It would honestly seem that a week doesn’t go by without a new headline in the media about something that has been changed with the rental market in New Zealand. Either prices are at an all time high, the shortage of stock is coming, tenants can’t find a property, or there is yet another new legislation for landlords to deal with. It was recently announced by the Associate Minister of Housing, Kris Faafoi, that yet more changes are afoot. With the landscape of the marketplace ever changing, it can seem an impossible task to keep abreast of everything that you need to know – especially as you start preparing your property for the busy summer period which inevitably will yield yet more headlines. Luckily, we’ve done the reading for you and are happy to be able to provide you with a copy of everything that you need to know about the new legislations and how they will impact your property portfolio moving forward!
The Government has announced that the threshold for damages claims at the Tenancy Tribunal will be doubled, renters will be able to make more changes to property and they have introduced anonymised tribunal rulings these are just three of the changes from the long awaited overhaul of tenancy laws. These laws, which are expected to be passed by Parliament in the new year, will essentially change the landscape of renting in New Zealand. Tenants will have more rights to claim against landlords who are not fulfilling their obligations, putting more pressure on landlords to make sure that the ‘boxes are ticked’ and they are meeting the correct standard of rentals. While most landlords are already aware of ensuring that their properties are up to scratch, this proposed increase in the ability for a tenant to claim damages will elevate the number of claims against those landlords who have let the standard of their property fall. Across the board, there should
The introduction of anonymised tribunal rulings, however, may have more of an impact. Essentially, with names withheld from tribunal rulings, there will be no way for a landlord to know whether or not a prospective tenant has had a history of appearing in the tribunal. While the intention of the law is not entirely clear, if a landlord cannot complete the correct due diligence required on prospective tenants, then the risk to landlords increases greatly. Property investors are entitled to do reference checks of course, yet these checks alone may not be enough to satisfy the landlord that the person they are putting into their property, arguably one of their most important assets, will not damage the property and cost the landlord money, time and effort. As a result, it would not be unreasonable to see landlords increase the rents to adjust for the extra risk that they will be accommodating.
Yet more changes announced suggest that there will also be a change to the way that rental increases are permitted. Currently, under Section 24 of the Residential Tenancies Act, landlords can increase the rent by providing 60 days’ notice in writing providing that the tenant has not received a rental increase within the last 180 days and the tenancy has been in place for at least 180 days. The proposed change, if passed, would allow landlords to increase the rent only once a year, as opposed to every six months. While this might not seem like a major concern for landlords, it is not uncommon for a landlord who has a property become available in the quieter winter months to advertise the property at a slightly reduced rent that usually would be expected in the busy summer period (by $10 or $20 per week say) in order to find a tenant quickly and limit the amount of vacancy time, with a mind to then increase the rent in six months’ time to fall back in line with the market during Summer. If landlords are unable to do this, we may then see shorter tenancies, to realign the property with the market prices and an increase in periodic tenancies where the landlord can give the tenants notice to leave the property just in time for the busy Summer rush and capitalise on the true market value of their investment.
It is obvious then, that there are plenty of changes afoot for the rental market across New Zealand. Of course, until the laws are passed it can be difficult to predict entirely the reaction of both investors and tenants, and both landlords and tenants alike will have to adapt to the new regulations as the market continues to develop. If you would like some obligation free advice on how any of these proposed changes might affect you, or if you would like to know how you can best prepare your portfolio, then feel free to give us an obligation free call anytime on 04 381 8604.