Key Takeaways:
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The Residential Tenancies Act 1986 (the Act) governs residential tenancies in New Zealand as a code. From 2018 to 2020 the previous Labour-led government made a number of changes to the Act to tilt the balance in favour of tenants. With the change of government to the National Party-led coalition, many of these changes are now being reversed. The stated aim of these changes is to “remove barriers to rental supply and incentivise property owners to rent their properties via the private rental market.” Key changes included in the Residential Tenancies Amendment Bill 2024 (the Bill) which is currently before Parliament are:
- Reintroduction of “no cause” terminations by landlords;
- changes to rules around notice periods for terminations and fixed term tenancies;
- introduction of a ‘pet bond’ and pet consent rules; and
- minor and technical amendments to improve the clarity and effectiveness of the law.
The Bill passed its first reading in May 2024 and public submissions closed on 3 July 2024. We now await the Select Committee’s report due on 21 November 2024. The Government expects most of the changes to come into effect in early 2025.
Notice Periods, Periodic Tenancies and Tenancy Terminations
The major change effected under the previous Government was to remove “no cause” terminations by instead introducing various lawful reasons upon which a tenancy may be terminated. These lawful reasons are the following:
- the landlord or member of their family requires the premises to live in; or
- the property is needed for occupation of the landlord’s employees/contractors (and this customary use of the premises is recorded in the tenancy agreement);
- The landlord wishes to put the property on the market for sale or has contracted to sell the property with vacant possession;
- The landlord wishes to carry out extensive alterations, refurbishment, repairs, or redevelopment to the property and it is not practicable for the tenant to remain in occupation while the work is undertaken or the property is to be demolished.
Depending on the reason for terminating, between 63 and 90 days’ notice must be given to the tenant.
Additionally, the landlord cannot prevent a fixed-term tenancy from automatically rolling over into a periodic tenancy unless the landlord has good cause to terminate.
Under the Bill, “no cause” terminations will be reinstated provided 90 days’ prior notice is given. Fixed term tenancies will also automatically terminate at the expiry of the fixed term, unless a party gives prior notice for the tenancy to continue.
On the tenant side, coinciding with the increased restrictions on a landlord’s ability to terminate under previous legislation, the notice period for termination by a tenant had been increased from 21 days to 28 days. As the Bill has broadened a landlord’s right to termination, the Bill also reverses this change with tenants only being required to give 21 days’ prior notice of termination.
Pet bond and pet consent rules
The Bill introduces significant changes regarding tenants keeping pets in rental properties. Currently, the Act is silent as to a tenant’s right to have a pet or pets and this has led to uncertainty around the enforceability of pet prohibition clauses in tenancy agreements.
To regularise the parties’ respective rights and obligations with regard to the keeping of pets, the Bill would have the effect of:
- Allowing the landlord to require an additional rental bond equal to two weeks’ rent in consideration for allowing a tenant to keep a pet. This is in addition to the maximum bond of four weeks’ rent as otherwise permissible.
- Clarifying that the keeping of a pet is only by agreement with the landlord, but prohibiting a landlord from unreasonably refusing consent to the keeping of a pet. The Bill provides some examples of grounds which would be considered reasonable for consent to be refused. These include:
- The premises not being suitable for the pet or vice versa due to the size, type or breed of the pet or its propensity for causing damage or disruption to neighbours; or
- A relevant bylaw or body corporate rule preventing the pet from being kept on premises.
- Confirming tenants’ liability for all pet-related damage beyond normal wear and tear.
Minor and technical amendments to improve clarity
The Bill also proposes a range of changes to clarify certain issues which have been the subject of some doubt. These include:
- Clarifying that clauses in tenancy agreements prohibiting smoking inside a rental property are enforceable;
- Removing barriers to a tenant leaving an unsafe situation by confirming that the tenant can leave a tenancy at short notice if their child or dependent is subject to family violence; and
- Clarifying that parties to a tenancy can give documents and notices by way of text or instant messaging.
Controversy
The Bill is not without its critics, with the reintroduction of “no cause” terminations and “pet bonds” being particularly controversial. Age Concern New Zealand is strongly opposed to “no cause” terminations citing that these will “cause significant health and social risk to tenants”.1 Similarly, the Salvation Army (Te Ope Whakaora) believes “no cause” terminations will “increase rental housing insecurity for low-income renters and contribute to increasing homelessness”.2
The new provisions regarding pets are contentious with the Salvation Army believing that the approach taken “will disadvantage renters especially those on low incomes who will face higher bond payments and unlimited liability for pet damage”.3
It remains to be seen what changes – if any – the Government will be prepared to make to the Bill in response to these criticisms or whether the coalition partners will prefer to push it through in its current form.
2https://www.salvationarmy.org.nz/article/submission-residential-tenancies-amendment-bill-2024
3https://www.salvationarmy.org.nz/article/submission-residential-tenancies-amendment-bill-2024
