Residential Tenancies Act Changes

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Proposed Key Changes to the Residential Tenancies Act

Policy decisions on key changes to the Residential Tenancies Act were announced this week. Legislation will now be drafted (and consulted on via the usual course of Select Committee) with it being likely that the changes will be entered into legislation in mid-2020.  The key changes include:

• A landlord’s ability to end a periodic tenancy with 90 day’s notice without stating a cause will be limited to a small set of circumstances. These include that the landlord intends to sell the property, re-develop / demolish the home, or refurbish it to the extent that  it is impractical for the tenant to live there while the work is carried out.
  
  
• Creating two new grounds on which a landlord can apply to the Tenancy Tribunal for termination of a tenancy:
  • The tenant having been issued notices for three separate ‘antisocial acts’ within a 90 day period;
  • The tenant having been issued with notice that they are at least 5 working days late with their rent payments on three separate occasions in a 90 day period.
    
    
• Rental increases may only be effected once in every 12 month period (from six months currently).
  
  
• Landlords will not be able to conduct ‘bidding wars’ for properties amongst potential tenants, though they will be allowed to accept more than the advertised rent.
  
  
• Providing for fixed-term tenancies to automatically become periodic tenancies at the end of the fixed term period, unless the tenant gives notice, notice is given by the landlord on another valid ground under the RTA or the parties agree otherwise. Essentially this means that fixed-term tenancies will automatically become periodic tenancies unless the tenant elects otherwise. 
  
  
• The notice required when a landlord or a member of their family is moving into a property for at least 90 days (or an employee, if this is provided for in the tenancy agreement) increases from 42 to 63.
  
  
• Tenants may request their landlord's permission to install a minor fitting and the landlord may only decline on specific grounds such as safety, on structural grounds, where either resource or building consent would be required, or to do so would breach a legal requirement. Tenants must still make good at the end of the tenancy.  Minor fittings include curtains, visual fire alarms, doorbells, a baby gate, earthquake restraints for large items of furniture – or picture hooks. 
  
  
• A party to a Tenancy Tribunal decision can apply for personal details to be removed where the party applying has been wholly or substantially successful in defending claims against themselves or enforcing their rights. This is to prevent tenants from being ‘blacklisted’ for appealing to the Tribunal in such cases. 
  
  
• Additional powers for the regulator (MBIE) including a new ‘infringement offence’ regime for minor breaches, a higher cap ($100,000, up from $50,000) for cases to be heard by the Tribunal rather than the District Court, significant increases in the amount of exemplary damages that can be awarded against a landlord and a new class of civil penalties for egregious breaches of the RTA.
  
  
• Landlords must consider requests from tenants to assign a tenancy agreement, and must not unreasonably decline a request once made.
  
  
• Tenants may request a breakdown of fees charged on agreement to assignment, subletting or break fees.

From a landlord’s perspective, the most significant of these changes is probably the removal of the ability to end a tenancy at 90 days’ notice.  This has been offset by the creation of a new, Tribunal based pathway to ending tenancies where tenants consistently commit ‘antisocial acts’ – such as disturbing or harassing neighbours, holding loud parties etc.  Tools to track the giving of notices will require some thought, and there may still be a handful of tenants who ‘game the system’ by behaving perfectly whilst on three strikes until one expires. 

Much will rest on the detail of these changes.  The definition of an ‘antisocial act’, and the level of proof that the Tribunal will require that behaviour reaches that threshold will be key.  We will be engaging closely with the Ministry of Housing & Urban Development through the drafting and submission processes to ensure that real-world situations that genuinely challenge good landlords are addressed.  We will also seek input from our landlords and tenants on the expected impact of the changes – and of course, keep you updated on the likely timeframes. 

Need more insight into the Residency Tenancies Act and how it affects you? Speak to one of our property experts.