In case you missed the news last week, there’s another round of changes coming to the Residential Tenancies Act. But are they really necessary?
The Act has been around since 1986 but has been substantially tinkered with, amended and changed in the years since, with the last round of tinkering taking place in 2016, by the then National Government.
So why the changes? Are there major issues in the rental sector which need to be fixed?
If the headlines are to be believed, every landlord is a heartless fat cat who doesn’t care about his or her tenant, and every tenant is a party animal who trashes property and terrorise neighbours.
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In reality, these stereotypes are very much the exception and the vast majority of tenants and landlords are just decent people getting on with their lives. Most landlords do their best to provide a safe, warm and healthy home in which the tenant enjoys a high degree of privacy and is able to treat the home, as much as is possible, as if it were their own – and most tenants pay their rent, on time, and treat the property with care and respect.
Despite this, Associate Housing Minister Kris Faafoi is determined to "bring change" to the sector – a determination which has more to do with the undue influence of extremist tenant advocacy groups than any real issues faced by tenants. As a result, some of the proposed changes are a continuation of the same virtue-signalling nastiness that wins votes by demonising landlords and portraying tenants as victims who are incapable of defending themselves.
But the proposals also contain some worthy ideas.
Proposals to allow tenants to install minor fittings are all reasonable and could probably have gone even further.
Likewise, a proposal to limit rent increases to one per year, and a proposal to enable tenants to apply to have their identifying details removed from Tenancy Tribunal decisions where they have been successful in enforcing their rights or defending a claim against them – are reasonable and in line with natural justice.
There are also proposals to streamline management of breaches of the Act by bringing in a new infringement offence regime which will enable MBIE to issue improvement notices to correct a breach of the RTA and issue penalties if these are not complied with. These shouldn’t concern the vast majority of landlords and will enable breaches to be dealt with quickly and effectively.
But now, the bad.
Fixed Term tenancies, which have traditionally been a way of providing certainty to both tenants and landlords and are popular in rental markets where there is high demand, will effectively be gone under the new proposals. They will still exist in name, but for all practical purposes the rights which they extended to landlords have been abolished because under the new proposals, they will convert to periodic tenancies at the end of the fixed term unless the landlord can provide a reason under the new notice provisions of the amended Act.
And make no mistake, those new notice provisions are draconian. Under the existing Act the landlord is required to give 42 days notice to a tenant and is not required to explain why they wish to have their property back. Under the new proposals, a landlord must give 90 days notice – and can only do so for reasons which are specified in the Act, ending the provision for no-reason notice. While an argument could be mounted to support extending the period of notice a landlord is required to give, there is no equitable basis for removing the right of the landlord to end a tenancy for his or her own reasons and this provision of the Act should be seen for what it is – a form of "soft" nationalisation of a private asset.
In the past I’ve referred to the Coalition as the most aggressively anti-landlord Government in our history, a view which is reinforced by these actions. In just the past few months they’ve introduced significant new compliance requirements, they’ve "ring fenced" tax losses made on rental investments and there are continuing suggestions that they may seek to regulate other aspects of the property market.
It’s easy to see why some landlords are considering selling up their property investments and getting out of the market.
- Ashley Church is the former CEO of the Property Institute of New Zealand and is now a property commentator for OneRoof.co.nz. Email him at [email protected]
