Critical Summary of Changes to the RTA 2020

Residential Tenancies Amendment Bill

The Residential Tenancies Amendment Bill was listed on the agenda in Parliament on 4th August 2020. This becomes the date it was passed even though the actual date the Bill was passed was the 5th of August. The changes come into effect in six months, except for restricting rent increases to once a year and the ability for a tenant to give 48 hours’ notice they are leaving a tenancy as a result of domestic violence, which is effective immediately.

 

Fixed Term and Periodic Tenancy Agreements

  • Landlords will not be able to end a periodic tenancy without a specific reason (see reasons below).
  • Fixed-term tenancies will become periodic tenancies at the end of the fixed term unless both parties agree that the tenancy will end. Fixed-term tenancies now expire as opposed to ending, effectively just minimum term tenancies.
  • If the landlord doesn’t want the tenancy to continue at the end of the fixed term, but the tenant does, then the landlord must use one of the periodic tenancy grounds for ending a tenancy and give 63 days or 90- days notice depending on the reason for termination.
  • If the tenant doesn’t want the tenancy to continue at the end of the fixed term, but the landlord does, the tenant must give notice between 28 days and 90 days before the end of the fixed term period.

 

Termination Grounds for Periodic Tenancies to end:

These grounds are in addition to the existing provisions that allow termination following a tenant breaking their tenancy condition, such as being 21 days behind in the rent.

  • the landlord or a family member is moving into the property (63 Days notice) and the family member must move in within 90 days and then stay for at least 90 days.
  • the landlord requires the premises to be used for an employee (this must be stated in the tenancy agreement).
  • the landlord has an unconditional sale and purchase agreement for the property (63 Days notice).
  • extensive alterations, refurbishment, repairs, or redevelopment of the premises are to be carried out by the landlord or owner (90 Days notice).
  • the premises are to be demolished (90 Days notice).

 

Removing a tenant for anti-social behaviour:

  • If the tenant, engages in anti-social behaviour that is more than mild on 3 separate occasions within a 90-day period; and
  • on each occasion the landlord gives the tenant written notice describing clearly which specific behaviour was considered to be anti-social and who engaged in it; and
  • advises the tenant of the date, approximate time, and location of the behaviour; and
  • states how many other notices (if any) the landlord has given the tenant under this paragraph in connection with the same tenancy and the same 90-day period; and
  • advises the tenant of the tenant’s right to make an application to the Tribunal challenging the notice and
  • the landlord’s application to the Tribunal must be made within 28 days after the landlord gave the third notice.

If the tenant disagrees with the notice to end the tenancy for antisocial behaviour, they can appeal the notice to the Tenancy Tribunal. It is up to the landlord to prove that the tenant engaged in the antisocial behaviour and that it was more than mild antisocial behaviour. This means that other tenants or neighbours will probably have to become involved and provide evidence

 

Tenant commits assault

If a tenant physically assaults the landlord, the owner, a member of the landlord's family, or the landlord's agent, the landlord may terminate a fixed-term or periodic tenancy by giving at least 14 days’ notice to the tenant.

To do this, landlords must lay a complaint with the Police who must have sufficient evidence to charge the tenant with the assault.

 

Other changes

  • Tenants will be able to add minor fittings to their premises where the installation and removal of the fittings are low risk.
  • The Regulator (Ministry of Business, Innovation and Employment) will have new compliance tools to take direct action against parties who are not meeting their obligations.
  • Increased powers of the Ministry of Business, Innovation and Employment against landlords include:
    • Criminal Acts
    • Infringement Offences
    • Infringement Fees
    • Pecuniary Penalties
    • Improvement Notices
    • Enforcement Undertakings
  • The penalty amounts will be increased to a maximum of $50,000.
  • As a general rule of thumb, fines increase 70%-80% on what they are now with some additional new fines (see attached spreadsheet).
  • Advertising a property without a rental price will be prohibited.
  • The minimum period between rent increases will now be twelve months.
  • A party who is successful in the Tenancy Tribunal can have their identifying details removed from the Tribunal’s decision.

 

New supplementary Order regarding family violence:

  • A tenant under a fixed-term or periodic tenancy may withdraw from the tenancy by giving at least 2 days’ notice to the landlord if accompanied by qualifying evidence that the tenant has been a victim of family violence.
  • The victim does not have to pay any rent after the two days’ notice period.
  • Rent reduction is a percentage of the number of people who have been offended against divided by the total number of people living in the house. So, if there are 4 residents and one is leaving as a result of violence, there would be a 25% reduction in rent. If the occupant is a solo occupant, then the tenancy ends.

Please note that this is only an extract of the Bill and these should be read alongside the legislation to get the full understanding of landlords' requirements.

http://legislation.govt.nz/bill/government/2020/0218/latest/LMS294929.html

 

With all these changes and increased implications to getting it wrong, it is more important than ever that you look at your investment as a business that requires professional management to ensure legal compliance, quality maintenance and the maximum possible returns from the asset.

To learn more or to sign with Quinovic Mt Eden call Jay on 021 836087 or Barry on 027 561 4448


Do landlords have to inspect rentals for insurance to pay out?

Landlord-specific insurance usually requires three or six-monthly inspections.

While standard house and contents insurance policies, such as under AA Insurance and Vero don't specify rental checks as a requirement for cover, optional landlord-specific covers for things such as loss of rent and malicious, intentional or deliberate damage, do.

To comply with AAI's landlord policy, landlords are required to get references from prospective tenants, collect at least a week's rent and two weeks' bond in advance, contact tenants in writing if rent falls seven days or more behind (further contact is required at 14 days) and complete a six-monthly rental inspection with a written record.

Similarly, Vero's LandlordPlan policy wording specifies that properties must be inspected internally and externally at six-monthly intervals, or sooner if there's a change of tenant.

It's important that landlords read their policy carefully to ensure they've selected a product suitable to their needs and are fully aware of their obligations as a landlord. Some policies have limits for things such as meth contamination and what level of contamination will trigger a claim.

Tenancy Services state landlords should give at least 48 hours' notice of the inspection and take a record of it. "Landlords should take a digital camera, the property inspection report for reference and take photos where appropriate, taking care not to include the tenant's belongings".

While inspections can't be more frequent than once every four weeks and must be done between 8am and 7pm, tenants are required to be reasonable in agreeing to them.

Landlord-specific insurance policies require six-monthly inspections with many now requiring three-monthly inspections before they'll pay out, backed by a written record.

Rental inspections are necessary for maintenance, safety, and insurance reasons.  Tenants wanting to live in a well-maintained property may welcome the intrusion, while landlords have the satisfaction that their nest egg is taken care of.

 

Some of the wording taken from Real Landlord Insurance Policy:

Real Landlord Insurance

Your/your property manager’s obligations

You, and/or your property management company, must:

  1. Exercise reasonable care in the selection of tenant/s by at least obtaining satisfactory written or verbal references, and
  2. Complete an internal and external inspection of your rental property at a minimum of six-monthly intervals and upon every change of tenant/s, or in compliance with the terms of the house policy (please refer to your house Policy currently in place) if less than six-monthly, and
  3. Keep a written record of the outcome of each inspection, and provide us with a copy of the record if we request it. You are required to keep these records and provide them to us when you make a claim.

5 Tips For Successful Tenancy Debt Collection (Private Landlords)

1. Find the Tenant with the Best Merit

Always rent to someone who has the best merit out of the pool of applicants for your property.  Property investment is a business and you want to be doing business with the best possible person who can help you realise your investment potential with the least amount of real and perceived risk.  Call it tenancy due diligence if you like.  Put in the hard yards at the very beginning, interview your tenants, reference and credit check them to find out what they are like as tenants and debtors, find out if they had ever been involved in a Tenancy Tribunal case, get an understanding of the tenant's way of life, all this information can help you pick the best possible tenant to work with.

2. Collect the Right Information at the Very Beginning

Information gathering is most effective at the very start of the tenancy when both parties are co-operating effectively and have a good relationship.  This is the time when your tenant is willing to give you more personal information.  Treat this as a window of opportunity and ask for as much information as you can think of including identification, alternative addresses for service, phone numbers for family members, next of kin, work numbers and other contact details.  Should the tenancy deteriorate for any reason and the debt collection process kicks in, the debt collectors can serve you better if you can supply them with more means to contact the tenant.
Additionally, always make sure that your tenancy agreement contains a debt collection clause making the tenant responsible for debt enforcement charges relating to the tenancy.
Also very crucial to being an effective landlord is to document all your history with your new tenant from day one. Make sure all your communication is confirmed in writing and any agreements or amendments to agreements are in writing and signed.

3. Ask Referees the Right Questions

Here are some basic questions you should always ask a referee:
  1. How long have you known the tenant and in what capacity?
  2. Can you confirm the tenant's phone numbers and contact details?
  3. How regularly do you have contact with the tenant?  When was the last time you had contact with the tenant?
  4. Have you ever had a creditor/debtor relationship with the tenant?  If so has the tenant always been on time with payments?
  5. (If the referee is an ex-landlord) What were the reasons for the dissolution of your tenancy?  Would you ever rent your property to the tenant again?
If the referee cannot give you satisfactory answers to any of the above then they should not be treated as referees at all.  Go back to your tenant and ask for more references.
Depending on who they are in relation to the tenant you should ask specific questions in addition to these listed. For example, when speaking with current or previous landlords you should ask about cleanliness, rent arrears, communication, maintenance, and general ease to deal with whilst you may want to ask their employer to confirm their tenure, position, and confidence in their future with the company. Lastly, we would suggest a general Google search to see if they are prevalent on any social media platform or other websites that could confirm their character and references.

4. Act Quickly

Small problems become huge problems very quickly, especially with compounding rent arrears. On the first day of a rent default, the amount owing may seem negligible.  But left alone, debt has a tendency to fester into something unmanageable.  Always be up-to-date with your rent ledger, ask your tenant to address rent arrears immediately.  Finding an extra $400 in one week is a lot easier than repaying a $3,200 tenancy debt when the rent becomes 8 weeks late.

5. Bring in the Professionals

Get the Tenancy Tribunal involved ASAP.  If your tenant owes you rent arrears or compensation for property damages, apply to the Tribunal and get the debt recorded in a sealed Tenancy Tribunal Order.  Once you have this order you can enforce it by engaging the services of a professional debt recovery agency.  These agencies have processes and tools available to them to better track down and recover losses on your behalf.

Don't have the time to do it right?

If you, like many of our clients do not have the time to effectively manage your investment or portfolio of investment property and need to hire dedicated property managers whos focus is singular in providing the best possible care & management of your asset then Call Quinovic Mt Eden today. Call Jay 24/7 on 021 836087 - Property Management is all we do. 

Faulty Stove/Oven or other Electrical Faults? - Here's where to start...

What to do if your stove/oven or major appliance is not working?

  1. Is it turned on at the isolator switch? (usually, ovens have a separate switch nearby that needs to be on)
  2. Check the electrical switchboard
  3. Is the appliance working at all? If not, ensure the appliance is set to 'Manual' operation and that the clocks have been reset. Instructions on how to reset the clocks and auto/manual functions can be found on most manufacturers’ websites
  4. Are all the circuit breakers pressed in, or in the 'up' position? For the vast majority of houses in this day and age 'up' is 'on' for circuit breakers
  5. If a circuit breaker is in the 'down' position, attempt to reset it by pressing it 'up'
  6. If it trips immediately or continues to trip periodically, there could be a fault - call us right away

The above are some of the most common issues we hear about. Some of these can be quickly resolved by the resident but if in doubt call us on 09 3735400

 

The issues in the following points are considered urgent or dangerous and we should be called without delay.

  1. Things that have gone 'bang'
  2. Burning smells and or smoke coming out of things
  3. Sparking, arcing or electrical flashes
  4. Lights or power flickering or only appearing to be working on half or reduced power
  5. Persons getting 'shocks' or 'tingles' off anything, especially taps, sinks, and showers

 

For all other faults or maintenance issues check out our blog post on How to Determine the Severity of your Maintenance Issue & What to Do!

For all emergencies please call 093735400 or if it is not a Serious problem please detail the situation in an email and send to [email protected]