to ownership and autonomy.
Landlords who wish to remain in total control of who, what, when and how can cater to the market that just requires short term rentals.
This is becoming urgent.
Some of our worst tenants were working professionals due to constant unreasonable expectations and requests and subsequent damage. Beneficiaries can be the best tenants depending on other factors. Pet owners are among the best tenants you can ever get.
Bad credit is a red flag to be avoided but having said that on one occasion we were approached by a self declared bankrupt wanting a longterm rental. We had to manage that very carefully, we keep in regular respectful communication and they've never missed a single payment, mostly look after the place and are now the best lot we've ever had.
I really think people need to have been a landlord to have an educated opinion on it. It's not easy at all and it's suddenly got a lot harder. I do feel for good tenants who will be punished by these rules. However there's some rogue tenants which make it so risky.
It's a no brainer thanks to this legislation, rents and waiting lists will now skyrocket. We'll sell up as our good ones move on and those houses won't be in the rental pool anymore. Those tenants will struggle with their pets, bankruptcy and beneficiary status to find other rentals. That's why we look after them and the houses they're in as best we can. As lifetime beneficiaries they're not tenants who can or ever would have been able to buy so who will house them?
You're such an idiot G.
One of my best, highest spending and most respectful customers was the Pres' of the local Mongrel Mob. He owned his own business and was a top bloke. His kids were respectful and well behaved in the shop (unlike other wannabe's) and I'd happily rent to anyone he recommended. It's people like you who ride the grievance gravy train in but ride the profit train out who are the biggest impediment to NZs future.
I'm a landlord. I hate the new rule. This whole thing was to stop people buying a house, sitting on it for 6 months and selling for a tax free gain in a boom and shunting tenants around (and I totally agree with that intent). Bright line rules made that a lot less appealing to would be tax dodgers.
Basically, if I have a rental and I vet the tenants carefully as per usual, they can now assign the tenancy to pretty much anybody? What could possibly go wrong there?
The tenancy tribunal is about to get absolutely slammed.
Also they did pass it at the last minute in secrecy, the minister showed up with a bunch of modifications at the "in urgency" parliamentary session so as to avoid the opposition and media having a look.
"Basically, if I have a rental and I vet the tenants carefully as per usual, they can now assign the tenancy to pretty much anybody? What could possibly go wrong there?" As I read it you can still refuse if you have reasonable grounds. I think the clause might be geared towards student accommodation where there is a regular turn over of tenants.
nktokyo,
I too am a landlord-though only with 1 property which I have had for over 20 years and one tenant for over 10 of them.. The rules have previously been weighted very much in the landlord's interests and this attempts to even things up. It recognises as the article points out, that an ever increasing proportion of the population are tenants and many will be so for many years, if not throughout their lives. Most of them deserve to be treated more fairly and to have greater security of tenure.
The idea that landlords will sell up en masse is just laughable. Yes, there will of course be bad tenants and some some landlords will get very rough deals, but that should not be sufficient to prevent tenants getting a better deal. I expect nothing but howls of outrage from National, most of whose MPs have multiple properties.
Perhaps you'll have to drop to 3 month fixed term tenancies, automatically renewing with an new fixed term just prior to expiry.That way, you don't have to worry about giving notice, just decline to renew the fixed tenancy. It will be terrible for renters, not good for landlords, but good tenants will get rewarded for good behaviour.
Labour will do whatever they want after they win this election (I called it about 2 years ago) so buckle in, or get out.
I've chosen the latter, despite investing in updated insulation, new oven and dishwasher, new paving and minor landscaping. With last years retrospective tax changes, income tax increases, and these new rules risks and costs, I can't afford to hold the house. The young family living there won't find a replacement home without paying at least an extra $100 per week. Surely that isn't what the government intended.......
Yeah I have 3 rental apartments which I built myself around 10 years ago. If Labour et al get back in I'll be selling them - or possibly Air-BNB-ing them. I'm not having people make minor alterations to them. I have only had to exercise the 90 day no-cause termination once in 10 years, but still think it's extremely valuable to have in there.
Rents on all residential accommodation will increase very shortly.
If this government gets back in then they'll continue along these lines making pets allowed as of right and so on.
Genuine question - why? Why is it such a massive deal if someone puts up a shelf or hangs a picture? Whenever I've had to look for a new rental property I've never thought 'oh, I'm going to pass on that otherwise nice flat because there are a few picture hooks in places I wouldn't have put them.'
In other countries people can paint their rentals and all sorts of things. I don't understand why people are getting so exercised about a few hooks, or that someone cut a tree down, as above. Who cares? Sure, maybe the tree was nice, but you don't live there. It's hardly going to affect your ability to get new tenants if you need to.
al123 I think the issue arises when these alterations are performed without permission. I doubt any reasonable LL would mind hanging the odd picture but given some of the pisspoor DIY skills around, putting up shelving could lead to damaged wallboards requiring repair.
It's not the action per se but the arrogance displayed. Even your comment about the tree is inherently arrogant - it's not your tree nor is it your property, you are a tenant.. not the owner
I don't see how it is arrogant to want to exercise some control over the surroundings you live in - especially when you pay handsomely for the privilege. Sure its technically your tree if you are the landlord, but in what way would its removal have any effect on you?
And I think it wouldn't really be a problem if most landlords were reasonable about these things, but in general they aren't - and it is a particular problem in earthquake prone places where things really should be secured to the wall if possible.
" Sure its technically your tree if you are the landlord, " Really?? You are that arrogant?? Here's a headsup son, it is factually my freak'n tree. No "technically" about it!! If you want control over the surroundings you live in then go buy your own property. I can certainly see why you think landlords in general are unreasonable but with your kind of tenant and the "what?? it's not that bad" attitude you're displaying is it any wonder?
Hook, if you want total control over the property you own, then don't rent it out. Renting it out means that it becomes someone else's home. You also never answered the question - how would it affect you, really?
Do I need to point out the irony of calling a person arrogant and then telling them 'here's a heads up son'?
Renting it to you means I am allowing you to occupy MY property for an agreed term and sum. You do not own it, and you have no inherent right to alter it without my permission. If you want to change something and seek permission - all good, If you alter things without permission - not good. Interesting that you can see the irony in my comment but not the incongruousness of your assertion re: "what's the issue?"
Again, that's not an answer - just an assertion of what you think your rights are. In plenty of other places you do have an inherent right to alter things without the landlords permission. Remember also when you rent to them it becomes THEIR home.
So again, how does it actually affect you if someone cuts down a tree? Are you worried about resale value? Are you worried that you'll be less likely to get new tenants? What? Or is it just a way to exercise power? There is nothing incongruous or arrogant about asking someone how they think something might affect them.
I am stunned you can't get your head around the principle.
When I rent to someone it may well become their home but the underlying fact is, it's my property. It's not about resale value or new tenants or anything like that. It's about a simple and fundamental concept called respect. As I've said repeatedly - ask and get permission and there are no issues. Go off and arbitrarily alter things then issues arise.
The issue isn't about personal or economic effects, it's about respect for people's property.
As for your "other places" comment then I suggest you move there if you want to alter another person's property.
Remember also that as the owner I could quite easily charge you with "wilful damage" and have you evicted, depending on the severity
So it doesn't actually affect you? You just want your tenants to display what you believe to be the appropriate level of subservience?
You talk as though there's some natural immutable law about what rights landlords and tenants have. But as I've said, there are plenty of places where tenants may make changes without permission. Are you saying that in those places tenants dont 'respect' their landlords, even though they are acting entirely within the law?
It may affect me in ways other than financial. If you think that asking a tenant to respect the property that has been offered to them is displaying a desire to exercise a level of control,or that the landlord is looking for,or desiring subservience then I'm afraid you are deeply misguided.
To go back to your tree argument.. say I plant a tree on the grave of a much loved and loyal pet, you come along and cut it down for no reason other than you (a transient tenant) doesn't like it. Am I supposed to shrug my shoulders and say "oh well"? Of course you've exercised your "right" to avoid subservience.
There's nothing wrong with a tenant to respect the property- what is at issue is what constitutes respect. So far you haven't given any reason to think that a tenant making small changes to THEIR home is inherently disrespectful to the landlord.
As for a tree you planted over a pet, yes that would suck. But that's a pretty rare sort of case.
Assume your property is on the market then Hook, given the new changes to the residential tenancy act? I guess the potential for tenants to be so disrespectful to you as to put up a hook that you never see in a house you don't live in has you quaking in your boots.
Funny how a little bit of power goes to people's heads. Also interesting the complete overreaction whenever the tiniest bit of that power gets threatened even hypothetically the personal insults get wheeled out.
You truly are a problem child. As I said originally I see no problems with tenants hanging pictures but I do see problems with tenants erecting shelving - the potential for damage is high, and I definitely see problems with tenants cutting trees down. Don't try to conflate something I said was acceptable or not with some sort of requirement for subservience. I have an expectation of respect for other people's property, something obviously well beyond your grasp.
'Child' 'son' - you are aware that when you resort to (erroneous) patronizing insults like this, it simply highlights that you are unable to actually defend your position, and your insecurity results in you having to resort to just trying to demean people? I am not a child, nor am I your 'son' (thank God). You repeatedly go on about respect, but you clearly don't understand what it means.
Yes, so if you think that's so great go live in Germany if you want the right to put your own kitchen and everything in. No one's stopping you moving there.
If you rent in Germany you get an empty room, literally - a room. You go to Ikea, get your flatpack kitchen and put it all in plus pay for plumbers and electricians. At the end of your tenancy you take it out and fix and paint the walls whatever it started as.
There's no problem with this model but the problem is Labour and Green want a modified German model, ie the rights but limited responsibility too. How many Kiwis do you think can be bothered paying to put in fixtures...
Now we've got a model which gives tenants rights with limited responsibility and landlords get the responsibility with limited rights. It's not balanced. As a result it's going to cause massive rental increases and even more rental shortages and homelessness.
I'm afraid you're the one who is going to have to sell, given the changes to the RTA.
But in any case, your last paragraph is not an accurate description of the current circumstances. Is also a misunderstanding of the relationship- of course a client has fewer responsibilities than the person providing the product or service. It also ignores the context - for example, in theory tenants have rights enforceable at the tenancy tribunal- so, rights on paper. But in practice they were largely unenforceable - even if a tenant was entirely in the right, in a tight market, going to the tenancy tribunal makes it incredibly difficult to secure a new tenancy. So you need to pay attention to the context and who has market power, not just look at what rights people have on paper. Also no one has no option other than to be a landlord- plenty of people have no option other than to rent to secure the necessity that is a place to live.
Another reason our tenancy laws need shredding. The way houses are rented in this country is INSANE! Bring on the European model and give people who will never be able to buy, a HOME and a stake in where they live. It will need to govt that instigates and initiates this, but what is going on must stop.
Long time National supporter here now going to vote labour. Jacinda is actually doing the best job possible for NZ's housing situation at this time. Its a fact that not everyone can own a home and labours policies seem fair for all involved parties.
Long time Labour supporter here now going to vote National. Jacinda is actually doing the worst job possible for NZ's housing situation at this time. It's a fact that anyone that has ambition and will can own a home and Labour's policies seem keen on making everyone a beneficiary.
I am not tribal at all in terms of politics. I have voted Labour, National, Greens and Act in my life.
This election, Greens are the only option for me because they are the only party taking inequality and environmental issues even semi- seriously.
And also because I have lost total faith in both our major parties.
This wont change many things apart from the fact that the lower quartile of tenants will need to be accomodated by the government and social housing schemes.
This lower quartile will include
- Single lower income parents
- Unstable employment
- Tenants with credit defaults
- Tenants who are self employed
- First time tenants without prior LL references
- Large extended families
- Tenants with questionable social media profiles
- Tenants with pets
- Tenants with payday loans
- lower credit scores
As a landlord i would far rather my properties stay vacant for a longer time...until i find a good model tenant. This will include me lowering the rent if needed to attract the best tenant.
Unintended consequences will be that lower quartile rents will increase significantly.
Unintended consequences will be that lower quartile rents will increase significantly.
Which will remove incomes spent into the consumer economy (the lower SECs spend 100% of their income). This is not good for the economy as a whole. As less is spent into the consumer economy, business revenues fall and there is a need for them to reduce revenues in order to meet sales targets or incremental sales.
When consumption is constrained, SMEs go to the wall. Houses have to be sold meaning downward pressure on house prices and rents.
Uninitended consequences you see.
Incentive always works better than fear. We are encouraged to raise our kids with positive intention yet the government loves to use force and fear as a way to do the right thing. Why not introduce tax benefits for those that do the right thing; such as maintaining healthy homes and following a fair approach in any eviction. Rules don't fit all and can result in manifesly excessive punishment where a landlord may have no choice in their situation. Instead of creating a sustainable framework for housing (or anythyng), Labour is creating politically contentious rules that will be dumped in the future. They need to focus on legislation that the opposition would never use the "gone by lunchtime" phrase to reference.
I'm sorry, but why do you think landlords should get taxpayer subsidies (which is what tax benefits are) for maintaining their own investments to a minimally decent standard and 'being fair'. No one else needs special incentives to make sure the services they provide dont make people sick and to not be an asshole. Talk about entitled.
That's what happens when you call someone "entitled" for wanting to preserve their investment. BTW a tax benefit is not a subsidy, it's the deferral or removal of a portion of tax which incidentally LLs get anyway for repairs and maintenance or capital outlay for improvements
No, that's what happens at the merest suggestion that landlords aren't special snowflakes, apparently.
And if you'd actually read it, you'd see that that I didn't say landlords who want to protect their investment are entitled. If you interpreted that way then that's your problem. It is however entitled to expect special tax treatment for meeting your bare minimum obligations as a service provider. Name one other service provider that gets special tax treatment for providing a service that doesn't make their clients sick.
There is no doubt in my mind that any prospective tenant that isn’t perfect on paper will find it difficult to secure a rental. What sane landlord would take a risk on a tenant when they know that if things don’t work out they will need to take extreme and costly action to end the tenancy.
Marginal applicants will definitely not be given the benefit of the doubt any more, and will find it exceedingly difficult to find a rental. Any of the following - Young, part time employed, single parent, no references, flat share, pets, low income, rough around the edges etc. Any single one of these things.
Could create a two-tier rental market - one for sought-after ideal tenants (easy to find a place, possibly cheaper rent to attract them), and the rest (very difficult to find a place and will likely need to pay a premium if they do).
There is no doubt in my mind that any prospective tenant that isn’t perfect on paper will find it difficult to secure a rental. What sane landlord would take a risk on a tenant when they know that if things don’t work out they will need to take extreme and costly action to end the tenancy.
After WWII, there was such a shortage of rental property in Japan that people would pay 'gift money' to landlords for the privilege of living in the rented property. This was equivalent to about 4-6 months rent. This practice continued until the 90s but it is less common now as there is excess supply and renters can opt for public housing.
Now you could try this in NZ. But just a small problem there. Most NZers have very little cash savings. They're living paycheck to paycheck. Chances of a landlord being able to get gift money or higher rents are constrained. And right now, renters will be looking for the best value proposition available.
Is that any different to the current situation? If I had over 650K tied up in a house I'd be really choosy who I let it to.
You can let it to whoever you want. If you want gift money, your target customer is probably smaller. If that is of no concern to you, good for you. A colleague has a house available for rent for $1,800 pw in Mission Bay. I told him good luck finding a tenant right now. He understands but only wants a tenant who can afford that level of rent.
It is very different. I’ve given marginal tenants the benefit of the doubt on a close to $1M property in the past. They didn’t tick all the boxes, but seemed like nice people. Worst case scenario I have a bad experience but can end the tenancy after 90 days. Wouldn’t dream of that now. Will be waiting for a professional couple with good references.
So in the past, the professional couple missed out to the marginal tenant. Now, the marginal tenant will miss out to the professional tenant. I guess that's slightly worse, but it just seems like an argument about who gets in the lifeboats on the titanic. Sure its unfair if professional tenants get prioritized, but the main problem is that there aren't enough lifeboats.
No, in the past the marginal tenant came along first and secured the property. It is not a matter of considering the marginal tenant and professional couple at the same time and then choosing the marginal tenant. That would be totally illogical. The professional couple are unlikely to miss out to anybody and would probably get the first place they apply for.
If you want to secure a tenant immediately so that the property doesn’t sit vacant, you may need to take someone that doesn’t tick all the boxes. As a result of these changes, the vast majority of landlords will wait longer and pass-up less than ideal tenants until the right tenant comes along. The higher up-front cost associated with having the property vacant for longer is certainly worth it in the long-run.
1. Properties will sit vacant for longer while landlords try secure ideal tenants. This equates to less rental floor space available per year.
2. Some landlords will leave the market because of this. Even if they sell to owner-occupiers, there is still a net reduction in rentals per renter because the average occupancy rate for rentals is higher for owner-occupied housing in main centres. The result is upward pressure on rent. This is in addition to the fact that less prospective landlords will build new dwellings to rent.
3. The country’s most vulnerable finding it even harder to secure accomodation due to government meddling that makes landlords more risk averse is a really big issue, not just a matter of “who cares, it’s just a matter of who gets the property”
1. Yeah, but presumably most landlords aren't going to leave properties vacant for months and months. In most places there is probably a huge supply of suitable tenants anyway.
2. I don't really buy this argument. I understand that occupancy rates a lower for owner occupied than rentals, but I suspect that's for the most part because owner occupiers are older and wealthier. In my experience, people tend to live with flatmates when they are young and single regardless of whether they own or rent, and live in 3 bed houses when they are married with kids regardless.
3. I agree it's a problem. But to go back to the analogy, is the way to fix that problem to make sure they have a better chance of getting on the lifeboats, or to actually try and make sure there are enough lifeboats? Basically I think that the argument you make here usually ends up functioning as a distraction from the bigger problem.
1. Days, weeks, months - will obviously vary from case to case. Either way, it is bad for the rental market.
2. Read the Regulatory Impact Statement that MHUD prepared for this piece of legislation. They outline this as a risk. These experts are correct, regardless of whether you “buy this argument” based on guess-work/speculation about demographics.
3. Yes, this is a problem and this legislation will exacerbate an already poor situation.
I checked out that reference- section 6.2 says that the likelihood of the rental supply contracting due to the changes was low. There was nothing in there that I could see that supports the argument that owner occupied homes have lower occupancies because they are owner occupied rather than because owner occupiers tend to be older and wealthier. Which part of it did you have in mind?
But yes, we both agree it's a problem. Its certainly not the main problem, though.
This isn’t the section I’m referring to. May be in the Regulatory Impact Statement Supplementary Order Paper. They said the same thing in the Regulatory Impact Statement for previous rental reforms “Each sale of a rental property to a new owner-occupier removes a property from the rental market. Transferring houses from rentals to owner-occupied housing may lead to a demand for more houses to accommodate the same number of people because the average, owner occupied housing has fewer people per property than rental housing. A reduction in rental housing particularly low quality homes are likely to disproportionally effect low income households, potentially increasing demand for public and emergency housing. This pressure is also likely to increase household crowding at the margins until supply constraints can be reduced.”
Thanks - that's interesting. I think they are still making the same mistake though - assuming that correlation equals causation. I still think that its plausible that at least part of the explanation for lower occupancy in owner occupied housing is that older and wealthier people tend to chose to live in lower occupancy housing situations, and older and wealthier people tend to be owner occupiers. (So, the lower occupancy isn't caused by the move to home ownership - age and wealth are causing both lower occupancy and increased likelihood of housing ownership).
It is very different. I’ve given marginal tenants the benefit of the doubt on a close to $1M property in the past. They didn’t tick all the boxes, but seemed like nice people. Worst case scenario I have a bad experience but can end the tenancy after 90 days. Wouldn’t dream of that now. Will be waiting for a professional couple with good reference
I think 'professional couples' are as vulnerable as the 'working class'. I would prefer a financially secure tenant regardless of their perceived SEC. Many people barely have two sticks to rub together in NZ, despite appearances.
Anti social acts will become like traffic demerit points: go easy until the (90 day) expiry date comes around and then go like hell.
I genuinely believe that some people will become homeless solely due to their own behaviour coupled with this bill because landlords will become hyper picky about prospective new tenants.
So, when meth head neighbours are baking P, and instead of their PM being able to issue a no-fault clause you must call the police, they know it is you who called, what happens to you then? PS: This was a real scenario (with a PM who did not act) and choices had to deal with.
The PM who evicted them under the old clause would still be known to the miscreants so I don't see how anything changes. That's a risk all PMs take and the fact that no action was taken is an indictment on the PM, who is engaged to look after the owners interests (being as the owner is paying them to do so) Sounds like the PM in question needs to get a backbone or ideally a new profession.
"New Zealand is becoming a nation of renters and the latest iteration of residential tenancy law is helping the legislation catch up with social reality."
A very sad indictment as to where as a country we have got to. This is not a cultural value relating to home ownership that for so long has been both the norm and an aspiration. There is need for government to address this and there is currently nothing in any party's policies to do so.
At a personal level, a young person risks becoming part of the future renting poor and needs to look at ways of avoiding this.
Fixed-term tenancies revert to periodic at their end unless both landlord and tenant agree otherwise.
So this means that when for example 12month fixed term tenancy runs out, the tenant just stays on on periodic term without the landlord agreement as the tenant don't agree to move as his fixed term has ended knowing 12 months in advance that the landlord would like to resign a fixed term. What is the point of a fixed term tenancy.
Also secondly a vetted tenant can "re-assign" to a new unvetted tenant without a landlord's "within reason" input and therefore putting up with any problems such as criminal activity such as drugs or anything else which the landlord unknowingly walk into.
Surely to change or reassign the agreement the LL must have some input. They just can't withhold agreement unreasonably (whatever that means) As the article pointed out - the definition of reasonable grounds is yet to be ascertained. If I was a LL I'd be having some very comprehensive discussions with the PM agency
I think these are all piecemeal changes, honestly, nothing major to see here. Saying that ..
I rent and DON'T believe it's morally-right these changes include 'no-cause evictions'. Once a tenancy term ends, landlords should be able to give notice to the tenant. I'm young, but old fashioned when it goes to property rights.
Now, just a correction .. fixed-term tenancies ALREADY revert to periodic at their end. So this isn't a new change. Perhaps this new legislation adds clarity?
Side Note: though I've been in my current rental for years and don't imminently intent to leave .. I'd prefer my notice period stay at 21 days. 28 days (four weeks) is a long time for a new landlord to wait .. while the old tenancy wraps up ..
Tenants .. heck .. I could find myself paying rent on two properties .. this is more a 'quality rental shortage' issue. And I do see landlords perspectives .. especially considering their notice periods .. if they can even give notice now.
Like I say, this is piecemeal at best and poor-quality work-product at worst.
One thing I would have liked:
The increasing of rent once a year - I understand both perspectives - can't control council rates, insurances, etc.
HOWEVER, if tenants are still in a fixed term tenancy, they should have the legal right to give a 28 Day Notice, before the rent increase takes effect .. unless rental increases (dollar amount) is stipulated in the Tenancy Agreement - up front.
“fixed-term tenancies ALREADY revert to periodic at their end. So this isn't a new change. Perhaps this new legislation adds clarity?
Yes, this is currently the case, but it only reverts to periodic if the landlord or tenant don’t give notice that the tenancy will be terminated at the end of the fixed term. Under the new legislation, the landlord can’t end the tenancy at the end of the fixed term, and they can’t roll it over to another fixed term unless the tenant agrees (and the tenant won’t agree because there is no advantage for them to do so now that they can essentially stay for as long or short as they want once the fixed term rolls over to a periodic agreement).
Disclaimer: My current tenancy rolled over to periodic a long time ago.
I think what u described - landlords being unable to give notice to tenants on periodic tenancies .. well that's obviously ridiculous legislation - that's obvious to everyone right? Now periodic tenancies are common in NZ, but this is really chipping away at landlords, cash-flow certainty. Though all investments obviously have risks and rewards .. this is a nutty piece of legislation.
Landlords need to realise they are running a business, not a thing on the side that makes money without any issue or work. Those sob sad articles you read in the herald about someone’s rental being trashed are lame, it’s all part of the risk of running this business. I don’t see the herald write up a sob sad article every time someone steals something from a retail store. Same with mouldy cold rentals etc - other businesses follow rigorous health and safety rules, landlords have got away with causing bad health outcomes for years all to prevent an investment of probably only 1% of business value.
So much ignorance in this post.
1) Houses that have been fine for decades for owner occupiers to live in suddenly become 'cold-mouldy-health-hazards' when tenants move in. The real reason for all this is that both in the couple now work and so the places are locked up and not ventilated all day and all night.
2) Equating a tenant trashing a house and someone pinching something from a retail store is like comparing a slap in the face with a stab in the face with a broken bottle. Fixing a house after it's been trashed (by a good, honest, hard working tenant who was only doing their best lol) can cost $30k or more. A shop item - $10? $50?
3) But as landlording is a business, as you point out, then there should be no compassion or empathy shown towards tenants at all right? Just who can pay the most and look after the place the best aye? No solo mums with a sob story, no temporarily down on their luck people, no one with even a hint of bad credit. The government can house these people. And of course your tax dollars will be used to do so. Hope you're happy.
Fritz perhaps the comments from actual landlords are descriptions of real life experiences and people's attempts to protect what is a substantial financial exposure based in the most part on trust extended to a complete stranger. I think it's unfair to call it a "cowboy sector" until you've experienced things from the owners situation.
My experience previously as a tenant is that maybe 50% of landlords were ok, the other 50% hopeless and out of their depth.
I realise some tenants are awful, but there's basic tenant rights that this country has lagged behind most of the western world on. And increasingly we are becoming a nation of renters, hence the need for change.
So you've had some bad landlords, therefore all landlords are cowboys and deserve some comeuppance. Did I sum up your argument correctly?
How about: I've had some bad tenants, so all tenants are useless/feckless so I should be able to kick them out with 24hrs notice.
Sound fair?
Well said Davo. There are far too many generalizations made here on this site. The majority of both sides are reasonable, Unfortunately the vocal minority stories sell advertising space on MSM sites. Until this is accepted by naive politicians and the electorate our laws will continue to lurch from one spectrum to the other
Yes, good summary.
Common sense, pragmatic reasonableness is the vast majority of most, both property managers, landlords and tenants
Obviously, ppl go through different and difficult stages in their life too.
The idiots are in the minority as it doesn’t work out for them, short term or long term
I have a set of 3 flats, Brick and tile and no debt. I used to have 9 rental properties. I will now do them up, and renovate each one from 2 bedrooms to 3 bedrooms by creating carports and changing the internal garages to new bedrooms. Then I will sell each one as they finish renovation. I will then buy as many shares in stable, dividend producing companies as I can and leave the rental market completely. This legislation in my opinion makes it too risky. I take care of emergency and transitional homes as a job, with most of these tenants on benefits, and I can tell you, 50% take care of their homes, another 30% are ok but need constant inspections and 10% trash the places and dont care. There is no way I am staying in this rental market. No I will take the capital and put it somewhere else thanks
I see a problem when a lawyer writes about an act that excludes lawyers from normally being permitted to appear in the Tenancy Tribunal. As a practicing landlord I see things differently and identify many errors. For instance he talks about the victim of family violence being able to give two days notice. The amendment does not say that. The notice can only be given by the tenant and that tenant does not need to be the victim! No mention is made of the irregular special two day notice and its implication. This is the only notice provision in the RTA that can only be served by post and yet at the same time our society has moved on from snail mail. Landlords will first find out if one of the tenants has left when the rent is missed and the tenants will say he swore at me or scoffed at my Iwi rights and that is family violence. Landlords will avoid all classes of people who are likely to suffer from family violence. The most vulnerable in our society will suffer as a result of this new law.
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