APIA Blog

RSS Feed

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.

Recent Posts


Tags

ring-fencing market Standards New Zealand trust p lab bond cash-flow buying rules Guest blog covid-19 renovation RTAA 2019 water bill productivity trespass Property (Relationships) Act bad tenant housing affordability Holler Q&A business rent arrears interest rates Investor story return rent increase structure holiday house building sale and purchas warren buffett letting rta reform buying rta management debt enforcement capital gain election 2017 Jeff Bezos rental wof ocr wins rental market income maintenance clnz government warm up new zealand Must knows gluckman report house prices Kris Pedersen Mortgages and Insurance rent DTI Gluckman cat principal and interest Editor's Choice worksafe equity auckland council subdivision tenancy services beginner investor trademe finance privacy How to sublease relationship CCC development Level 4 education financial advisers act heating extractor fan minor dwelling Question and answer personal growth tax wealth creation letting fee CoreLogic ventilation Investment tip meth scotney williams HSWA advice twg report reserve bank investment strategy landlord smoke alarm negotiation off the plan first home buying buyer's agent RBNZ short-term rental bond form nzpif unitary plan termination boarding house ask an expert recycling equity sale and purchase yield insurance damage mortgage meth contamination market rent property value watercare TCIT parry v inglis television property fixed-term tenancy inspection anz ird Sponsored post initio interest only Case study auckland robert kiyosaki Market report lvr Tribunal case study shower dome tenancy tribunal positive cash flow property cycle skill shortage mindset tenancy issues cgt housing bubble speculator asbestos Must know Landlording tenant winz HHGA property management insulation investor heater data security airbnb khh banking property maintenance partners legal HHS LIM

Archive

Introducing Our Partners
Principal Sponsor - Kris Pedersen Mortgages & Insurance logo Gold Sponsor - Barfoot & Thompson logo Gold Sponsor - CoreLogic logo Property Apprentice logo Keith Hay Homes logo The Insulation Warehouse logo The Renovation Team logo The New Zealand Property Investors' Federation logo
09 360 2376
info@apia.org.nz

The Tenancy Practice Service and TPS Credit Control work closely with the Auckland Property Investors' Association. Our vision of bringing helpful resources, documents and high quality services to Auckland Property Investors and Property Managers is shared by APIA, so its a partnership that works well. 

The Auckland Property Investors' Association is a great organisation for those who want access to advice and information from a range of industry experts and partners. 



Mathieu Holt- Managing Director, The Tenancy Practice Service & TPS Credit Control
Through the Association I found the channels and methods to fund the purchase of property I never dreamed about. Grant Brown

All round it has been one of those things Neil and I felt was really worthwhile belonging to. We have learned so much it has just built our confidence in what we are doing.

Janice Bieleski
I read two articles in the monthly magazine that saved me over $5,000. That is my membership fee for the next 26 years and I am sure I will learn a whole lot more! John Duncan
Fantastic organisation. The networking opportunities are brilliant and provide us with information and opportunities that cannot be obtained anywhere else. We learn something new at every meeting and we've been in this game for nearly 20 years. Pauline and Gyanen Kumar

I find the information obtained from various APIA meetings very useful in guiding my own property investment and rental management.  I also enjoy the networking opportunities with like-minded investors.  I am inspired by other investors’ success and find the more experiences and knowledge that I share with others, the more confident I become.  

Thanks to all APIA event organizers and administrators for your brilliant work. 

Stella Shao

I like talking to people and learning from their experience because it gives me the confidence to invest well. I think it is a knowledge thing. I now know I am doing things the right way.

Stephen Weatherall

My APIA membership has become a total success.

Every time I attend a monthly or regional meeting I come away with so many useful and positive tips that have added value to my property investments and management.

Not only that, the website is a great place for practical advice and useful information. It has now evolved into an important resource for my business.

Talk about value for money! The discounts I have been getting at Bunnings when I present my APIA membership card have more than paid for my annual subscription!

Tim Duffett, Plan A Investments Limited