OPINION: The property question I've been asked the most over the past month is: what does alert level one mean for the rental sector? There’s considerable confusion around what landlords can and can’t now do, which is not surprising given the poor communication and mixed messaging on this topic.
Most of this stems from the draconian measures which were introduced back in March and, at the time, I was strongly critical of the way in which the Government was dealing with the rental sector during lockdown, introducing a raft of emergency measures to protect tenants without any matching support for landlords. Despite being in the middle of the biggest national crisis our country has faced in over half a century, ideology was still being favoured over common sense and public safety and landlords are understandably concerned to know if these rules have now been relaxed.
Indeed, while businesses within other sections of the economy were being supported through the wage subsidy and other initiatives, landlords, who collectively house around 40 percent of the country and who were already feeling pressure prior to Covid-19, were expected to carry the additional strain on the housing sector at their own cost.
The measures put in place meant that landlords have not been able to evict tenants except under "extreme circumstances", have not been able to press for the payment of unpaid rent unless there has been non-payment for more than 60 days, have not been able to replace tenants who choose to vacate a property and, in many cases, have not been eligible for deferral of mortgage payments if they have been suffering hardship.
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While most Kiwis accepted the degree of sacrifice implicit in the restrictions, I’m not sure that we believed that one sector should carry more of that burden than others, so it’s worth reviewing what’s happened to see what’s changed since the move to Level 1.
The Tenancy Services site isn’t particularly helpful in providing answers to these questions as it appears that whoever is keeping it updated simply adds information to old provisions rather than properly updating the new rules – but here are the key points:
1. Rents are still frozen
The original rent freeze provision was for the six months between March 26 and September 26 (one week after the election) and this is still in place. There is currently no information to indicate whether this freeze will be renewed or removed after September.
2. Tenancies can now be terminated
During lockdown (and even more recently) it has been impossible to terminate a tenancy except under extreme circumstances. From June 26, landlords can give notice to terminate a tenancy under the normal provisions of the Residential Tenancies Act.
3. Restrictions on freedom of movement are gone
There are now no restrictions on moving house, conducting open homes, carrying out maintenance or undertaking scheduled inspections (other than some lip-service provisions around physical distancing which appear to be more about butt covering than public health). For all intents and purposes we’re back to business as usual.
4. Tenants are still liable for unpaid rent
It’s worth noting that, although landlords couldn’t evict a tenant for unpaid rent during lockdown, rental arrears are still owed and not just "wiped" as appears to be the belief of some. Collecting unpaid rent still needs to be undertaken through agreement with the tenant, or through the tenancy tribunal if the former approach fails, but you’re legally entitled to do this and the rent hasn’t just been written off by decree (unless you choose to do this yourself).
5. Provisions around notice periods are still unclear
Some tenants were in the process of moving out when the lockdown restrictions were imposed and may have been part way through a notice period. It’s not clear whether the terms of that notice period simply pick up from the date that we went to level one, whether the notice period starts again, or whether there is some other provision to cover this scenario. My suggestion would be to try and resolve this amicably with your tenant, but if you’re unable to do this you’ll need to call Tenancy Services.
- Ashley Church is a property commentator for OneRoof.co.nz. Email him at [email protected]
