The Real Estate Institute of New Zealand (REINZ) is disappointed that the Government has gone ahead with its proposals to end the 90 day no cause notice and to convert fixed term-tenancy agreements to periodic tenancies, despite significant feedback from different areas of the property industry that this could further exacerbate the rental shortage with rental property owners leaving the market.
Bindi Norwell, chief executive at REINZ says: “Since the Minister made the initial announcement back in November last year, a number of key players in the property sector have made it clear that there are concerns the proposals could have adverse effects on the rental property market should the 90-day no-cause notice cease to exist.
“Our concerns centre around the fact that should the proposals go ahead; rental property owners will have limited abilities to remove tenants who are causing problems in their rental properties or causing trouble with neighbours.
“Rental property owners have already had to contend with a raft of legislative changes over the last few years designed to bring the balance more in favour of tenants, but it’s important to get the balance right between protecting the rights of tenants with the rights of landlords in order to look after both sides of the equation. If this change goes ahead, we believe this may be the final straw for landlords,” continues Norwell.
“As we have already outlined to the Government, provisions are already in place to protect tenants who believe a ‘no cause’ termination is retaliatory. Landlords who misuse this provision can currently be ordered to pay damages of up to $4000. So, we don’t believe the current situation needs to change – our preferred approach would be to see higher exemplary damages for landlords who abuse no-cause terminations. This will be much more affordable for the government to implement, will require less education of landlords and property managers and won’t add to the already significant backlog of Tenancy Tribunal cases,” she adds.
The real estate profession is also disappointed to see the proposal going ahead to automatically convert fixed-term tenancies to periodic tenancies. Under the proposals, tenants will have up until 28 days before the end of a fixed-term lease to let an owner know they are not going to renew their fixed-term agreement.
“If fixed-term tenancies automatically convert to periodic tenancies, this will significantly affect areas that have strong student populations such as Christchurch, Hamilton, Auckland, Wellington and Dunedin,” points out Norwell.
“Under the proposal, students could let their tenancy rollover to a periodic contract throughout the Christmas period. Then in the New Year after university has started back the tenant could give notice to leave and the landlord will have missed the student market for a whole year. A tenant’s desire for security of tenure needs to be carefully balanced against a landlord’s need to manage business assets,” continues Norwell.
REINZ isn’t entirely critical of the proposals; and is in fact supportive of a number of changes including the ban on rental bidding, the proposal to limit rent increases to once every 12 months and making rental properties safer and more liveable.
“For many years REINZ has strongly discouraged the practice of rental bidding by landlords and property managers, therefore, we welcome the proposed ban on rental bidding as this just drives up prices in an unfair and unethical manner for tenants,” says Norwell.
“Additionally, we’re very supportive of the proposal to limit rent increases to once every 12 months. This will allow tenants and landlords to have more certainty and ensure everyone knows where they’re at in relation to their finances,” points out Norwell.