NZ tenancy law changes; landlords wary

A host of regulatory changes introduced under the Residential Tenancies Amendment Act 2020 are now in play.

Some commentators have said the amendments were well overdue and better reflect the current realities of renting.

Chief Human Rights Commissioner Paul Hunt praised the Act’s new provisions, suggesting that the boost to tenants’ rights would further improve tenure security.

Recent figures released by the Human Rights Commission’s housing inquiry show that the proportion of renters living in their home for less than a year fell to 33.7% in 2018 from 42.5% in 2006.

Presumably, the amended Act will see this trend continue.

Terminating a rental agreement now requires a specific reason

Under the amended legislation, landlords can no longer end tenancies without cause – they must provide specific reasons and observe a 63-day or 90-day notice period. Reasons that hold water under the Act include the landlord’s intention to live in the property, put it up for sale, or carry out renovations.

The change has sent a shiver up the spine of some landlords, who are now less likely to give the benefit of doubt to marginal renters when they weigh up the pain and cost of exiting ‘good tenants gone bad.’ The unintended consequences of the law change may leave some tenants out in the cold.

Limits on frequency of rent increases

Other changes include limiting rent increases to once every 12 months (with a minimum of 60 days’ notice in writing before the increase takes effect), and new notice periods for ending periodic tenancies. Tenants who have signed a periodic tenancy are required to give their landlord 28 days’ notice (an increase from 21 days).

Landlords can apply to end tenancies if rent is unpaid for 21 days or more, or in cases of repeated antisocial behaviour. The notice period drops to 14 days when a tenant assaults their landlord.

Fixed term and periodic tenancies

Landlords must balance the better security of fixed-term tenancy (a rental agreement for a set time) with the flexibility of periodic tenancy (i.e. a month-to-month tenancy).

In both instances, a landlord can only terminate the tenancy for reasons specified in the Act. The same doesn’t apply to tenants, who are entitled to terminate a periodic tenancy by giving 28 days’ notice at any time during the tenancy, without providing a reason. In the case of a fixed-term tenancy, tenants must provide at least 28 days’ notice before the end of the term.

Fixed-term tenancies automatically convert to periodic tenancies at the end of the term, unless otherwise agreed.

The Residential Tenancies Amendment Act 2020 introduced a lengthy list of changes affecting both landlords and their tenants. A summary of changes under the Act can be found here. Call your Goodwins property manager to get a practical perspective on what these changes really mean.