When the government announced the proposed amendments to the residential tenancies act, a few eyebrows were raised by a number of landlords, as the changes seemed to further burden the landlord, especially as the costs of Healthy Homes compliance are still being felt.
As the first month has now passed with these new changes in place, we wanted to take a look and see if our property managers have seen any immediate effects.
For those that missed the memo, we have outlined the new changes to the act in a previous blog ‘What changes to rental properties are coming in 2021’. Below is a brief recap:
- Rent increases are limited to once every 12 months.
- Landlords will not be able to end a periodic tenancy without cause by providing 90 days’ notice.
- All fixed-term tenancy agreements will convert to periodic tenancies at the end of the fixed-term unless the parties agree otherwise, the tenant gives a 28-day notice, or the landlord gives notice in accordance with the termination grounds for periodic tenancies.
- Tenants can ask to make changes to the property and landlords must not decline if the change is minor. Landlords must respond to a tenant’s request to make a change within 21 days.
- Rental properties cannot be advertised without a rental price listed, and landlords cannot invite or encourage tenants to bid on the rental (pay more than the advertised rent amount).
- Tenants can request to install fibre broadband, and landlords must agree if it can be installed at no cost to them unless specific exemptions apply.
- Not providing a tenancy agreement in writing will be an unlawful act and landlords will need to retain and provide new types of information.
- The Tenancy Tribunal can hear cases and make awards up to $100,000.
- All requests to assign a tenancy must be considered. Landlords cannot decline unreasonably.
- A suppression order can remove names and identifying details from published Tenancy Tribunal decisions if a party who has applied for a suppression order is wholly or substantially successful, or if this is in the interests of the parties and the public interest.
Source: https://www.tenancy.govt.nz/law-changes/
So what have our property managers noticed to date? We sat down with our team to discuss what they have experienced. Below is what they had to say:
Additional changes to the tribunal Application process
As a result of the new changes, the Tenancy Tribunal has become increasingly busy, this can mean that some hearings aren’t being heard until tenancies have well ended. New Plymouth-based property manager Rachel Fabish has noticed that the tribunal application process is more time consuming as a lot of extra information now has to be submitted that requires a good understanding of the new legislation. For private landlords, this can be quite a burden especially for someone that is not familiar with the legal process and new rules.
Since the new laws came into effect, Rachel has found that she has been able to offer her experience and knowledge to landlords who do not use McDonald Real Estate’s Property Management and who are experiencing problems.
Patsy Castles has commented that the training and her knowledge of the new legislation gives her the reassurance that McDonald Real Estate’s current procedures are set-up to provide the best outcomes and protections for her landlords. She is also able to use that knowledge to successfully and professionally manage her properties.
Rent arrears and overdue rent
The law now says that if a tenant is in arrears by more than 5 working days 3 times within 90 day’s, and they have been formally issued the correct notice by the landlord each time this has happened, the owner can apply to terminate the tenancy. Our team agrees that this is a positive step forward as property managers are able to use this part of the legislation to help both parties. One, to have a consequence for the tenants that will stop them going into arrears consistently, and two, for the owners who have commitments to mortgages etc that arrears make challenging financially.
An immediate action the McDonald Real Estate Property Management team has taken on is that they have started to use new protocols, including formal notice of arrears that are 5 working days overdue. This is a new and a good tool to keep arrears in check as the consequences are serious for tenants.
It also pays to note that the McDonald Real Estate Property Management team manage over 770 properties and consistently only have 2-3% of this portfolio in arrears, which is fantastic in this industry. COVID-19 lockdowns are certainly a challenge to deal with arrears but the team have plans in place to help tenants not to get in debt and compromise their tenancies if this were to happen.
Tenants making minor changes to rental properties
All McDonald Real Estate Property Managers agree that this has mostly been a positive change. If owners are accepting of the new legislation that allows tenants to make the properties more like a home then the relationships will improve on both sides. Small changes such as putting up baby gates, pictures or cat and dog flaps help the tenants feel like they have a home to be proud of and this provides longevity to the relationship.
Our team of Property Managers mediate these requests and help with what is reasonable and what is not. Even though it is still early, there has not been an influx of requests from tenants looking to make changes, in fact, the team has not had any requests so far, so there is no need to panic that every scenario in the new legislation will result in the landlord having difficult tenants. The majority of tenants are good people looking for a reasonable place to call home. It looks as though the fear-mongering about black paint on every surface was just that.
Understanding what the rules mean for landlords
Our Stratford-based Property Manager Maureen Burrnand has noticed that COVID-19 has affected the stress levels of her clients, both landlords and tenants alike. Stress and fatigue are affecting people and, as a result, she is finding more self-managed landlords have been reaching out to property managers to help with the issues they are dealing with.
The private landlords that have started to reach out to property managers are finding that they don’t have the energy or time to complete regular inspections, which are extremely important for insurance reasons and cannot be overlooked. The new legislation is also challenging owners as they realise just how important it is to understand all the legislation in order to fully reduce the possibility of being caught up in a bad situation.
With an ever-changing landscape of rules and requirements being a landlord has become less of a hands-off passive income and more of a part-time job, something many landlords are willing to employ someone else to worry about so they can achieve peace of mind.
What additional preparation has McDonald Real Estate done?
The team has recently completed a certificate in ‘Situational Safety and Tactical Communications’, which is also used for Police training. The team were taught the correct way to deal with challenging situations and how to talk to tenants to better their chances of compliance and a peaceful resolution. The team felt that this was great ongoing professional training that gave them the confidence to do their jobs even more effectively. They have gained important knowledge in ways to improve outcomes for their landlords and tenants alike.
Even though the new legislation created fear for many landlords, not helped by the exaggerated concerns from a few sources, the reality is showing a different picture. At McDonald Real Estate we are currently seeing around 95% of the tenancies are problem-free and it is only the other 5% that when they rear their head, it becomes evident that professional training to deal with those situations is paramount. If you’re currently self-managing your properties and would like to make sure you have all your ducks in a row, don’t hesitate to contact our team. They are always willing to help share their experience and knowledge. Contact us by clicking on the link below.
