Level 4 has caught many of us by surprise. Here are answers to some common day-to-day questions arising out of the latest snap lockdown. Note that these answers are current as of the 19th of August 2021. Should the lockdown be extended and emergency tenancy laws come into effect, our answers to some of these questions may change.
Q. My tenant has asked for a rent reduction for the duration of Level 4. Can I do that?
A. For sure. You are not obligated to reduce rent during COVID lockdowns but should you consider it appropriate to do so (e.g. whether your tenant is, in fact, experiencing a reduction in income, the relationship as a whole, your risk appetite, your personal financial situation etc) then you simply formalise your temporary rent reduction arrangement by executing a variation to your tenancy agreement.
You and your tenant may also want to explore other options to alleviate any cash-flow pressure connected with the lockdown. They include an alternative payment schedule (if you are in a position to absorb lengthier arrears), WINZ’s accommodation supplement and its rent arrears assistance (the last of which was paid out very quickly during last year’s lockdowns).
Anyone suffering financial hardship due to the lockdown is encouraged to visit the Unite against COVID-19 website in the first instance.
Q. My fixed-term tenant texted me to say he is moving out immediately because he can no longer pay rent and wants his bond back ASAP. What should I do?
A. Several immediate issues are apparent:
– Notices cannot be served by text given that a mobile number is incapable of being an address for service under s13AB of the RTA, as such, the tenant has served no notice whatsoever.;
– The tenant shouldn’t be moving at all during Level 4 (unless in exceptional circumstances such as to follow a court order or flee an abusive relationship), but we suggest you not make that your issue to solve. Irrespective of whether the tenant actually remains in occupation for the duration of the fixed-term tenancy, the tenancy remains ongoing;
– If the tenant insists on terminating under these circumstances, he can apply to the Tenancy Tribunal for an early termination order s66. You can, in turn, seek reasonable compensation; and
– Until then, the bond should stay with the bond centre. Do not sign the bond release form.
Level 4 can be stressful for many families, landlords AND tenants. We suggest both parties approach this matter collaboratively. Perhaps a good starting point would be to advise the tenant to explore various financial support packages that are available for those who are financially impacted by the lockdown (see details above).
Q. My tenant is behind on rent and hasn’t been in touch. Should I issue a 14-day notice?
A. Our view on 14-day notices hasn’t changed from the last lockdown. Yes, you absolutely should irrespective of the lockdown if only to preserve your position.
Q. My tenant is scheduled to move in/out during Level 4, can that still happen?
A. The overarching approach to Level 4 is that of elimination which is particularly pertinent given the much more problematic nature of the Delta variant. With respect to any activities requiring the movement of people, our instinct is that the starting point is no.
From there, you and your tenant can consider the situation as a whole and ask yourself whether the moving in/out is, in fact, essential. In very limited circumstances, it would still be appropriate for tenants to move in/out of rental properties (such as to be removed from an abusive relationship). They will not be able to hire a moving company and will have to carry out the entire move within their bubbles.
Per s60 of the Residential Tenancies Act (RTA), any tenant stranded at a rental property after termination continues to be entirely obligated as if the tenancy is ongoing. As we don’t know how long Level 4 will remain in force, we advise that landlords who find themselves in this situation to keep an eye on the number of days the tenant remains on the property under s60 so as to avoid being unwittingly locked into a periodic tenancy.
Q. Given that we are back at Level 4, am I prohibited from terminating a tenancy or increasing rent like landlords were in 2020?
A. No. The COVID-19 Response (Urgent Management Measures) Amendment Act is no longer in force. For the time being, there is no ban on termination nor is there one on rent increase. In saying that, the law merely sets minimum standards of behaviour and does not always reflect best practices. We encourage landlords to consider matters of (scheduled) termination/rent increase more broadly and appreciate the knock-on effects on tenants (especially those whose income is disrupted by the lockdown).
Should this lockdown be extended, something landlords should be mindful of is that of history (i.e. how quickly any planned rent increase could be curtailed): NZ entered into a national COVID lockdown for the first time on 23 March 2020. By 25th March the government put in place a 6-month ban on termination and rent increase (including nullifying any notified increases that had yet to take effect). Should you have any concerns around your cash-flow position vis-à-vis a potential extension to Level 4, please take immediate action and liaise with your financial advisor now.
Q. My tenancy is under a termination notice. Does Level 4 push out the termination date?
A. No. There is currently no amendment to the definition of a ‘working day’ under the RTA nor one that temporarily changes the way notice periods are calculated under the Act. In saying that, should termination fall during Level 4, it is likely that your tenant will have to remain in occupation under s60. To avoid being locked into a new periodic tenancy make sure you apply for a possession order and keep an eye on the number of days the tenant remains in occupation (if it is over 90 days with no possession order then the Act assumes you have entered into a periodic tenancy on the same terms). See more commentaries here on s60.
Q. My new tenant has signed the tenancy agreement, paid her bond and rent (in advance) but is now unable to move in due to the lockdown. Can I still charge her rent for the duration of Level 4?
A. Assuming the tenant is already in possession of the key(s), we would rather approach this as a should you instead of could you. We don’t think you should. This is one of those exceptional circumstances where the Residential Tenancies Act falls somewhat short: yes, technically you have granted her the right to occupy in exchange for consideration of rent but a common-sense approach suggests the true value of a tenancy (for the tenant) lies in actual occupation. Assuming this same tenant is incurring accommodation costs elsewhere for the duration of Level 4, we think to add to her existing financial burden without the exchange of anything in value is a bad way to start a relationship.
Talk to your insurance company to see if there is any coverage here for you. If this lockdown gets extended further then have an open and frank conversation with the tenant about your challenges and see if you can work out a mutually beneficial outcome.
Q. Can scheduled trade visits still be carried out during Level 4?
A. No, seeing that scheduled work is, by its nature, not urgent. However, tradespeople can attend the property during Level 4 if there is a immediate threat to life, health and safety.
Q. My property is vacant at the moment, can I still go over to carry out maintenance and repair work as long as I stay in my bubble?
Q. Are inspections allowed during Level 4?
A. In-person inspections are suspended under Level 4 but you can still carry out inspections by video link. Note video inspections are considered inspections under the Residential Tenancies Act and therefore pushes out the timeframe for your next inspection. In appropriate circumstances, you may want to consider deferring a scheduled inspection in order to do so in person. Should you be inspecting purely to satisfy insurance requirements, please approach your insurer in the first instance for guidance.
The REINZ Level 4 guidelines for residential property management and Tenancy Services Level 4 information for landlords and tenants are good starting points to troubleshoot any day-to-day issues during lockdown. Landlords and tenants with Level 4 specific questions can also email them to us at [email protected].
Stay safe everyone!