Notice changes focus on periodic tenancies

01 December 2019

It will be some months before the Government calls for submissions on its latest proposed changes to the Residential Tenancy Act (RTA) but the announcement last month by Housing Minister Kris Faafoi immediately drew fire from groups representing landlords.

The Government will introduce a Bill needed to make the changes early next year, with the following  Select Committee process providing an opportunity for the public to make submissions and suggest changes or improvements.

While changes are welcomed to protect vulnerable tenants from rogue Landlords, Quinovic managers have identified several areas of concern that are likely to disadvantage property investors and unfairly tip the balance of the renting equation in favour of tenants. We will keep our clients informed of progress via these monthly newsletters and once the Bill is available for feedback, we hope you’ll join us in making submissions to the Select Committee.

Meanwhile, much criticism of the November announcement has focused on a provision removing the right of landlords to end periodic tenancies without specified reasons. Quinovic will continue to closely monitor and manage tenancies and work with owners prior to the expiry of the fixed-term tenancies that comprise the vast majority of properties under management.  Under the proposed new rules, they will become periodic tenancies at the end of the fixed term, unless the landlord and tenant agree otherwise, the tenant gives notice, or the landlord gives notice using one of the specified reasons.

Minister Faafoi said the proposals were designed to provide greater security for tenants after the 2018 General Social Survey found that 25% of those who had moved in the previous five years did so because their landlord ended the tenancy. And although the proportion of households that were renting had increased from 23% in 1991 to 32% in 2019, the median tenancy length was only 12 months.

Provisions for dealing with tenants who are repeatedly late with rent payments apply once a payment is at least five working days’ late, when the landlord can issue a notice advising the tenant that the rent is late. If a landlord has issued a tenant three notices for separate late payments in a 90-day period, they may apply to the Tenancy Tribunal to end the tenancy.

And where a tenant on a periodic tenancy agreement has acted in a way that has caused harassment, alarm or distress to a third party, a landlord will be able to issue the tenant with a notice to stop the behaviour. Once a landlord has issued a tenant three notices for separate antisocial acts in any 90-day period, they may apply to the Tenancy Tribunal for termination. Guidance to accompany the Bill will spell out what specific acts of antisocial behaviour will come under the new system.

The Auckland Property Investors Association vice president Peter Lewis said if the 90-day notice requirement for antisocial behaviour went ahead, it would put people off doing something about disruptive, antisocial tenants in rental properties.

He said neighbours would be at greater risk from disruptive, bad tenants because landlords would not be able to remove them, unless one of the neighbours was prepared to stand up and provide the necessary evidence of three separate instances of antisocial behaviour.

Other significant proposals include a ban on soliciting rental bids, (which is supported by Quinovic), extending the minimum period between rent increases from six months to 12 months and increasing the period of notice a tenant must give a landlord when terminating a periodic tenancy from 21 days to 28 days.

The proposed new changes follow the Government’s previous RTA reforms, which have included the banning of letting fees and the Healthy Homes Guarantee.

The Ministry of Housing and Urban Development, which is leading the reform process, has  comprehensive details of the proposed changes on its website.

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