The New Zealand government recently passed the biggest changes in Tenancy legislation in 35 years, outlined in the Residential Tenancies Amendment Act 2020.
Here at Lochore’s Real Estate, we keep up to date with all things residential property and care about our clients’ investments, which is why our Auckland property management professionals and real estate salespeople have created this handy guide for everything you need to know about the changes, what you can expect, and what action you should take where necessary.
Why were these changes passed?
The recent changes were made in response to significant shifts in New Zealand’s housing market demographics. With homeownership in New Zealand now at its lowest point in the past six decades, the number of households renting long-term has ballooned to over a third of the country’s population. What’s more, the number of children raised in rented homes has leapt from 26% in 1986 to nearly 50% today.
These demographic changes have significantly altered the power balance between tenants and landlords, so the government proposed these changes to ensure that the rights of tenants in this environment are secured. Importantly, these changes to the original Residential Tenancies Act 1986 did not arise in response to evidence of widespread mistreatment or exploitation of tenants by landlords. Rather, they seem to be precautionary, shoring up perceived weaknesses of tenants in a changing NZ housing market.
Residential Tenancies Amendment Act 2020: Changes to Note
Passed in late 2020, the Residential Tenancies Amendment Act 2020 rolls out a series of tenancy legislation changes over three phases, outlined below.
Phase 1 – In effect from 12 August 2020
- Rent can be increased no more than once every 12 months.
Phase 2 – In effect from 11 February 2021
- Landlords will require a specific reason to terminate a tenancy and must provide 90 days’ notice to do so or face a $6,500 penalty.
- Fixed-term tenancy agreements convert to periodic tenancies unless the parties agree otherwise. A landlord must provide 28 days’ notice to renew a fixed-term tenancy.
- Landlords cannot unreasonably deny minor changes requested by the tenant and must respond to the tenant’s request within 21 days. Tenants now have more freedom to install minor enhancements such as baby proofing, fire alarms, earthquake brackets, and other safety and security measures.
- Landlords must list a set rental price for a property and cannot invite or encourage rent bidding from prospective tenants.
- Landlords cannot unreasonably deny for a tenant to have broadband installed.
- Landlords may no longer use no-cause terminations to discontinue periodic tenancy agreements.
- Parties who successfully apply for a suppression order can have their names and identifying details removed from published Tenancy Tribunal decisions.
- Landlords must consider all requests to assign a tenancy and may not decline one unreasonably unless the residential tenancy agreement prohibits assignment.
- It is illegal for landlords to fail to provide a written tenancy agreement and landlords must provide and maintain any relevant new information.
- The Tenancy Tribunal can now issue awards up to $100,000.
- The Ministry of Business, Innovation, and Employment will have additional measures to act on parties who are not meeting their obligations under the Residential Tenancies Act 1986.
Phase 3 – In effect from August 11, 2021
Phase three allows for more immediate termination of tenancy agreements in the event of family violence or the assault of a landlord.
Tenants won’t incur a financial penalty if terminating a tenancy without notice due to experiencing family violence. Additionally, landlords can terminate a tenancy agreement with only 14 days’ notice if they, their agent, their family, or the property owner have been assaulted by the tenant, and police have laid a charge against that tenant for said assault.
Get help from property management experts.
As a leading Auckland property management office, the Lochore’s team works hard to stay abreast of changes to tenancy law and can help you navigate any compliance issues that may arise, working to optimise the return on your investment whilst minimising the risks.
If you need expert, professional services to help you navigate these changes or take the stress of property management off your hands, don’t hesitate to contact our team today.