Being A Residential Landlord Has Become More Challenging
The law around residential tenancies has seen some significant changes in recent times, first in July 2019 with the Healthy Homes Standards and then in August 2020 with an overhaul of the residential tenancies legislation.
There are now more obligations on Landlords and harsher penalties for non-compliance.
Healthy Homes Standards
The requirement for a Landlord to comply with the Healthy Homes Standards became part of the Residential Tenancies Act on 1 July 2019. The standards require Landlords to meet new rules in relation to heating, insulation, ventilation, moisture ingress and drainage, and draught stopping.
The key obligations of a Landlord under the healthy homes legislation are:
- To provide a compliance statement in any new or renewed Tenancy Agreements from 1 December 2020 (this deadline was extended from 1 July 2020 due to issues with the ability to comply due to Covid-19 restrictions). The compliance statement is an addition to Tenancy Agreements that provides specific information about how a property meets the healthy homes standards.
- From 1 July 2021, to ensure that their rental property complies with the healthy homes standards within 90 days of any new tenancy.
- From 1 July 2024, to ensure that all rental homes (whether under a new or existing tenancy) comply with the healthy home standards.
Major changes to the residential Tenancies Act
The Residential Tenancies Act was passed in the 1980’s and has, in 2020 had its first major overhaul. Probably the two key changes to the law are restrictions on rental increases and the end of a Landlords ability to terminate a tenancy without cause. The changes are being phased in.
The major change that took effect from 12 August 2020 is that rent increases are limited to once every 12 months. This is a change from once every 180 days (6 months).
The key changes that take effect from 11 February 2021 are:
- Landlords will not be able to end a periodic tenancy without cause. Prior to 11 February 2021 a Landlord can end a tenancy by providing 90 days’ notice. A Landlord can still end a tenancy due to the owner, their family or employee moving in. However, the notice period will increase to 63 days (previously 42 days). A Landlord can also still end a tenancy if the property is being sold, or extensive alterations, demolition or conversion is being done. However, the notice period for this has increased to 90 days, (previously 42 days). This is an important consideration if looking to sell your rental property.
- Other grounds for termination by a Landlord including for non-payment of rent or certain breaches of the Tenancy Agreement will still apply, on application by the Landlord to the Tenancy Tribunal.
- All fixed-term Tenancy Agreements will convert to periodic tenancies at the end of the fixed-term unless the parties agree otherwise, or the Tenant gives a 28-day notice, or the Landlord gives notice in accordance with the allowed termination grounds for periodic tenancies.
- Tenants can ask to make minor changes to the property and Landlords must not decline if the change is “minor”. Minor changes include changes that have low risk of material damage and do not require a building consent. Landlords must respond to a Tenant’s request to make a change within 21 days.
- Landlords must keep records of all works that are carried out at the property that required a building consent, electrical or gas fitting certificate of compliance or involve sanitary plumbing work.
- Rental properties cannot be advertised without a rental price listed, and Landlords cannot invite or encourage Tenants to pay more than the advertised rent amount.
- 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.
- All requests to assign a tenancy must be considered. Landlords cannot unreasonably decline a request for assignment. If a Residential Tenancy Agreement prohibits assignment, it is of no effect. However, a Landlord may agree with the Tenant to end their fixed term tenancy rather than assign it.
- Not providing a Tenancy Agreement in writing will be an unlawful act and Landlords will need to retain and provide new types of information including the healthy homes standards compliance statement.
- The Regulator (the Ministry of Business, Innovation and Employment) will have new measures to act against parties who are not meeting their obligations. The Regulator can now issue infringement notices of up to $3000.00. The civil and criminal penalties have increased as well, for example if a Landlord acts to terminate a tenancy without grounds they can be fined up to $6,500.00. There are also pecuniary penalties for serious breaches of up to $50,000.00.
The key changes that take effect from 11 August 2021 recognise situations where speedy termination is reasonable:
- Tenants who experience family violence (and provide evidence of the family violence) will be able to withdraw from a fixed-term or periodic tenancy by giving two days’ notice (rather than 21 days’ notice for a periodic tenancy).
- A Landlord will be able to issue a 14-day notice to terminate the tenancy if the Tenant has assaulted the Landlord, the owner, a member of their family, or the Landlord’s agent, and the Police have laid a charge against the Tenant in respect of the assault.
The changes to residential tenancies legislation are significant and Landlords will need to ensure that they are up to date with the changes and are meeting their obligations, or face action from the Regulator or the Tenancy Tribunal and potentially be faced with infringement notices, fines or penalties.
Our property team can help with buying or selling your rental property and any other property issues you may have.