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Let's call a spade a spade

Thursday, February 27, 2020

SOURCE:TUTANDGROAN.COM

In light of the growing voice against The Residential Tenancies Amendment Bill 218-1 (2020), which the Associate Housing Minister Kris Faafoi is the face of, Mr Faafoi said the following,

…At the same time, the reforms protect the rights of landlords to terminate a tenancy under a range of justifiable reasons, including where a tenant has engaged in anti-social or illegal behaviour, or is at least three weeks in rent arrears.

Landlords will still be able to terminate tenancies for a range of fair and justified reasons, that will be specified in law.

Landlords have said that anti-social behaviour from 'difficult tenants' is the most common reason for issuing 90-day notices. Ninety days is a long time to put up with this kind of behaviour and going to the Tribunal to attain a shorter notice period may benefit landlords.

Having gone through the language of the Bill, we consider these statements to be misleading if not disingenuous. While we can respect this government's wish to be pro-tenant and anti-landlords, we cannot stomach its misinformation campaign characterising the Bill as proportionate and fair-minded. The purported safeguards for landlords are, in our opinion, cold comforts at best.

Let’s unpack*.

Right to terminate on grounds of rent arrear

Currently, landlords can apply for termination if the rent was, on the day of application, at least 21 days in arrears (s55(1)(a)) - a fairly straightforward pathway.

The Bill introduces unnecessary complications.

On the one hand, it appears that the right is preserved.

On the other hand, in the case of periodic tenancies, a different and concurrent set of termination rules could apply to require the following:

  1. That there must be 3 separate occasions of rent arrears within a 90-day period. Each ‘occasion’ is defined by the arrear being ongoing for at least 5 working days;
  2. That on each occasion, the landlord serves the tenant written notice (with specific formatting, content and service requirements);
  3. That the tenant either doesn’t challenge any of the notices at the Tribunal or that none of his/her challenges succeeds at the Tribunal; and
  4. That the landlord applies for termination within 28 days after the third notice

The amended provisions put landlords in a periodic tenancy in an awkward catch-22. When rent is late, a periodic landlord is faced with the following choices:

  1. Do nothing and hope that the arrear would persist for 21 days and continue to persist until the time of the Tribunal hearing for the landlord to qualify for a straight forward termination under s55(1)(a); or
  2. Follow the new provisions and risk not attaining any right to terminate because of one of the following reasons
    1. That the required 3 separate occasions of arrears do not materialise in a 90-day period;
    2. That the Tribunal finds one or all of the notices to be defective or incorrectly served;
    3. That the application to terminate cannot be made within 28 days of the final third notice.

On the face of it, the provisions in the Bill curtail rather than enhance or maintain the status quo.

Right to terminate on grounds of anti-social behaviour

The current Act does not specifically refer to ‘anti-social behaviour', however, it does provide for termination on the grounds of assault.

While this certainly speaks to concerns raised by landlord groups in November 2019 when the Associate Housing Minister Kris Faafoi announced that he would seek to remove the 90-day notice all together, we feel that the provisions here will not result in any meaningful protection for landlords and neighbours.

In order to be successful, an application to terminate on grounds of anti-social behaviour must contain all of the following elements:

  1. That there must be 3 separate occasions of anti-social behaviour in connection with the tenancy within a 90-day period by the tenant or persons in the premises with the tenant’s permission;
  2. That on each occasion, the landlord gives the tenant written notice (with specific formatting, content and service requirements);
  3. That the tenant either doesn’t challenge any of the notices at the Tribunal or that none of the challenges succeeds at the Tribunal;
  4. That the landlord applies for termination within 28 days after the third notice;
  5. That the Tribunal does not consider it ‘unfair’ to terminate; and
  6. That the Tribunal does not believe the landlord’s application is made in bad faith.

The procedural hurdles alone are enough to cast doubt over whether the new provision would ever actually result in an order to terminate. It is highly unlikely for landlords and neighbours, having felt sufficiently threatened by certain 'anti-social' tenants, to then choose to 'confront' said tenant by way of a legal notice or giving evidence at the Tribunal. This three-strike-and-then-maybe-you-are-out rule would disincentivise landlords giving notices in the first place. Why would they? A notice would just aggravate the tenant and lead to further escalation. Oh, that by way? That tenant still has full control of the rental property!

This Bill does no 'protect the right of landlords to terminate...'. If anything, it drastically reduces it. What else is there to conclude but that the government is hell-bent on granting tenants unprecedented power by taking reciprocal rights away from landlords?

To reiterate the main thrust of our position for the preservation of the 90-day notice: When it comes to continuity of tenancy, the starting point for a landlord is to never terminate unless there is a good reason to. Not having to state a reason is not the same as not having a reason. 90-day notices to terminate are most commonly used as a last resort for landlords managing their way through a difficult/stressful tenancy. Most commonly these stressful tenancies involve anti-social behaviour by the tenant that not only threaten the landlord but also the neighbours. Although landlords rarely give 90-day notices (3% of tenants receive them per year), many consider it a safety-net without which the risks of being a residential landlord would be far too great to fathom. A remedy is not invalid nor redundant just because it is rarely called upon to provide relief.

These are just some of our thoughts from reading the Bill. But hey, we are not lawyers. But do you know who is? Kristine King from DK Law and this is what she has to say about termination as envisioned by the Bill.

We hope you find this piece helpful. When you make your submission for/against the Bill before 25th of March, please be mindful of the points raised here. Have you written to your local MP to express your concerns? Download our How to write to your MP - a toolkit for landlords to show you how to draft an effective letter/email. 

* It should be noted that this commentary has been put together based on a plain reading of the Residential Tenancies Amendment Bill. Various ambiguities in the legislative language necessitate a common-sense approach to our interpretation. This commentary is not intended as legal advice.

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