Rent arrears end tenancies in lockdown
Wednesday 20 May 2020
The Covid-19 crisis saw the introduction of emergency rules which make it harder to terminate tenancies, but a recent Tenancy Tribunal ruling shows that racking up rental arrears can still mean the end of a tenancy.
By Miriam Bell
At the beginning of lockdown the Government introduced measures to amend the Residential Tenancies Act (RTA) and better protect tenants.
These measures include a provision which mean it is not possible to terminate tenancies during a period of three months around the lockdown, unless the parties agree or for one of a limited set of reasons.
Those reasons include substantial tenant damage to a property, assault or threats of assault from the tenant, anti-social behaviour, abandonment of the property, and being 60 days (up from 21 days) behind in the rent.
The new rules also specify that tenants who had previously been given notice could stay in their rental property if they needed to during the lock-down period.
When it came to rental arrears, if such a case made it to the Tenancy Tribunal, the Tribunal was tasked with considering fairness and whether the tenant is making reasonable efforts to pay the rent.
For landlords, there has been considerable concern around this particular provision as they feared tenants would stop paying rent – despite Housing Minister Megan Woods saying tenants must still pay rent.
These was also concern that Tribunal rulings around the emergency measures might favour tenants.
However, looking through recent Tribunal rulings it seems Tribunal adjudicators have largely been finding in favour of landlords in cases where there is 60 days of rent owing.
One recent Auckland case – which ended in a termination due to rental arrears during lockdown- is a good example of this.
Allan Tairua and Susan Felts-Mackay moved into a North Shore rental property, managed by North Shore Rentals Ltd, in February 2019.
Later in the year, the two stopped paying rent as they claimed there were defects in the premises, which the landlord did not remedy.
Tairua also claimed he had provided the property manager with a letter detailing the problems. However, he had not kept a copy of it and had no evidence of formally complaining to the landlord.
By the time, the landlord got a Tribunal hearing the country was still in level four of the lockdown and Tairua and Felts-Mackay owed $15,600 in rent.
Tribunal adjudicator, R Kee, found that the tenants were over 60 days in arrears and was not persuaded by the tenants’ claim that the property defects were so significant that the rent should be abated.
There was no documentary of photographic evidence of the problems, Kee noted. Further, the landlord was prepared to remedy any maintenance issues that were proven.
Kee also said the Tribunal had to consider other matters in considering whether the tenancy should be terminated.
“In relation to those further considerations, I find that the tenants are not making reasonable endeavours to pay the rent.
“The second factor [balancing the interests of the tenants and the landlord to see if a termination is not justified] is not reached. Therefore, there is no basis to refuse termination.”
For that reason, Kee ordered the tenancy be terminated and said the landlord’s application for rent arrears was established.
The tenants were ordered to pay North Shore Rentals Ltd $14,974.28 immediately, while the Bond Centre was ordered to pay the company $1,400.
Comments from our readers
Sign In / Register to add your comment
The housing market was booming in July with price and sales up nationwide, new REINZ data shows, but the return of Covid-19 raises questions of how the market will fare going forward.
Steady declines in value growth are becoming evident – as QV’s latest data reveals – and that suggests the housing market’s resurgence could be coming to an end.
ASX-listed Centuria Capital has declared that its takeover of New Zealand property funds manager Augusta Capital is now unconditional, as it has secured nearly 66% of Augusta’s shares.
Reserve Bank governor Adrian Orr says the mortgage deferral programme will be extended beyond September, as the Covid-19 pandemic regains a grip on New Zealand.