Diana Clement looks in detail at the implications of the new Residential Tenancies Act changes, that come with hardened opinions by landlords, and welcomed by tenant advocates

This article originally appeared in LawNews (ADLS) and is here with permission.

New Zealand is becoming a nation of renters and the latest iteration of residential tenancy law is helping the legislation catch up with social reality.

But not everyone is happy. The new Residential Tenancies Amendment Act 2020 (RTA) Act has been dubbed the “I hate landlords bill” by National MP Alfred Ngaro, whose party voted against it – a suggestion described as “Neanderthal” by barrister and property law specialist Des Wood, who says Ngaro’s approach fails to recognise that the new Act is part of a continuum, designed to keep pace with the changing nature of tenancy in New Zealand.

One of the most controversial changes to the law is the removal of no-fault 90-day eviction notices, which in the past could be issued to tenants without reason. Now landlords need to prove three instances of anti-social behaviour within a 90-day period (s 55A) before they can evict.

Tenants groups such as Renters United and the Tenants’ Protection Association (Auckland) have hailed the new Act and its increased security of tenure as a move in the right direction. Landlords, however, if those on social media are representative, are crying into their lattes.

Carolyn Ranson, a partner at Smith and Partners Lawyers, says the new laws will give landlords pause for thought. But she doesn’t think they have cause for the sort of concern some are voicing. “They are just going to need to plan better,” she says. There are other provisions in the new law for notice to be given.

In the first 24 years of the RTA’s existence there was only one minor amendment. That changed in 2010, followed by more amendments in 2016 and 2018. Since 2010, Wood says, the RTA has become “a not infrequent attendee” in both the High Court and the Court of Appeal.

“In the past 10 years it is quite likely that no other New Zealand statute has been subject to the scrutiny that has fallen on the Residential Tenancies Act 1986,” he says. “The legislature has become very active in turning to legislation to tidy up perceived defects.”

Changing society

Wood says the latest round of amendments was designed to be “highly aspirational” and to align with present-day realities.

In the 27 years from 31 December 1991 to 31 December 2018, occupation of rental homes increased by 108.34%. During that time, the number of owner-occupied dwellings increased by only 21.9%. Another way to view the change, Wood says, is the number of children living in rental accommodation in the same period. This has increased from 26% to 43% of the population.

The law is catching up with these changes in demographics but also moving to reflect the views of those who occupy the property, says Wood. He cites a judgment of the High Court from 1989 where Justice Sir Alan Holland stated: “There cannot be the slightest doubt that the Residential Tenancies Act was designed substantially to protect tenants and any cases of ambiguity should be interpreted in that light.”

Wide-ranging changes

• As well as removing no-cause evictions and the new rules around anti-social acts, some of the other key changes include:
• Rent rises are limited to once a year, instead of 180 days
• Tenants now need to give 28 days’ notice to vacate, up from 21
• Eviction is permitted if rent is late by five working days three times within 90 days or is 21 days behind on one occasion. Previously only the 21-day rule applied
• Tenants are now allowed to assign tenancies unless the landlord has a “reasonable” reason to decline
• Parties can request anonymity after a Tenancy Tribunal hearing
• Rental bidding is banned
• Landlords must give 63 days’ notice instead of 42 to move themselves, family, or employees into the property and prove “genuine need”
• When tenants are removed for renovation or demolition of the property, the work must begin within 90 days
• Tenants can make minor changes to the property such as hanging pictures and installing fibre connection in most instances
• Fixed-term tenancies revert to periodic at their end unless both landlord and tenant agree otherwise
• The tribunal can now handle claims of up to $100,000 – double the previous figure
• Penalties are increasing and landlords with six or more tenancies face greater fines than those with fewer properties
• Victims of family violence can end their tenancies with two days’ notice
• Landlords can terminate tenancies if a tenant is charged by the police for assaulting them

Anti-social behaviour

One of the provisions most likely to be disputed is the lack of clarity around what constitutes antisocial activity.

The new Act defines anti-social behaviour as:

(a) harassment; or

(b) any other act or omission (whether intentional or not), if the act or omission reasonably causes alarm, distress, or nuisance that is more than minor.

Wood questions the inclusion of “any other act or omission”. Admirable as the changes appear to be, he says, this aspect seems designed to invite litigation. “How do you define anti-social behaviour? It’s pretty difficult. Anti-social behaviour is in the eye of the beholder. Is it inviting your mates around every night for a party and boozing up? Excessive use of cannabis? That sort of stuff?”

The issue for the tribunal and the courts, says Ranson, will be defining the threshold for antisocial behaviour. “What falls above and what falls below the threshold?”

Barrister and solicitor Nick Kearney of Schnauer & Co also has questions about the anti-social behaviour provisions and believes the new law might prove especially difficult for landlords of tenants in multi-unit dwellings governed by bodies corporate.

“If you have landlords who have got tenants in these complexes who are rowdy, making a noise, difficult, problematic and you haven’t got a 90-day provision to get rid of them, conceivably you are going to have body corporates, neighbours who are getting very annoyed” he says.

“[The landlords] will be in breach of body corporate rules. They will be saying ‘I can’t get rid of them because they have to commit three [anti-social] acts’. That will be interesting.”

Despite his predictions of more work for lawyers, Wood describes as “nonsense” comments from the New Zealand Property Investors’ Federation that “neighbourhoods around the country will have to put up with anti-social, loud and offensive behaviour from difficult tenants if the government removes the 90-day notice period for evictions”.

He says anti-social behaviour “is actually referred to as an area where landlords can [evict]. It’s hyperbole and nothing else, frankly.”

Ranson says existing reasons for eviction such as threat or damage to property remain. The new antisocial behaviour provisions add a new, lower tier now that landlords need a reason to evict.

More litigation

The tribunal and courts will inevitably see more cases, Ranson says. “But I think we will pretty quickly get some indication from the tribunal of what that threshold [for anti-social behaviour] is and what can be expected.”

Kearney agrees that the new law will lead to more cases in the tribunal. “Landlords trying to get rid of tenants. Tenants complaining that landlords haven’t complied with [orders]. If you introduce more regulation, you get more litigation. I just hope the government increases the man-hours, the numbers, more money and resources to the tenancy tribunal.”

Ranson points out that provisions in the Residential Tenancies Amendment Act 2019 around methamphetamine and intentional damage, for example, increased the tribunal’s workload a year ago.

Insipid assault

New rules about tenants assaulting landlords, their families or their property managers could also prove problematic, says Wood, who used the word “insipid” multiple times.

Section 55AA states that a landlord may terminate a fixed-term or periodic tenancy by giving at least 14 days’ notice to the tenant if the landlord or owner or a member of their family, agent or neighbour is assaulted by the tenant.

The big ‘but’ is that s 55AA kicks in only if police charge the tenant. All too often, police take alternative interventions such as diversion, Wood says. “It needs a little more teeth. It’s like any relationship, be it a tenant-landlord relationship or a commercial relationship. Where there is an assault, the whole commercial relationship is dead in the water.”

Ranson says, however, that s 55AA is in addition to existing provisions that allow landlords to seek a tribunal order should assaults occur. Those provisions don’t require the laying of a charge. “[The new provision] is an extra provision. There are two ways if an assault occurs that the landlord could terminate the tenancy.”

Family violence

Ranson wonders if the new provision allowing victims of family violence to end a tenancy with two days’ notice will lead to work for the tribunal.

Victims will need to provide qualifying evidence, the details of which is yet to be spelled out. Whether landlords will want to challenge their tenants on their evidence is another question. When similar provisions were added to employment law, they didn’t result in the rush of work for lawyers that some anticipated, Ranson says.

Ramifications

Landlords have been vocal in complaining that the new law was rushed through under urgency, claiming the reason was to avoid scrutiny.

Both Kearney and Wood point out that the law was several years in the making. Says Kearney: “All they have done in terms of rushing it through was implementing it in the last week of parliament. In terms of the substance of it, it has been ongoing for quite a while.”

Landlord groups have also been full of dire predictions of mass exists from the business. Many claim the law will backfire and make it harder for less-than-desirable tenants to find a home.

“I think there is going to be a lot more vetting of tenants,” says Kearney. “Landlords are going to have to be a lot more careful about who they choose, which invariably is going to lead to [potential tenants] missing out. People need somewhere to live. If you make it harder, it will affect people and tenancies will be harder to come by.”

There is no doubt it will become more onerous to be a landlord, especially if you have more than six properties, Ranson says. “You are going to be exposed to extra penalties.”

For this and other reasons, Kearney is sure some landlords will hand their properties over to professional property managers who are more experienced and can deal with these sorts of issues. The flip side of that is property managers are not regulated, he says.

The final word goes to Wood: “It is what I would call a maturing piece of legislation, heading towards matured. Like anything else, you won’t know the effects of everything until it has been in place for a year or two or three.”

Recent changes to the Residential Tenancies Act

2010

• Tenancy agreements in unit title properties became subject to body corporate rules and boarding house tenancies were brought under the law
• Ten-working-day notices to remedy became 14-consecutive-day notices
• Landlords absent from New Zealand for more than 21 consecutive days were required to appoint a New Zealand-based agent
• New procedures added for disposal of tenants’ abandoned goods Several unlawful acts were added, such as exceeding the maximum number of people who could reside at a property and interference with the supply of services, such as electricity

2016

• Minimum standards set for installing and maintaining smoke alarms
• Requirements set for insulation
• New rules about abandonment, allowing landlords to enter a property 24 hours after giving notice of their suspicions that the property was empty

2019

• Tenants’ liability limited for careless damage in rental properties
• Protections given to tenants living in premises that fail to meet minimum requirements for renting such as garages and sleep-outs
• New rules about how methamphetamine contamination of rental properties is tested and managed

Diana Clement is a freelance journalist. This article originally appeared in LawNews (ADLS) and is here with permission.