Reform Worries - Tenancy Law
It’s been hit after hit on the policy and regulation front for investors in recent years. From the extension of the bright-line test; to new rules around the ring-fencing of rental losses; to the Healthy Homes minimum standards, it has all made the business of being a landlord much harder.
The Proposed Reforms
One major proposal is that landlords wouldn’t be able to end a periodic tenancy without a reason. That means they wouldn’t have the ability to issue “no cause” 90-day notices. These reasons include the intention to sell within 90 days of the tenant leaving the property, major renovation or repair work which would leave the property uninhabitable, or plans to change the use of the premises.
Landlords could also end a periodic tenancy if they have issued three separate 14-day notices to a tenant within a 90-day period for antisocial acts, or if they have given notice a tenant has been at least five working days late with their rent within a 90-day period.
Another big change is that fixed-term tenancies would automatically become periodic tenancies at the end of the fixed term.
Under the proposed reforms, rent increases would be limited to once every 12 months and the practice of “rent bidding” would be banned. Requests from tenants to reassign a fixed-term tenancy to another tenant would have to be considered and landlords couldn’t unreasonably decline. Also, tenants would be allowed to make minor alterations to rental properties, like adding brackets to secure furniture against earthquake risk, installing visual fire alarms and doorbells, and hanging pictures.
Additionally, MBIE will be empowered to issue notices to landlords comply with RTA obligations without first having to obtain a Tenancy Tribunal Order, and the financial penalty levels which the Tribunal can award will be increased to a maximum of $100,000.
*The proposed reforms are not law yet. They’ll be drafted into a Bill to amend the RTA, which will be introduced to Parliament in the first part of next year. Landlord advocates are urging anyone who is concerned about the implications of the reforms to make their views known to MPs as the Bill goes through parliamentary process. Until the reforms become law, the existing RTA regulations still apply.