I sat down with Niall Heeran from RentWellington to discuss the recently passed Residential Tenancies Amendment Act 2020.
Niall believes that good landlords don’t need new legislation to do what’s right, bad landlords will look for ways around legislation.
When listening to Minister Fafoi during the final parliamentary reading of the legislation, Niall understood the rationale the Minister was using regarding 90 days no cause terminations. The Minister’s angle was, why allow such a termination clause to hang over the heads of 97% of the population when it is only used to end the tenancies of 3% (the ministers statistics). Most 90 day notices are issued to end tenancies due to anti-social behaviour, removing this no cause option will add to the level of stress and length of time it will take to end such a tenancy. Apart from this change and how fixed term tenancies roll over to periodic unless the tenant agrees otherwise, it is ‘business as usual’ with not a lot for landlords to worry about as most amendments to the RTA were regarding improving the condition of houses, which a good landlord would already be on top of like insulation, ventilation, drainage, etc.
For anti-social tenancies, Niall links poorly maintained properties, or possibly a relaxed approach to reference checking for ending up with people living in your house who do not contribute positively to the neighbourhood. At RentWellington Niall and his team work with property owners to create a maintenance and renovation plan for each house. Each suburb has a specific type of tenant looking for specific types of properties. The RentWellington team won’t recommend creating a 5 bedroom flat in a house in Kilbirnie, they would suggest that would make more sense in “university central” Aro Valley where 5 bedroom houses are in demand.
Niall says the Residential Tenancies Amendment Act 2020 will still work when it comes to dealing with anti-social tenants but going forward suggests that “neighbours and landlords need to throw everything at the problem in the first instance, call the council to report all anti-social behaviour, include the police if needed, get it recorded and keep the evidence for a tribunal hearing if it comes to that.”
One change of note Niall points out is that no longer will landlords be able to sign up a tenant for a year lease with the intention of reviewing the tenants eligibility to stay on at the end of that lease, to either roll over the lease for another year, or to offer a periodic tenancy going forward. Under the new legislation a fixed term tenancy agreement will automatically move to periodic on its conclusion. Niall says, “no one was screaming to get rid of fixed term agreements but do note the act is abolishing no cause termination.”
Rental bidding, the practice of a landlord pitching prospective tenant against prospective for them to bid against each other for the highest rent to be paid, like you would in an auction room to buy a property, will be outlawed under the amended act. “Rental bidding that is now outlawed never really happened in Wellington” Niall says, putting it in perspective. “A number of years ago a Property Management Company in Auckland promoted rental bidding as their point of difference, and that happened to achieve a lot of publicity.” Niall recommends ensuring your rental property is in the best possible condition, with features that will match the expectations of people who want to live in your property and location. Being an ideal property will ensure that those who are applying to live in your house and pay a premium rent.
There are solid reasons a landlord can terminate a periodic tenancy says Niall.
- The landlord or immediate family wants to move back in
- The landlord is to undertake extensive renovations to the property
- The property is to be converted into commercial premises or need for nearby business activity
And for the real estate agent, there are two main things they need to be fully aware of when the landlord intends to put their rental on the market.
- The property is to be put on the market by the landlord within 90 days of the termination notice
- The landlord is required under an unconditional agreement for the sale of the property to give the purchaser vacant possession
In summary, says Niall, “It’s about relationships and doing the right thing. It’s about the relationship between tenant and landlord and a good competent property manager is essential.” Good landlords don’t need legislation to do what’s right. Bad landlords will look for ways around legislation.