Residential Tenancies Amendment Act 2020
The Act was passed on the 4th August 2020 and changes will come into effect in six months (With one exception). Pukeko Rental Managers have reviewed the new legislation in detail and summarised it for our clients.
The government is has passed a range of changes to the Residential Tenancies Act 1986. Their goal was to increase the security of tenure for tenants by promoting good-faith relationships in the renting environment; modernising and clarifying the Act to reflect the modern renting market and environment; enhancing powers and tools for the chief executive of the department responsible for the administration of the Act, and supporting tenants' ability to assert their legal rights.
The Residential Tenancies Amendment Act Overview
The amended act covers the following:
- Removes a landlord’s right to use “no cause” terminations to end a periodic tenancy agreement.
- Requires that fixed-term tenancy agreements must become periodic tenancy agreements upon expiry unless both parties agree otherwise, or certain conditions apply.
- Clarifies the rules about minor changes tenants can make to premises.
- Prohibits the solicitation of rental bids by landlords.
- Limits rent increases to once every 12 months. (Effective immediately)
- Allows for identifying details to be suppressed in situations where a party has been wholly or substantially successful in taking a case to the Tenancy Tribunal.
- Clarifies the Tenancy Tribunal’s power to suppress names and identifying particulars of any party or evidence given, if that is in the interests of the parties and the public interest.
- Requires landlords to permit and facilitate the installation of ultra-fast broadband, subject to specific triggers and exemptions
- Increases financial penalties.
- Gives the regulator new tools to take direct action against parties who are not meeting their obligations
- Makes other administrative changes.
Rent bidding prohibited
Rent bidding is now prohibited with landlords being obligated to state the amount of rent when advertising residential premises. Landlords would not be allowed to ask multiple applicants to pay more than this advertised price.
Assignment and break-lease fees
The assignment involves a tenant transferring their interests and responsibilities under a tenancy to a new tenant. Currently, the law distinguishes between tenancy agreements that prohibit assignment and those that require landlords to consider assignment requests on a case-by-case basis. The Act ensures that all assignment requests be considered by the landlord, who may not withhold consent unreasonably. The act considers that landlords should be required to respond to the assignment request in writing, and within a reasonable amount of time. This would ensure that they do not effectively withhold consent by failing to respond. We are aware that “a reasonable amount of time” is a subjective measure, but consider that it need not be strictly defined. It should accommodate both a response that needed only a short time, such as a reference check, through to a response that might need more time, such as for a criminal record check. The landlord should only be required to respond to an assignment request if the request names the proposed assignee. This would allow the landlord to conduct appropriate checks to determine the suitability of the assignee.
This has also been made an Unlawful Act if the Landlord has not responded to the request in a reasonable time.
Landlords must permit and facilitate the installation of fibre broadband services. This is designed to ensure that New Zealanders renting a property have similar opportunities to access fibre as owner-occupiers.
Compromising weather tightness of a building
Landlords will be exempt from fibre obligations if the installation would compromise the weather-tightness of the building.
Compromising the character of a building
A landlord is not required to permit the installation of a fibre connection if the installation would “materially compromise” the character of a building.
Time limit on renovation exemption
A landlord is exempt from permitting the installation of fibre if the landlord intends to carry out extensive alterations, refurbishment, repairs, or redevelopment of the premises and the installation would impede that work.
Landlord or network operator unable to obtain consent
A landlord is exempt from permitting the installation of a fibre connection if installation requires the consent of a third party and the landlord or network operator is unable to obtain consent.
Termination by notice
The Act prohibits the use of “no cause” terminations (90 day notices) to end a periodic tenancy without a reason. Instead, landlords would be able to end a periodic tenancy on various specific grounds. They include existing grounds in the Act.
Termination to allow the owner or a family member to move in
A landlord may end a periodic tenancy on at least 63 days’ notice if the owner requires the premises as the principal place of residence for themselves or a family member.
Also that the owner or their family member must move into the premises within 90 days. This would help ensure that the notice of termination was genuine in its intent and that the property did not stand vacant for an extended period of time.
Termination where the landlord requires the premises for an employee
A landlord can terminate a periodic tenancy on at least 63 days’ notice if the premises are to be occupied by employees of the landlord. This possibility would have to have been clearly stated in the tenancy agreement.
Termination to change to a commercial premise
A landlord to terminate a periodic tenancy by giving at least 90 days’ notice if the premises are to be converted into commercial premises. A further restriction is applied: that the premises must be used for a commercial purpose for at least 90 days. This would help ensure that the tenancy was terminated because of a genuine intent to use the property commercially and that the tenant was not required to leave earlier than necessary.
Termination to allow renovations
A landlord can terminate a periodic tenancy if extensive alterations, refurbishment, repairs, or redevelopment were to be carried out, and it would not be reasonably practicable for the tenant to remain in place. The landlord should take material steps towards beginning renovations within 90 days of the termination date.
Termination because of demolition
Allows a landlord to terminate a periodic tenancy, with at least 90 days’ notice, if the premises are to be demolished. The landlord should take material steps towards beginning demolition within 90 days.
“Within 90 days” of termination.
As noted, clause 32 provides for a number of termination grounds that envisage landlords doing certain things within 90 days of the termination date. Note that a tenant could give 28 days’ notice following a landlord’s giving of a 90-day notice. This would terminate the tenancy earlier than the landlord had expected.
Termination for anti-social behaviour
Allows a landlord under a periodic tenancy to apply to the Tribunal for an order terminating the tenancy on the ground of anti-social behaviour. The Tribunal would make the order if it was satisfied about certain things. The tenant (or person on the premises with their permission) must have exhibited anti-social behaviour on three separate occasions, and the landlord must have given written notice each time. The landlord’s application to the Tribunal must be made within 28 days after the third notice. If a tenant makes an application to the Tribunal challenging a notice, it is for the landlord to prove that anti-social behaviour occurred and that the notice met the requirements of the RTA.
Privacy and access to justice
First, it makes clear that the Tribunal could make a suppression order prohibiting the publication of evidence, or the name or any identifying particulars of any witness or party to proceedings. It would also require the Tribunal to prohibit the publication of the name or identifying particulars of a party to the proceedings if that party had applied for suppression and been either wholly or substantially successful in the proceedings (unless the Tribunal considers publication is in the public interest or is justified because of the party’s conduct or any other circumstances of the case).
Changes Made after Submissions closed
Enforcement Associated person test
The bill provides that landlords with six or more tenancies would be subject to higher infringement fees and pecuniary penalties. To avoid landlords structuring their affairs in such a way as to avoid liability, the bill sets out an associated person test, with the tenancies of the associated person counted towards the landlord’s number of tenancies. The bill proposes that the associated person test include parents, children, partners and spouses, and the parents and children of partners and spouses, as well as a number of company arrangements.
Determining what is a “large-scale” landlord
The Act provides that landlords with six or more tenancies would be subject to higher infringement fees and also to pecuniary penalties.
Infringement notices still valid for large-scale landlords, even if issued for fewer than six properties.
Failing to provide the minimum information
The Act lists the minimum information required for a tenancy agreement. However, there is no penalty for failing to provide this information, even though it could result in parties having difficulty enforcing their rights. A landlord who fails to ensure that the tenancy agreement includes the landlord- related information specified by the Act commits an unlawful act.
The requirement to retain documents
The Act requires landlords to keep certain records and provide them to the regulator on request, including records of any building work, prescribed electrical work, or other maintenance work. Therefore documents must be retained for building work requiring a building consent.
Withdrawal from tenancy following family violence
The Act gives a tenant who has experienced family violence the ability to withdraw from a tenancy. In order to withdraw, the tenant will need to give notice and qualifying evidence of the family violence to the landlord. What constitutes qualifying evidence for this purpose will be set out in more detail in regulations to be made under the Act. A tenant who withdraws from a tenancy on this ground ceases to be responsible for obligations under the tenancy agreement. If there are no other tenants at the time of the withdrawal, the tenancy is terminated. If other tenants remain, the rent is reduced for the 2-week period following the withdrawal.
For the period of 2 weeks beginning with the day after the date of the withdrawal, the rent payable for the premises is reduced to an amount calculated in accordance with the following formula: a = b ÷ c × d where— "a" is the rent payable for the 2-week period. "b" is the rent that would otherwise have been payable for the 2 weeks. "c" is the number of tenants immediately before the withdrawal. "d" is the number of remaining tenants.
Related provisions prohibit the disclosure of the notice of withdrawal (and the qualifying evidence) except in certain limited circumstances and, in related Tenancy Tribunal proceedings, provide for the evidence to be given remotely, hearings to be held in private, and the name and identifying particulars of the parties to be suppressed.
Termination by notice for physical assault by the tenant.
New ground for termination of periodic and fixed-term tenancies in the case of physical assault by a tenant is added. If a tenant physically assaults the landlord, the owner, a member of the landlord’s or owner’s family, or the landlord’s agent, and is charged in respect of the physical assault, the landlord may terminate the tenancy on 14 days’ notice.
The notice must comply with certain requirements and be accompanied by qualifying evidence of the charge. If a tenant challenges the notice in the Tenancy Tribunal, the burden of proving the physical assault and the charge is on the landlord.
For further information about the act and how it may affect you, please contact your local Pukeko property manager.