Tauranga Property Investors' Association
Today Parliament has passed under urgency the Residential Tenancies Amendment Bill. This bill has some major changes for both tenants and landlords alike, and none of them are good news.
A primary concern is the removal of the 90-day no-cause termination where a tenant can no longer be given a notice to move out unless the landlord has received evidence of anti-social or disruptive behaviour on 3 separate occasions within 90 days. Tenants and neighbours who live beside a disruptive and anti-social tenant will not be able to ask the landlord for help or rely on them to ensure their peace and quiet enjoyment of the property. These neighbours will have to provide the evidence to be given to the Tenancy Tribunal which would then be able to rule that the landlord can remove the tenant from the property. Providing this required evidence puts the identified complainants at risk.
This new law will give security of tenure to the small number of anti-social tenants but not to the good tenants who will probably look for new properties to rent. It is possible that more areas will turn into slums as good tenants move out due to the behaviour their neighbours and marginal tenants will take over.
Another significant change is that a fixed term tenancy will automatically roll over to a periodic tenancy once the fixed term ends unless both parties agree otherwise. The impact of this on the student market will be substantial. Rents are expected to rise, and families may start moving into student areas as houses become available outside term times, thus reducing available student accommodation.
Landlords will have to give tenants an increased notice from 42 days to 90 days if they want to place the property on the market or move into the property themselves. While this gives tenants more time to find alternative accommodation, it could create stressful situations for landlords and their families, whose circumstances may have unexpectedly changed.
It is expected that about 20% of rental property owners will leave the industry, with many already exiting an over-regulated market. At present, there are close to 17,000 on the emergency housing waiting list. This list will now continue to rapidly increase as tenants without impeccable tenancy records find it challenging to rent a property from private rental property owners.
The Coalition Government believe this Amended Bill will balance the power between rental property owners and tenants. Instead there will now be an imbalance favouring tenants. Not only are New Zealand rental property owners likely to exit the market permanently but some will possibly move to invest in properties overseas. The risk of placing an unsuitable tenant into a property without the ability to remove them will be more than some rental property owners will be willing to take.
Fewer properties available for tenants will unfortunately mean that rents will probably rise. There will be increased competition to rent a property in some areas. Tenants who are perceived as risky will not be able to find a private rental property owner who is willing to give them a chance and there will not be enough state and social housing to provide accommodation for these people. The only way to correct this situation is to have policies which encourage an increase in the supply of rental properties. The passing of this Bill will not achieve this solution.