Big changes coming for residential landlords

Tuesday 8 September, 2020

Upcoming amendments to the Residential Tenancies Act mean big changes for residential landlords.

The changes are intended to provide more security and stability for tenants and help them to feel more secure in their rental property.

Ending tenancies

Landlords will no longer be able to end periodic tenancies without a reason, and fixed tenancies will automatically convert to periodic tenancies at the end of the term unless the landlord and tenant agree otherwise, or the tenant gives notice. Otherwise the landlord will only be able to end the tenancy for one of the reasons set out in the Act, as with a periodic tenancy.

In addition, the notice periods for landlords ending tenancies have also increased to between 63 and 90 days, with few exceptions. Tenants can end tenancies with 28 days’ notice and do not have to give a reason.

Several of the reasons for ending a tenancy comes with stringent time limits: for example, if the landlord ends a tenancy because they or their family require the property to live in, they must move in within 90 days after the property becomes vacant,, and live in the property for at least 90 days.

Minor fittings

Landlords will no longer to be able to withhold their consent if a tenant wants to make minor changes to a property, such as baby proofing, putting up shelves or pictures, or installing a garden, provided that the changes present a low risk of damage to the property, do not require a building consent, and can readily be undone at the end of the tenancy. If a tenant wants to make changes that are more than minor, the landlord can only withhold their consent if it is reasonable to do so. The tenant bears the cost of making the changes and is responsible for reinstating the property back to its prior condition at the end of the tenancy. Landlords and tenants should discuss how the tenant will remediate the changes at the time that the tenant asks for permission.

Rental bids and rent increases

Landlords can no longer solicit rental bids, for example, by advertising a property without a rental price or asking a potential tenant for a higher rent in order to secure a property and could face fines if they do. Tenants can still offer more money if they want to. Rent increases must be at least 12 months apart, rather than the current 6 months. These changes came into effect the day on 12 August 2020; however, this is also impacted by the current COVID-19 rental freeze.

Fibre broadband

If a tenant requests the installation of fibre broadband, the landlord must facilitate the installation, provided that it can be done at no cost to the landlord. Landlords can only decline a request for fibre installation where:

• It will materially compromise the building’s weathertightness or character
• It will compromise the building’s structural integrity
• It will breach an obligation relevant to the premises
• The landlord is going to carry out extensive renovations.

Assignment and subletting

Landlords can no longer ban assignment of the lease for fixed term tenancies and must consider all assignment requests. They can’t unreasonably decline requests. When they agree to an assignment, sublease or early end of a tenancy, they have to provide tenants with a breakdown of the fees that they’re charging, so that the tenants can determine whether the fees are reasonable.

Increase in penalties

These are significant changes to the law on residential tenancies, and they are backed up both by new offences and increased penalties for breaching obligations, particularly for landlords with 6 or more tenancies. The majority of these changes will come into force in February 2021.

If you have any questions or concerns on how you will be affected by these changes, our Property Team can help.