The real estate industry body is disappointed the New Zealand government ignored its feedback as it works to update the Residential Tenancies Act.
Last year, Associate Housing minister Kris Faafoi announced the government’s proposed changes for tenancy laws.
The proposals included limiting rent increases to once a year, remove the landlord’s right to use no-cause terminations, and letting tenants make minor changes to properties, such as fixing furniture to walls and installing fire alarms and doorbells.
Although the property sector welcomed many of the proposed changes, many are concern about the removal of the no-cause termination.
“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,” REINZ chief executive Bindi Norwell said.
“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 had to accept a lot of new laws in recent years which were designed to favour tenants, but there needs to be more work done to get the balance right for tenants and landlords, Ms Norwell said.
“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 $4,000. 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.”
The industry is also disappointed at the proposal going ahead to convert fixed-term tenancies to periodic tenancies automatically.
The result of the change would mean tenants have 28 days before the end of a fixed-term lease to let the landlord know if they are not going to renew their fixed term lease.
This will significantly impact areas with large student populations, Ms Norwell said.
“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,” she said.