January 29, 2021

RTA Changes

We are straight back into the swing of things at The Rent Shop in Property Management for 2021 with over 100 lettings Nationwide and of course preparing for the new changes in Legislation  Residential Tenancies Amendment Act 2020 (RTA). Whilst some of this has already come into effect the bulk of the new changes are set to take place on February 11th 2021.

There has been a lot of hype about these changes, however our view on this is quite simplistic. Our focus is to guide our Landlords through this process with education and ensuring your properties meet compliance with the new requirements. With the new changes in Legislation,it can be very overwhelming for our clients, it certainly highlights the importance of working with your Property Management Company and provide our clients confidence that they are working with experts in this field.

Most owners are questioning why the changes? In a nutshell the Government has made these changes to modernise the Tenancy Law Act which has remained unchanged since 1986 and has been long overdue.  Since the RTA came into force,home ownership rates have declined and the proportion of households living in the rental market has increased. Statistics New Zealand indicate that 1 in every 3 Kiwi household now rent. These new laws reflect the current day renting situation in New Zealand. The legislative changes aim is to increase the security of tenure for rental customers, as well as provide homes that they treat as their own. The aim is also to create more stable prices in an increasingly competitive rental market.

Over the past year alone the new Residential Tenancies Amendment Act 2020 has already come into effect. This first phase rolled out in August of 2020 whereby rent increases can only take place every 12 months. This also included the Healthy Homes Standards compliance statements which are now required on all new, renewed, and extended Tenancy Agreements. There is more information on this in our blog written late last year https://www.therentshop.co.nz/post/your-quick-healthy-homes-standards-guide. Most of our owners have had their Healthy Homes assessed with work underway or completed to meet compliance.

As part of this blog, we will recap the changes coming into effect next month. We will continue to keep you updated each month on how the implementation of these changes affects you.

From 11 February 2021, the main changes cover:

1)   Security of rental tenure – landlords will not be able to end a periodic tenancy without cause by providing 90 days’ notice. New termination grounds will be available to landlords under a periodic tenancy, and the required notice periods will change.

90 days’ notice -

·      The property has been sold with a requirement by the owner for vacant possession.

·      The Landlord wants to change the use of premises to a commercial use.

·      The Landlord intends to carry extensive renovations at the property, and it would be impractical for the tenant to live there during that process.

·      The premises are to be demolished.

63 Days’ Notice-

·      The owner or their family require the property to live in

·       The owner customarily uses the premises for occupation by employees or contractors are needed for that purpose (Please note this is stated in the Tenancy Agreement)

 

2)    Fixed Term Tenancies now convert to periodic tenancies at the end of their fixed terms. Few exceptions to this change include:

·       If a tenant gives notice to vacate at least 28 days before the end of a fixed term.

·       If both the tenant and the Landlord agree to extend or renew or end the fixed term.

* We encourage all our Owners to explore the option of Landlord Insurance to mitigate the risks surrounding breaking of fixed term tenancies *

3) Making minor property changes – tenants can ask to make changes to the property and landlords must not decline if the change is deemed ‘minor.’ Landlords must respond to a tenant’s request to make a change within 21 days.

We will discuss this more in depth in our blog next month.

We view to look at the legislation in positive outlook for both parties (tenants and landlords) without favouring one or the other. For example, the security of rental tenure is a positive for both sides; tenants get a feeling of security, and landlords have good tenants in place hopefully for the long-term.

 

Remember we’re here to help, should you have any questions around the new legislation. 

Sharon Bradley

General Manager of Licensees/Training