Requirements for Residential Rental Properties – What landlords Need to Know

22 December, 2020 | Carolyn Ranson

The Government has been continually updating the requirements for residential tenancies – with further changes in 2020 and 2021 with the Residential Tenancies Amendment Bill

This Bill introduces significant changes to modernise the Residential Tenancies Act.  This recognises the change in property ownership and the increase in long term rentals since 1986. The changes will be phased in in three parts.

The first phase became effective from 12 August 2020. It includes funding for transitional and emergency housing and provides for rent increases to be limited to once every 12 months.  The previous law allowed rent increases once every six months.

Phase two will take effect from 11 February 2021 and can be briefly summarised as including the following:

1.              Security of rental tenure;

2.              Changes relating to termination of fixed term tenancies;

3.              Allowing tenants to make minor changes to the property;

4.              Prohibitions on rental bidding;

5.              Allowing the installation of fibre broadband;

6.              Addressing privacy and access to justice issues;

7.              Loosening the requirements to be able to assign a tenancy;

8.              Increased obligations in terms of landlord records and retention;

9.              Increased enforcement measures and penalties; and

10.           Changes to the Tenancy Tribunal jurisdiction (an increase of awards from $50,000 to $100,000).

Phase three will take effect from 11 August 2021 and includes provisions addressing family violence and physical assault.

Previous updates to the law included:

Working smoke alarms must be installed in all residential rental properties.

The current standards require a minimum of one working smoke alarm in a hall, within three metres of each bedroom door.

From July 2019 all residential rental properties had to be fully insulated.

At the time of the change, the Government estimated that 18,000 New Zealand homes need insulation and the health benefits of insulation will be reduced hospitalisations and reduced pharmacy costs together with fewer days off work and school.

The Government puts the average cost of retrofitting insulation for both ceiling and floor to be approximately $3,300.00 per property.

The Ministry of Business, Innovation and Employment  have new powers to prosecute landlords for breaking tenancy laws as part of these reforms, especially if there is a risk to health and safety.

Investor property buyers looking at purchasing residential property to rent out should take these plans into consideration, particularly where the cost of fully insulating an older property up to standard will require a substantial amount of capital to be added to the investment required.

The new laws emphasise the importance of conducting a thorough due diligence process prior to unconditional purchase of any residential property.

If you would like to discuss any tenancy or due diligence issues, please contact  Carolyn Ranson by phone on 09 837 6891 or email carolyn.ranson@smithpartners.co.nz.