Greens ecstatic over new residential tenancies law, Real Estate Institute sees unintended consequences
The Residential Tenancies Amendment Bill passed its second & third readings in Parliament on Tuesday, updating the 1986 Residential Tenancies Act as Parliament rose for the election next month.
The Government says the bulk of the reforms will come into effect in 6 months, to give tenants & landlords time to prepare for the new rules.
The bill will modernise and clarify the Residential Tenancies Act, and bring changes such as increasing security of tenure for tenants and supporting tenants’ ability to assert their legal rights. It will also promote good faith relationships between landlord & tenant, and enhance powers & tools for the chief executive of the department responsible for the administration of the act.
The bill was guided through Parliament by Labour’s Associate Housing Minister, Kris Faafoi, and coalition partner the Green Party is ecstatic that this law has been passed, along with a number of other causes the party had championed.
“Key improvements are the removal of no-cause terminations, meaning families no longer have to live with the constant threat of eviction; limiting rent increases to once a year; and enabling victims of family violence to end a tenancy with 2 days’ notice,” say Green co-leaders James Shaw & Marama Davidson.
But, while the Greens were ecstatic, the Real Estate Institute warned of unintended consequences that could cause more harm than good.
“For example, in a recent survey around half of landlords & investors (46.3%) said it is likely or highly likely they will sell their rental property if removal of the right to issue a 90-day notice went ahead. Given we already have a shortage of quality rental stock across the country, this is problematic as it will further reduce the pool of rental properties available and likely push up rents even further,” says Institute Chief Executive Bindi Norwell.
“With median rents in Auckland having risen 9.8% in the last 3 years (from $510 to $550) and in Wellington by 20.2% (from $420 to $505), it will be interesting to see how much higher rents go as more landlords withdraw from the market.
“Additionally, tenants without an ‘excellent’ rental history may now find it even harder to successfully secure a rental property than they already do, given how hard it will now be to remove tenants who end up significantly in arrears.
“This is especially true, considering landlords will need to apply to the tribunal to terminate the tenancy, therefore extending the average timeframe to resolve claims and extending backlogs further.
“Both the institute & the NZ Property Investors’ Federation, who represent a significant portion of landlords across the country, have warned this would be a likely outcome as landlords & property managers seek to take a more risk-averse approach to selecting tenants,” she says.
However, Norwell also welcomed a number of positive provisions, “such as banning landlords from seeking rental bids, limiting rent increases to once/year and making rental properties safer & more liveable by enabling tenants to make minor changes to the property, such as installing child-proofing, hanging pictures, or earthquake-proofing.
“We’re also broadly supportive of the changes introduced at the last minute, including allowing victims of family violence to end a tenancy with 2 days’ notice, to allow landlords & property managers to terminate tenancies with 14 days’ notice if a tenant physically assaults them, and the extension of the time the Tenancy Tribunal can hear cases via phone/video conference,” she says.
