With news breaking on the proposed reforms to tenancy law, tenants and landlords alike are unsure how it’ll affect them. So we want to talk about what the proposed changes to the Residential Tenancies Act might mean for landlords and tenants.
The Government’s proposed changes revolve around the following areas:
1. Tenancy agreements: do changes need to be made to the types of tenancy agreements on offer, to ensure they remain fit for purpose in a modern renting environment?
2. Modifications to property: how can the law better help landlords and tenants agree to tenants making reasonable modifications to their rental home?
3. Pets: is the law fair when it comes to tenants and landlords agreeing whether pets can be kept or not?
4. Setting and increasing rent: should tenants know how rents are set? How often should rents be increased?
5. Boarding houses: MBIE wants to know how boarding house tenancies should be treated and how the quality of boarding houses and accountability of boarding house landlords can be improved.
6. Enforcement: can the enforcement of tenancy law be carried out more effectively?
So what does this mean for landlords and tenants across New Zealand?
From our point-of-view, we see the proposals as good and bad. Yes, the Residential Tenancies Act is over 30 years old and there are definitely some areas that require updating. But it needs to be fair to both tenants and landlords to ensure things run smoothly.
If landlords feel the rules are too weighted in favour of the tenant, they may feel pressured to sell up, which will reduce the amount of rental stock available. This is obviously a cause for concern as more than one third of New Zealand households, including over 40% of children, now live in rentals… so we need those rental homes!
But tenants need protection too – time and time again we hear news of tenants renting amid squalid conditions, and being treated poorly and unfairly. Therefore ensuring the proposed changes are fair and equitable for both the landlord and tenant is crucial.
And when it comes to the debate on whether or not rents will increase, this ultimately depends on what makes it through the reforms. Changes such as the 42-day tenancy termination notice period moving to 90 days, for landlords wishing to sell their property, shouldn’t cause rents to rise.
However, changes like limiting rent increases to once per year will definitely encourage landlords to stay on top of rent reviews to cover costs in other areas, as it will become riskier to invest in rental properties.
And one thing seems certain – once letting fees are abolished, rents will surely increase, as landlords will look to pass on costs associated with finding a new tenant (such as travel, marketing, admin overheads etc) to the tenants themselves, through higher rents.
It’s an interesting time to be involved in the rental market, and we look forward to seeing what positive changes will come from these reforms to the Residential Tenancies Act.
To read more about the proposed changes, and to have your say, visit mbie.govt.nz/rta-reform today. Submissions are due by 5pm on Sunday, 21 October 2018.
- By Kishan Lal of Clarke Group Property Management.
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