Associate housing minister Kris Faafoi has turned a blind eye to the harm that the ‘no-cause eviction’ ban will have on tenants, neighbours and landlords.
The key proposed changes are…
1. Landlords will no longer be allowed to end a periodic tenancy without stating the reason
At the moment, you can end a periodic tenancy without having to state your reason (the so-called “no-cause eviction”). This avoids arguments with unreasonable tenants, and avoids having to take them to the Tenancy Tribunal.
Under the new rules, you must tell your tenant why you want to end the tenancy, and you can only do so for one of the ‘specified reasons’ that will be listed in the RTA.
This means that tenants will always know why their tenancy is ending and have the ability to challenge this at the Tenancy Tribunal if they disagree or consider their landlord has not followed due process.
The list of ‘specified reasons’ are…
- The landlord intends to make the property available for sale within 90 days of the tenant leaving the property. [COMMENT: Expect severe penalties if you don’t.]
- If the property was acquired for a business use other than residential rental accommodation and termination is required for the purposes of the business. [e.g. you buy a tenanted house intending to run an accounting practice from the premises.]
- The landlord intends to carry out extensive alterations or redevelopment at the property and it would be unpractical for the tenant to live there during that process.
- The landlord wants to change the use of the premises. [e.g. you decide to change your investment property from a residential renter to a childcare centre.]
- The premises are to be demolished.
- The landlord is not the owner of the property, and the landlord’s interest ends. [e.g. you lease a property from the owner and rent it out to tenants, and your lease is coming to an end.]
- If the landlord has issued a tenant three notices for separate antisocial acts in any 90-day period, and applies to the Tenancy Tribunal to end the tenancy. [COMMENT: Cunning tenants will realise they can get away with 2 notices every quarter without eviction, meaning they can terrorise the neighbourhood up to 8 times a year with impunity.]
- If the landlord has given notice that a tenant has been at least five working days late with their rent payment on three separate occasions within a 90-day period, and applies to the Tenancy Tribunal to end the tenancy. [COMMENT: They can be as late as they can push it 8 times a year and there’s bugger all you can do about it.]
- Reasons specific to public housing.
“Creates more jobs for Tenancy Tribunal and HNZ as more issues go via TT and less investors want to own rental properties. Suddenly Labour has reduced unemployment further.
– Property investor A
“Labour loves to create jobs that are unproductive.”
– Property investor B
At the moment you can also terminate a tenancy if you or a family member intend to use the property as your main residence. The reform amends this ground so that you or your family member must intend to live there for at least 3 months. In submissions, some tenants indicated they were given notice under this clause and then found the rental property advertised for a higher rental. [COMMENT: Expect severe penalties if you do this.]
In addition, you will also be able to apply to the Tenancy Tribunal to end a tenancy. The Tenancy Tribunal can end a tenancy where on balance, it considers your application to end the tenancy is legitimate and fair, taking into account the impact on the tenant. [COMMENT: Expect “the impact on the tenant” to take precedence.]
“Now you have to take a mediocre tenant to the tribunal. They’ll get a black mark against their name and find it hard to rent. Well done. One example I gave is a solo mother tenant who gets a no good boyfriend mid tenancy that you need gone. To get him out, you have to take her to the Tenancy Tribunal. She’ll now find it hard to rent again. Very unfair.”
2. Fixed-term tenancies convert to periodic tenancies at the end of the fixed term
At the moment a fixed-term tenancy converts to a periodic tenancy unless you or the tenant give notice for any reason 21-90 days before the term ends, or you agree to renew or extend the fixed-term tenancy.
Under the new rules, it will automatically convert to a periodic tenancy unless you give notice (but only for one of the ‘specified reasons’), the tenant gives notice, or you and the tenant agree otherwise.
COMMENT: This means that tenants can choose to stay on after the end of a fixed-term tenancy whether you like it or not. The only exception is if you are able to give notice using one of the ‘specified reasons’ permitted under the new legislation.
Why are these two changes coming in? Because renters were strongly in favour of “rebalancing” tenancy laws so decisions around whether to stay or leave the property are largely in the hands of the tenant, not the landlord. Renters expressed concern about the costs of moving and a perceived lack of fairness in decision making.
COMMENT: Landlords were strongly against most of the proposals, but it is obvious who was listened to and who was ignored.
“Landlords are like voodoo dolls. Govt just keeps putting in the needles.”
3. The current 42-day notice period will increase to either 63 or 90 days
Provisions to end a tenancy that are currently subject to 42 days’ notice will increase to either 63 days’ notice or 90 days’ notice.
The notice period will be 63 days when you give notice because…
- You, or a family member, require the property to live in. [But you or your family member must intend to live there for at least 3 months. If you don’t, watch out!)
- The property is needed for an employee (and this is in the tenancy agreement).
The notice period will be 90 days when you give notice because…
- You have sold the property with a requirement by the owner for vacant possession. (This aligns the notice period with the new termination ground that the landlord intends to make the property available for sale.)
- Any of the ‘specified reasons’ above.
4. Tenant’s notice increases to 28 days
The notice a tenant must give you when terminating a periodic tenancy will increase from 21 days to 28 days.
COMMENT: The notice period a tenant must give you has increased by 1 week. The notice period you must give a tenant has increased by 3 weeks in some cases, 7 weeks in others. ‘Nuff said.
5. Ending a tenancy due to antisocial behaviour
Where a tenant on a periodic tenancy agreement has acted in a way that has caused harassment, alarm or distress to a third party, you will be able to issue them with a notice to stop the behaviour.
If you have issued a tenant 3 notices for separate antisocial acts in any 90-day period, only then may you apply to the Tenancy Tribunal for termination.
If the Tribunal considers that the notices were issued reasonably and fairly, and that the behaviour aligns with the Tribunal’s definition of antisocial behaviour, it will make an order terminating the tenancy.
The Government says, “Guidance will be developed to have parties understand what specific acts of antisocial behaviour will come under this new system.”
COMMENT: It is likely the Government’s list of what is considered antisocial behaviour will be much narrower than yours.
COMMENT: Clever tenants will realise they can get away with 2 notices every quarter without eviction, meaning they can terrorise the neighbourhood up to 8 times a year with impunity.
“We had neighbours from hell. The landlord was not helpful. If all neighbours complain, I would like to see that the renter can be removed. Neighbours needs rights too.”
“The other one is the neighbour that complains against the violent/unruly/tenant. Previously the timid neighbour just had to call the landlord and we could enact the 90 day no cause termination. Now the neighbour has to go to TT with you. It won’t happen for those with a softer personality. So lose lose for neighbours.”
“It’s the social impact. If you live next to a disruptive rental property your quality of life could be seriously affected as the landlord of that property will no longer be able to control the behaviour of those tenants. This will potentially affect every owner-occupier in the country including you.”
“Yes. And it is completely impossible to understand the full implications of loss of quality of life. I lived in a neighbourhood that was unable to sleep between 10pm and 4am – for three months. It became impossible to walk down the street because you were intercepted. Nothing was safe, no one trusted, and the friendly conversations between neighbours of several decades ceased.
“No sleep, not taking a stroll to get fresh air, not enjoying the neighbours spring flowers, bringing in their recycling bin and finding a gift of home-made bikkies in your mail box … being in constant frenzy making sure everything was locked down tight … and never sticking your head up while wandering around in a constant state of sleep-deprivation.
“This is not normal. It destroys previously connected communities – and the lack of sleep means people behave in really whacky ways – which impacts their job performance, involvement with community organisations, sports participation … the list goes on. You don’t realise it until you are on the receiving end of frenzied, non-stop chaos that prevents you doing so.”
“This is the hell we are living with at the moment. It’s just horrible. I’m often going to work on four hours sleep, can’t let our five year old play outside, totally unfair and will only get worse if the Bill goes through as proposed. I’ve emailed both of the MPs for my electorate this afternoon about it.”
6. Ending a tenancy due to repeated late rent
If a tenant has been at least 5 working days’ late with the rent payment, you can issue a notice advising the tenant that the rent is late. If you have issued a tenant 3 notices for separate late payments in a 90-day period, only then may you apply to the Tenancy Tribunal to end the tenancy.
If the Tribunal considers that the notices were issued reasonably and fairly, the Tribunal may make an order terminating the tenancy.
COMMENT: Not ‘will’ but ‘may’ make an order terminating the tenancy. Expect them to sympathise with tenants, not you, and go soft.
7. Installing fixtures & fittings
At the moment, tenants must get your consent to install a fitting (called fixtures in the RTA). Under the new rules, tenants can request permission to install a fitting and you can only decline for ‘specified reasons’.
Such fittings must be ‘low risk for installation and removal’, installed at the tenant’s expense and they must remove them at the end of the tenancy and remediate the property to a satisfactory standard, unless you agree to them staying.
The Government says, “Guidance will be developed and published that provides examples of acceptable minor fittings.” They have signalled that the list is likely to include…
- Accessibility fittings that improve safety for disabled people such as visual alerts for fire, security alarms and doorbells.
- Securing furniture or appliances to protect against earthquake risk or to make a property child safe.
- Installing dishwashers and washing machines.
- Installing a baby gate.
- Screwing child safe latches to cupboards.
- Installing shelving.
- Installing television aerials or wireless broadband equipment.
- Installing gardens when these can be returned to the original state at the conclusion of the tenancy.
- Installing curtains and window coverings.
- Installing internal locks (provided they are compliant with relevant fire safety laws).
“The government wants tenants to have all the benefits that a homeowner has worked hard to earn, but without putting any of their own skin on the line, or risk or sacrifice.”
8. Rent setting and increases
Under the new rules you are not allowed to seek rental bids. This includes advertising rental properties with no rental price listed or organising a rental auction.
Rent can only be increased every 12 months (currently 6 months).
Under the new rules, tenants who ‘wholly or substantially’ defends a claim against them can have their identifying details removed from Tenancy Tribunal decisions before publication.
COMMENT: Tenants who are so bad they regularly get taken to the Tenancy Tribunal by landlords, but always seem to find a way to get out of it, will no longer be identified by searching decisions for their name. Your risks have just increased.
At the moment, a fixed-term tenancy agreement can prohibit assignment of the tenancy. Under the new rules all assignment requests must be considered, and you must not decline unreasonably.
11. Bigger penalties
The Government says, “The Regulator [MBIE] will have new compliance tools to take direct action against parties who are not meeting their obligations.” They go on to say, “The Regulator requires the full suite of tools of a modern regulator in order to effectively implement the changes in the reform and achieve compliance across the sector. Penalty levels in the RTA have not been reviewed since 2006. If adjusted for increases in rental costs, the penalty levels are 60% too low in real terms.”
COMMENT: This bureaucratic mumbo jumbo is code for increasing the penalties against landlords by between 50% and 80%.
MBIE will be able to issue landlords with improvement notices to correct breaches of the RTA. These carry a penalty if not complied with. There will also be a new class of civil penalties for the most serious breaches of the RTA by landlords.
12. Tenancy Tribunal
At the moment, the Tribunal can hear cases and make awards up to $50,000. This will increase to $100,000.
What is your plan of action to combat the no-cause eviction ban?
Q. “Hi Team! With everything happening and changing with the tenancy law will you still invest and keep your current rental investment? Or will you not invest any further in rental properties and start selling your portfolio next year? Very keen to hear from you what you think and your plan of action for the new tenancy laws.”
A. “I’ve been selling for the last 2 years. About 20 gone so far, looks like I will just continue now. Will the IRD accept reason for selling within 5 years – Socialist Government?”
A. “Have (touch wood) just sold my last rental. I’ve always had long term tenants. My last were there over 10 years.”
A. “In the process of selling down after a successful 30 years… it’s time!”
A. “Try the employment relations act and being an employer it’s a nightmare one large part of the reason I closed my business. Now they are coming for landlords also.”
“From a tenant’s point of view this government needs to cut it with all the new rules. Renting is already hard enough. It’s just gonna make landlords sell. Less rentals more ppl in motels.”
“This government seems to attack symptoms rather than causes. All this will do is encourage more landlords to exit leaving the housing problem squarely in their own laps. Sigh. Glad I saw this coming and sold my rentals.”
“More landlords selling equals more homeless. To make this work remotely well, the TT will need a lot more funding. At least give some of them legal training, so we don’t get such inconsistent decisions.”
“This policy only hurts the small Mum and Dad investor, who will now likely drop out of the market over the next 3 to 5 years. Supply drops, rents rise as demand remains flat or increases. All combined with greater tenant scrutiny/vetting that drives more people to socially provided housing and a loss of self esteem. For a socialist government I think they need a basic economics lesson.”
“Yeah I agree, I read a friends’ rental application and I know there’s a reason for all the questions but it’s very invasive. You really get put under the microscope. Used to be far simpler.”
“Govt is really interested in helping home buyers, NOT tenants. LL will be selling up under this draconian regime. Home buyers may benefit from a short-term depression effect on prices. But there WILL be less rentals available. Rents for the few remaining properties will skyrocket. Only LL left will be those willing to charge real market rents in these circumstances. Sorry tenants – another govt fail for you.”
“Despite all the MBIE (MHUD) ‘workshops’ with landlords, housing providers and tenants, this was decided before Labour got in. The workshops were to see how to manage the fallout from landlords.”
“Why? Why does government always put up challenges instead of making business easier?”
– Property investor A
“Because they want votes next election from the trashy tenants they are protecting.”
– Property investor B