Proposed changes to the Residential Tenancies Act

While no-one denies that the reasons for the Government’s proposed changes to the Residential Tenancies Act is to improve the lot of renters, there is concern that they have lost sight of landlords’ rights.

Removal of the 90-day ‘no-reason’ notice

One of the proposed changes to the legislation is to the 90-day notice to terminate a tenancy – the so-called ‘no reason’ notice. Currently, landlords may give tenants 90 days notice to terminate a tenancy with no reason given. Under the proposed change, landlords will not be able to terminate a periodic tenancy with no cause. The government is aiming to ensure tenants have greater security of tenure but at the same time, they are also claiming that landlords will “still be able to terminate tenancies for a range of fair and justified reasons.” So what are these reasons?

Under the proposed changes to the Act, reasons for terminating a tenancy with 90 days notice include:

• landlord selling the property
• property is acquired for a business other than residential rental accommodation
• landlord intends to carry out major renovations
• landlord wants to change the use of the premises
•  property is to be demolished
• landlord is not owner and their interest is ended.
  
  

Landlords will also be able to give 63 days notice if:

• a family member is to move into the property
• the property is needed for an employee.
  
  

On the tenants side, they will be required to give 28 days notice under a periodic tenancy whereas under the current legislation, only 21 days notice is required.

How will the changes work?

The main reasons landlords will evict a tenant under the current 90-day notice is because of rent arrears or antisocial behaviour. So how will situations where there is antisocial behaviour or tenants are in arrears with their rent be able to be dealt with under the changed legislation.

Under the new legislation, tenants who display antisocial behaviour will have to be given three notices within a 90-day period before the landlord can apply to the Tenancy Tribunal for the tenancy to be terminated. (Waiting times for a hearing with the Tribunal are currently around six weeks so nothing will happen quickly.)

The same applies to late payment of rent. A notice may be issued to a tenant if a rent payment is five working days late. If three notices are served within a 90-day period, the landlord may then apply to the Tenancy Tribunal for a termination of the tenancy.

When the rent is 21 days in arrears, the landlord can apply to the Tribunal and the Tribunal is obliged to issue an order, either final or conditional, to end the tenancy.

Do landlords really want to terminate tenancies?

The reality is that no-reason terminations are used very infrequently. Landlords do not want to terminate tenancies when they have good tenants who look after the property and pay the rent on time. There is not reason for them to want to do so. As an investment, long-term tenants who pay the rent on time are what all landlords desire.

An argument, often presented, that landlords evict tenants so they can put up the rent does not make sense as the loss of 2-3 weeks’ rental income between tenancies is not readily recuperated simply by a rent increase.

Another argument is that if tenants raise issues relating to the tenancy, the landlord’s response is to terminate the tenancy. In fact, the less expensive option is invariably to fix the problem rather than replace the tenant. Furthermore, the majority of landlords would prefer to address any property issues to both protect their property and reduce any legal liability.