Housing Minister Phil Twyford says he wants to make life better for
renters. But in doing so, will he make life unbearable for landlords?
The Government has released a discussion paper as a prelude
to what will be a comprehensive reform of the residential tenancy market. The
changes to be "discussed" come on top of a number of changes either
in place or on the way, which include:
- Insulation
upgrades.
- Removing
the right of property managers to charge a letting fee.
- Limiting
damages claims against tenants.
- New
standards which are likely to include the installation of a fixed heating
source, a ventilation method, and protection against draughts.
The new proposals up for discussion include:
- Removing
the "no cause" right of landlords to terminate tenancies unless
it is for a "specific and justifiable criteria".
- Increasing
a landlords’ notice period to 90 days in all cases. Currently it is 42
days (6 weeks) where the owner or their family member requires the
premises to live in, the property has been sold with vacant possession, or
where it is required for employee housing. There are no plans to change
the tenants 21 day notice period.
- Limiting
rent increases to once a year (from six months currently), removing the
practice of rental bidding, beefing up the rights of tenants to challenge
rent they consider is higher than market rent, and requiring landlords to
include a formula to show how they will calculate future rent increases.
It seems there is no room for discussion on the 12 month limitation, given
the reports says, "The Government is committed to limiting rent
increases to once every 12 months to give tenants longer term certainty of
their housing costs".
- Reviewing
the rules governing fixed term tenancy agreements including giving the
tenant the right to extend or renew their fixed term agreement or move
onto a periodic agreement. It is also likely that the minimum duration for
a fixed-term tenancy would increase, and two years is mentioned as an
example.
- Increasing
the rights of tenants to keep pets and make "reasonable"
modifications to the property.
- Reviewing
the regulations regarding boarding houses, and
- Introducing
new tools and processes into the compliance and enforcement system.
Of these changes, the "no cause" clause is likely
to be the most problematic for landlords. The effect is that a 90 day notice to
vacate will only apply where the landlord:
- Intends
to carry out extensive alterations, refurbishment, repairs or
redevelopment of the premises and it would not be possible for the tenant
to continue to live there while the work was being undertaken, or
- Intends
to change the use of the premises, e.g. from residential to commercial,
or
- If
a person, such as a mortgagor, becomes entitled to possession and needs
the tenant to vacate the premises to meet requirements relating to a
mortgagee sale process.
- Where
these situations don't apply a landlord would need to obtain a Termination
Order from the Tenancy Tribunal, which can only be granted in certain
situations specified in the Act - like the rent is more than 21 days in
arrears.
Making termination more difficult will not only be a problem
for landlords. It could also become a problem for neighbours living near
disruptive renters. This new provision would require a landlord to prove to the
Tenancy Tribunal there are grounds for terminating. Often that proof is not
available as complainants who are affected neighbours may not want to be
identified.
Extending the notice period from 42 days to 90 days may also
be problematic where a property is sold. This will complicate a sale and may
make homebuyers less inclined to buy a rental.
Having longer fixed term tenancies will be welcomed by some
landlords and tenants, but specifying a minimum term of two years will not.
Market evidence suggests that tenants generally do not like leases longer than
12 months, mostly because their personal circumstances may change.
Extending the rental increase period from 6 to 12 months is
unlikely to make a material difference to landlords. Most landlords hold the
rent steady during a tenancy, and do so willingly when the tenancy-landlord
relationship is a good one. The effect of this law change may work against a
tenant as landlords will be more likely to schedule reviews annually and link
the increases to metrics like inflation, rate rises, property value rises, and
so on. It may also mean landlords delay making improvements to a property
to coincide with a rent review date.
On the positive side, the discussion document does not
propose a warrant of fitness for rental properties. It is being considered for
boarding houses.
The reforms are unlikely to become law before mid-2020, just
before the next general election.
Comment about the proposed reforms may be made in a number
of ways:
- Online
at research.net/r/rta-reform-survey
- emailing
your submission to RTAreform@mbie.govt.nz
- posting
your submission to:
- Residential Tenancies Act Reform, MBIE, PO Box 1473, Wellington 6140
- Submissions must be in by 5pm, 21 October 2018.
Frank
Newman, an investment analyst and former councillor on the Whangarei
District Council, writes a weekly article for Property Plus.
2 comments:
There are two papers under discussion at present. If you go to MBIE there are referendum type questionnaires for both papers which are relatively easy to go through. Both need to be done before 21st October.
Cheers Tony
further to my previous. Go to MBIE site. It is further down the page when you search MBIE on Google. Then put in healthy homes into the search bar. Two surveys come up. Housing quality and healthy homes. They both need filling in.
Cheers Tony
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