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The thing about "no-cause" termination ...

Thursday, October 11, 2018

Currently, hot news in the property world right now are the proposals to ‘reform’ the Residential Tenancies Act. A number of changes to this Act are under consideration, and of these changes, the "no cause" clause is likely to be the most problematic for landlords.

The publicity around this proposal is – possibly deliberately – biased. There is actually no such thing as a “no cause” termination. There is always a cause. No landlord wakes up in the morning and decides to get rid of a tenant just for the fun of it. To do so will disrupt his cash flow of rent from that property, never a good idea. What they seem to refer to is that there is currently no requirement for the landlord to disclose that reason to the tenant.

The effect is that a 90-day notice to vacate will only apply where the landlord:

  • Intends to carry out extensive alterations, refurbishment, repairs or redevelopment of the premises and it would not be possible for the tenant to continue to live there while the work was being undertaken, or
  • Intends to change the use of the premises, e.g. from residential to commercial, or
  • If a person, such as a mortgagor, becomes entitled to possession and needs the tenant to vacate the premises to meet requirements relating to a mortgagee sale process.
Where these situations don't apply a landlord would need to obtain a Termination Order from the Tenancy Tribunal, which can only be granted in certain situations that will be specified in the Act.

To give the tenant a reason for the termination is to give grounds for an argument, which is why landlords are generally advised to not state the reason. “No I didn’t”, “Yes you did” gets no-one anywhere, and neither do promises to be quieter, to be tidier, or not to park on the lawn. Human nature is such that change is difficult for some and impossible for many.

So the intention of the proposed change is to make it more difficult for the landlord to terminate the tenancy and regain the possession of what is, after all, their property.
 
Making termination more difficult will not only be a problem for landlords. It could also become a problem for neighbours living near disruptive tenants. This new provision would require a landlord to supply firm proof to the Tenancy Tribunal there are grounds for terminating. Often that proof is not available as complainants who are affected neighbours may be scared of being identified.
 
In my view, implementation of this change will advantage low-quality and troublesome tenants while penalising those who live alongside them.

 


ABOUT THE AUTHOR

Peter Lewis 

Peter is the Vice President of the Auckland Property Investors' Association and sits on the board of the New Zealand Property Investors' Federation. 

 

 


 

 

 

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