Residential Tenancies Amendment Bill – summary of key changes

Thursday, August 6, 2020

The Residential Tenancies Amendment Bill passed under urgency on 5 August 2020. It will now be sent for Royal Assent to become law.

The Bill makes significant changes which landlords of residential properties will need to be aware of. These changes are due to come into force six months after the date the Bill receives Royal Assent (February 2021).

The key changes are summarised below:

Terminating a periodic tenancy

The biggest change relates to a landlord’s ability to terminate a periodic tenancy.

Termination of periodic tenancy by notice

The new law removes “no cause” terminations. Landlords will no longer be able to terminate a periodic tenancy for no reason. Instead, the Bill sets out a range of “justifications” for ending a periodic tenancy by notice. Tenancies can also be terminated by Tenancy Tribunal order in certain circumstances.

The table below compares the changes to the position under the current Residential Tenancies Act 1986.

Current

New/Amended

(s51) Periodic tenancies can be ended by a landlord at any time by giving 90 days’ written notice without having to give a reason.

(s51 amended) A landlord will only be able to terminate a periodic tenancy on giving 90 days’ written notice if:

  • The property is to be put on the market for sale within 90 days of the termination date;
  • The property has been sold (unconditionally) with vacant possession;
  • Extensive alterations, refurbishment, repairs, or redevelopment of the premises are to be carried out within 90 days of the termination date and it would be impractical for the tenant to remain in occupation while the work is undertaken;
  • The property use is to be converted from residential to commercial for at least 90 days;
  • The tenancy agreement clearly states that the landlord acquired the premises to facilitate the use of nearby land for a business activity, and the premises are required to be vacant to facilitate that use;
  • The landlord is not the owner of the property and the landlord’s interest ends;
  • The premises are to be demolished within 90 days after the termination date;
  • There are grounds specific to service tenancies or social housing.

A shorter notice period (42 days) can be provided in the following circumstances:

  • The landlord requires the premises as a residence for themselves or a family member.
  • The landlord has entered into an unconditional agreement for sale and purchase to sell the property with vacant possession.
  • The premises are customarily used for occupation by employees of the landlord and the landlord requires the premises for that use (provided that the tenancy agreement clearly states this).

Shorter notice period is increased to 63 days.

Shorter notice can be given where:

  • The landlord requires the premises, within 90 days after the termination date, as the principal place of residence for themselves or a family member. The owner or family member must require the property to live in for at least 90 days.
  • Where premises are customarily used for occupation by employees or contractors of the landlord and the landlord requires the premises for that use (provided that the tenancy agreement clearly states this)

NOTE: The shorter notice period no longer applies where the property has been unconditionally sold with vacant possession –90 days’ written notice to terminate will need to be given in those circumstances.

Tenant can terminate at any time by giving at least 21 days’ notice in writing.

Tenant can terminate at any time by giving at least 28 days’ notice in writing.

Fixed term tenancies (s60A)

Fixed term tenancies convert to periodic tenancies unless:

  • Either party gives written notice of their intention not to continue with the tenancy 21-90 days before the term ends; or
  • The parties agree to extend or renew the tenancy.

Fixed term tenancies (s60A amended)

Fixed term tenancies convert to periodic tenancies unless:

  • The tenant gives notice for any reason at least 28 days before the end of the tenancy;
  • The landlord gives notice using one of the justified reasons for ending a periodic tenancy;
  • Both parties agree to extend, renew or end the fixed-term tenancy.

Termination of periodic tenancy by Tenancy Tribunal Order

A landlord can apply to the Tenancy Tribunal for an order terminating a periodic tenancy if the tenant repeatedly:

  • fails to pay the rent on time (at least 5 working days late); or
  • engages in “anti-social behaviour”.

Landlords must:

  • show three separate incidents within a 90-day period;
  • have provided written notice of each such incident to the tenant within required timeframes; and
  • must make application to the Tenancy Tribunal within 28 days of giving the third notice.

A landlord can also apply to the Tenancy Tribunal for an order to terminate a periodic tenancy on the grounds of hardship.

Other changes

The Bill makes other changes, including:

  • Prohibiting the solicitation of rental bids by landlords. Any advertisement or offer must state the amount of rent payable;
  • Limiting rent increases to once every 12 months (increased from every 6 months);
  • Clarifying the rules about minor changes to premises, such as baby-proofing or earthquake-proofing;
  • Improving a tenant’s ability to assign their tenancy when it is reasonable. Tenancy agreements can no longer prohibit assignments;
  • Requiring landlords to permit and facilitate the installation of ultra-fast broadband (subject to specific exemptions);
  • Allowing for the Tenancy Tribunal to keep identifying details of parties in claims anonymous in situations where a party has been wholly or substantially successful in taking a case – this is intended to remove the disincentive for tenants who are reluctant to enforce their rights in case they are “blacklisted” by future landlords;
  • Financial penalties for breaches have been increased (the penalty levels for exemplary damages and criminal offences have been increased by between 50 and 80%);
  • Giving the Regulator (MBIE) new tools to take direct action when parties don’t meet their obligations - including the introduction of an infringement offences regime, the ability to enter into enforceable undertakings or issue infringement notices and the ability to seek pecuniary penalties against landlords with 6 or more tenancies who fail to meet key obligations.

If you have any questions please contact a member of our property or private client team.

 

Disclaimer: the content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.

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