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RTA Amendment Bill Passed

28-Aug-2020 13:34:06

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The Residential Tenancies Amendment Bill (RTA) has been passed into law with most changes coming into effect six months after receiving the Royal Assent on 11th August 2020.

Rent increases being limited to once every twelve months came into effect on the 12th August, however due to COVID-19 legislation’s six month rent freeze, rent can only increase from the 26th September and not prior.

In addition to the proposed law changes that we were aware of and addressed in past issues of the Property Management Focus Newsletter, some last-minute changes were also introduced. These provisions must come into effect 12 months after the day of the Royal Assent, but may come in earlier if the Government agrees (using an Order in Council). The changes include: allowing victims of family violence to end a tenancy with two days’ notice without financial penalty; and a landlord will be able to issue a 14-day notice to terminate a tenancy if the police have charged the tenant with assault of the landlord, a member of the landlord’s family, or the landlord’s agent.

Possibly the most controversial of all changes is the removal of the right to issue no-cause terminations. Landlords will only be able to terminate a tenancy under specific grounds. The grounds for termination will include the provision to give a tenant 90 days’ notice if the premises are to be put on the market for sale within 90 days of the termination. If a property is sold with a tenant in occupation and vacant possession is required, the notice period required will be 90 days. This is up from the current 42 days and more than the anticipated 63 days’ notice.

Another change to take note of is that fixed term tenancy agreements will convert to periodic tenancies, unless a landlord gives notice using the reasons listed in the RTA, a tenant gives at least 28 days’ notice, or both parties agree to extend or renew the fixed term. If a landlord requires the property for the principal place of residence for themselves or a family member, the notice period required will be 63 days, increased from the current 42 days’ notice.

Landlords should also be aware that the jurisdiction of the Tenancy Tribunal has increased. The Tenancy Tribunal can hear cases and make awards up to $100,000 and there are higher penalties for committing an unlawful Act under this new legislation. This includes higher infringement fines for landlords with six or more tenancies. Landlords are expected to have a very good understanding of the Residential Tenancies Act and all subsequent amendments, and failure to abide by the Act will be considered unlawful and substantial fines can be awarded.

Your property manager will continue to undergo stringent checks on all prospective tenants. Our system of conducting background and credit checks, together with our experience, enables us to determine the best tenant, on merit, for your investment. Our purpose is to protect our landlords’ interests and our property managers receive ongoing training to ensure that they are knowledgeable about any amendments and that their actions remain compliant with all legislation.

For further information, including all grounds for terminating tenancies and notice periods, please refer to the Government FAQ's here.

This article is featured in Harcourts' Property Management Focus Newsletter Issue 8, 2020

Topics: Property Management, Residential, Tenants, Property Management Focus, harcourts new zealand