Abandoned tenancy process on the fast track

Government research indicates that up to 10% of landlords may have to deal with suddenly deserted rental properties.

Only 2.3% (884) Tenancy Tribunal cases in the year to November 2014 were to do with the  abandoned tenancies.

But, in a cabinet paper, Building and Housing Minister Nick Smith said anecdotal evidence indicated the number was higher.

“Some landlords may be choosing not to enter what they perceive to be a slow and cumbersome Tribunal process to terminate an abandoned tenancy.

“They may be taking action outside the Residential Tenancies Act.”

Currently, tenancy abandonment cases can take up to six weeks to resolve.

This creates a housing supply issue because the rental property is not available to the market until the tenancy is officially terminated by the Tenancy Tribunal.

A vacant rental property does not just leave the landlord out of pocket*, Smith said.

“It also imposes costs on tenants as the property cannot be occupied until the previous tenancy has been terminated. The rental market as a whole is negatively affected.”

For this reason, Smith has proposed changes to the Residential Tenancies Act to enable the faster resolution of tenancy abandonment cases.

He wants to improve the processes for resolving such cases to allow rental properties to be returned to the market and re-let more quickly.

Smith has proposed that:

• Landlords have the power to enter a property with 24 hours’ notice to confirm abandonment.
• Hearing of abandonment cases “on the papers” be allowed in specific circumstances.
• A ten working day statutory timeframe for the Tenancy Tribunal to hear these cases be introduced.

The Ministry of Business, Innovation and Employment and the Ministry of Justice are also working on wider system changes to Tenancy Tribunal processes.

Smith said these operational changes will involve updating paper-based systems, making more use of technology, and the centralised management of some applications in order to avoid regional delays.

The benefits of returning properties to the rental market more quickly outweighed the limited costs and the small risks associated with introducing a statutory timeframe, he added.

The NZ Property Investors Federation welcomed the proposal which it said came in response to an issue it has been talking to the government about for a long time.

Along with the new requirements for landlords to insulate and install smoke alarms in rental properties, the tenancy abandonment proposals will be included in a bill due to be introduced into parliament by October.

*According to the NZ Property Investors Federation, the loss of landlord income arising from rent arrears and abandonment is about $1,939.00 per application to the Tenancy Tribunal.