Sep 09 2019
A landlord’s guide to recent legislation changes
Rental property owners continue to be affected by ongoing legislation amendments– including to the Residential Tenancies Act (RTA) and the 2018 Privacy Bill. Here’s a quick overview of where everything is currently at and how they affect landlords.
Insulation Requirements – Residential Tenancies Act
Ceiling and underfloor insulation became compulsory in all rental homes on 1 July 2019. Since that deadline there have been over one hundred cases presented to the Tenancy Tribunal, where landlords could be liable for up to $4,000 in damages for non-compliance. The Tribunal has stated there will be little tolerance for landlords on this issue – exemplified through the fines that are being issued.
All properties managed by Point have met these new standards, and we were pleased to be able to facilitate this process. We would like to thank Landlord Solutions in particular, for helping us secure a fantastic price and priority installation offer for Point clients.
The Healthy Homes Guarantee Act
The Healthy Homes Guarantee Act passed in 2017 allowed for the development of standards to improve the quality of rental housing in New Zealand. There are five healthy homes standards under the Act with the final four standards due for completion in all private rental housing by 1 July 2021. We are in the process of speaking with experienced contractors regarding pricing and certification for all standards, as we did with insulation. Once we have finalised the best contract for you our Owners, we will be in touch regarding your individual requirements.
- Insulation standards – completed
- Heating standards – Landlords must provide one or more fixed heaters that can directly heat the main living room to a maintained temperature of at least 18 degrees Celsius.
- Ventilation standard – Rental homes must have openable windows in the living room, dining room, kitchen and bedrooms. Kitchens and bathrooms must have extractor fans.
- Moisture ingress and drainage standard -Rental properties must have efficient drainage for the removal of storm water, surface water and ground water. Rental properties with an enclosed sub-floor space must have a ground moisture barrier.
- Draught stopping standard – Landlords must make sure the property doesn’t have unreasonable gaps or holes in walls, ceilings, windows, skylights, floors and doors which cause noticeable draughts. All unused open fireplaces closed off or their chimneys must be blocked to prevent draughts.
Capped Liability for Careless Damages by Tenants – Residential Tenancies Act Amendment
This new amendment to the RTA gives landlords some respite from having to bear the complete cost of careless damages to their property by tenants. It goes some way to mitigate the previous Court of Appeal decision (Holler v Osaki 2016), which put total responsibility on the owner and their insurance company.
The new RTA amendment, which came into effect on 27 August 2019, means that tenants are now liable for careless damages to their rental property – albeit capped to their bond or the property owner’s insurance excess (whichever is the lesser amount).
While this may not be a complete win for owners, it is a positive move. However, it does have implications for owners regarding the insurance on their rental properties and information regarding this which now needs to be disclosed to their tenants. Point Property Management is in consultation with insurance companies to ensure their clients have the best cover possible considering this new law.
New Privacy Guidelines for Landlords – 2018 Privacy Bill
The Privacy Commissioner, John Edwards, issued new guidelines in May 2019 for landlords on what questions they are legally allowed to ask prospective tenants. This has provided the industry with much-needed clarification on some issues – including the landlord’s right to clarify whether the tenant is over 18, and at what point in the process it is reasonable to ask for credit reports and criminal record checks.
Finding the right tenant is obviously one of the most important parts of making a rental investment work for you. It requires judgement based on expert knowledge and experience to fit the right for both the property owner and the tenant – especially in light of further changes that yet may come to the Residential Tenancies Act regarding the possible removal of no-cause 90 day tenancy terminations (see below).
Still to come…the removal of 90 day no cause tenancy termination?
The changes to the RTA keep coming! The Government is still to decide on whether or not to remove the 90 day ‘no cause termination’ of tenancies. It is part of the ‘sustainable tenancies’ policy which has already been introduced for Housing New Zealand properties – which aims to provide more stable housing for tenants.
The potential consequence of this is added bureaucracy and difficulty in removing tenants due to disruptive behaviour. Advocates for landlords – including the New Zealand Property Investors’ Federation are calling for the Government to take a more considered and practical approach.
Regardless of the outcome of this decision, this further highlights the importance of careful tenant selection and the management of that relationship. Putting the right time and commitment into this at the start of your tenancy is the best insurance you can make for your rental investment.