The Reform of the Residential Tenancies Act 1986 discussion document is presented as a “targeted reform” of the Act with the target being the rights of a rental property owner.
There are 1.7-million households in New Zealand. A total of 588,700 are rented, which includes 61,861 state houses. The sector comprises $6-billion of total GDP.
Clear heads are needed when pondering reforms to tenancy law.
Any imbalance between the rights and responsibilities of property owners and tenants will have a substantial financial consequence on both parties and have a direct effect on the supply of accommodation.
But there is currently an imbalance in favour of tenants.
This is over the required period of notice to terminate a tenancy, with the tenant required to give 21 days and the owner 90 days, with shorter 42-day periods if the property is sold or if the owner wishes to live there.
And the current “targeted reform” wishes to extend the imbalance by removing the owner’s ability to end a tenancy.
We think such an approach is discriminatory, would bring negative results for both tenants and property owners, and would ultimately lead to rental properties being converted to owner-occupied dwellings.
Housing and Urban Development Minister Phil Twyford has initiated the reform out of a misguided belief that making it more difficult to end tenancies would end what he claims is a “housing crisis”, although he does not specify the nature of the “crisis” in the foreword of the discussion document.
The document looks at termination provisions, tenancy agreements, owner and tenant responsibilities, modifications, pets, rent, boarding houses, and enforcement.
The issues, options, and questions from the discussion document are reproduced below, with a further option of no change from the status quo, and a line for comment.
We suggest that you print this out, answer the questions, add comments, and mail it to the address at the bottom of questions by 5pm on Sunday, October 21, 2018, with your name and contact details as well as a request to give an oral submission to the select committee if you wish.
The changes suggested are neither necessary nor helpful.
What is needed is a back-to-basics approach to tenancy law that balances the rights and responsibilities of both parties to a tenancy agreement instead of loading costs on one party and benefits on the other.
The Government wants to remove the ability for owners and managers to end periodic agreements for any reason and without needing to tell the tenant why, and generally extending the notice periods owners must give tenants under a periodic agreement from 42 to 90 days. Owners will still be able to end tenancies where tenants are not meeting their obligations and in other specific situations. This is a current practice by way of 14-day notices to remedy tenancy agreement breaches. This approach works with unpaid rent which is readily verifiable. This approach does not work with disruptive behaviour because witnesses can be bullied into silence, making evidence-gathering impossible.
Under what circumstances should tenants and owners be able to end a tenancy? ȓ
Should owners be required to provide tenants with evidence showing why they are ending a tenancy? Yes/No.
If so, what sort of evidence is appropriate?
How much notice should tenants be required to give an owner when they end a tenancy?
Should there be specific termination grounds available to public housing providers? Yes/No.
Do you think notice periods be balanced between both parties, that if one party is able to give 21 days’ notice of termination with no explanation, the other party should be able to do the same. Yes/No.
Do changes need to be made to the types of tenancy agreements on offer to ensure they remain fit for purpose in a modern renting environment? We have two types of residential tenancy agreement – a periodic tenancy and a fixed-term tenancy. A periodic tenancy may be terminated by the tenant by giving 21 days’ notice or by the owner giving 90 days. A fixed-term tenancy rolls into a periodic tenancy at the end of the fixed term unless the owner confirms that he or she wishes to fix a new term, or if he wishes to terminate it. The proposals seek to abolish fixed-term tenancies and remove the owner’s ability to end the tenancy by giving 90-days’ notice. That means tenants will remain until they wish to move.
Providing tenants with a right to extend their fixed-term tenancy agreement.
Specifying a minimum length for fixed-term agreements.
Making all tenancies open-ended and only able to be terminated by owners or managers when certain criteria apply.
Retain the current rules around fixed-term tenancies
Should tenants who are meeting their obligations have the right to renew or extend a fixed-term tenancy? Yes/No.
What do you think would happen if there was a minimum length for fixed-term agreements?
Should all tenancies be open-ended and only able to be terminated by owners when certain criteria apply? Yes/No.
Should both periodic and fixed-term tenancies be retained? Yes/No.
Should the notice period to terminate a periodic tenancy be the same length of time for both owner and tenant? Yes/No.
Owner and tenant responsibilities
Are there times you have disagreed with your tenant or owner about whether or not they are meeting their obligations? Yes/No.
Do you think a tenant’s responsibilities to keep a property “reasonably clean and tidy” make it clear what sort of behaviour an owner can expect? Yes/No.
What changes, if any, might be needed to tenant and owner responsibilities to modernise rental laws?
Are there sufficient repercussions for tenants and owners who don’t meet their obligations? Yes/No.
How can the law better help owners and tenants agree to tenants making reasonable modifications or minor changes to their rental home? The discussion document gives as examples hanging pictures, putting up shelving, affixing furniture or appliances to a wall, or planting a vegetable garden. Property owners have no indication of the level of handyman skills a tenant may have and are likely to be concerned at possible damage resulting from an unskilled person attempting such tasks. Some owners have horror stories of interiors being painted red and black, walls removed, and gang fences constructed.
Owners have 21 days to consider a request, after which they are deemed to have agreed to minor modifications. Tenants have the right to make specified modifications.
Are the existing rights tenants have to make reasonable modifications to their rental property working? Yes/No.
If you are an owner, in what instances have you withheld or granted permission for tenants to modify a property? Yes/No.
What types of modifications, if any, do you think are reasonable for a tenant to make?
How can we make it easier for tenants and owners to agree to minor modifications being made?
Should allowable and non-allowable modifications be defined? Yes/No.
Should tenancy agreements have a modifications clause like the existing sublet clause, which can specify that “The tenant shall not modify the tenancy without the owner’s written consent”, with “without the owner’s written consent” in bold?
Is the law fair when it comes to tenants and landlords agreeing whether pets can be kept? The Minister, who may not own a pet may have in mind a pussy cat or cute wee dog. He may not be aware that some owners have had to replace carpets urinated and defecated upon by cats and dogs. Some owners have been kept off their properties by savage guard dogs. Others have had to repair doors chewed through by a dog that has been locked inside.
Specifying the circumstances when an owner could decline a request to keep a pet. Granting power to the Tenancy Tribunal to consider the circumstances when an owner could reasonably refuse a pet request.
Introducing pet bonds or carpet cleaning requirements.
Clarifying the obligation on tenants to remove any doubt that their pets must not cause nuisance to others.
What might be reasonable grounds, if any, for an owner to object to a tenant’s request to keep a pet?
What types of changes, if any, could be made to the law to reduce the risk owners face from allowing tenants to keep pets?
Should tenancy agreements have a pets clause like the existing sublet clause, which can specify that “The tenant shall not keep a pet without the owner’s written consent”, with “without the owner’s written consent” in bold?
Should tenants know how rents are set and how often should rents be increased? Currently, rent may not be increased more frequently than once every six months. The discussion document proceeds on the assumption that rent only ever goes up. Owners who have been in business through a couple of property cycles would have experienced rents declining.
Introducing controls on the practice of “rental bidding”.
Clarifying when tenants can challenge rent increases that are above market rent.
Limiting rent increase to once every 12 months.
Keeping rent increase period at six months.
Should the practice of “rental bidding” be controlled? Yes/No.
What should the process be to determine whether the rent a tenant is paying is fair?
What would happen if the law is changed to only allow rent to be increased once per year?
Should owners be required to provide information to prospective tenants about how rent is calculated? Yes/No.
Should the rent-increase period be retained at six months? Yes/No.
We want to know how boarding house tenancies should be treated and how the quality of boarding houses and accountability of boarding house owners can be improved. A boarding house is where a tenant rents a room, rather than the whole house. They share facilities such as the kitchen and bathroom with the other tenants. A boarding house is occupied, or intended to be occupied, by at least six tenants at any time. Boarding houses have been included in the Residential Tenancies Act since 2010. The law already spells out the rights and responsibilities of both the owner and the tenant, and those rights are already skewed in favour of the tenant. For instance, the owner may end the tenancy by giving 28 days’ notice while the tenant has only to give two days’ notice.
Requiring boarding houses or their operators to be registered. Only allowing boarding house operators who show they are a fit-and-proper person and that their property meets minimum standards to run a boarding house.
Are the responsibilities on boarding house tenants and owners fit-for-purpose? Yes/No.
Are stronger controls needed to improve the quality of boarding houses? Yes/No.
What standards, if any, should boarding house owners be required to meet to operate a boarding house?
Is the definition of boarding house fit-for-purpose? Yes/No.
Should the notice period for termination by tenant be the same as that for the owner? Yes/No.
Can the enforcement of tenancy laws be made more effective and efficient? The reform targets owners while the actual problem of enforcement is getting tenants to comply with Tenancy Tribunal orders, especially to do with unpaid rent, which is mostly what the tribunal deals with. Access as of right by government officials to boarding house interiors looks like a breach of the Privacy Act, being a breach of tenants’ rights to privacy.
Providing those in charge of enforcing the law with the ability to:
enter into enforceable undertakings with an owner.
issue improvement notices
issue infringement notices
audit an owner or property manager
take a single case in respect of multiple breaches of the Act
access to the common spaces and offices of boarding houses.
Should those enforcing the law have greater powers, such as to make people give them information? Yes/No.
Should instant fines apply in situations where there is no doubt that a party, the owner or the tenant, has broken the law? Yes/No.
Should instant fines apply in situations where there is no doubt that a party has broken the law, for both parties? Yes/No.
Are existing penalties sufficient? Yes/No.
Should the Tenancy Tribunal require immediate payment of rent arrears or end of tenancy at time of order? Yes/No.
How to have your say
The Reform of the Residential Tenancies Act 1986 discussion document may be downloaded from here
You may email your submission to RTAreform@mbie.govt.nz.
You may post your submission to:
Residential Tenancies Act Reform, Housing and Urban Branch, Building Resources Markets, Ministry of Business, Innovation and Employment, P.O. Box 1473, Wellington 6140.
Please also include your name, or the name of your organisation, and contact details.
Please say that you wish to give an oral submission to the select committee.