Letting Fees bill passes final reading, will be gone by Xmas
The Prohibiting Letting Fees bill has passed its final reading in parliament today.
The bill, which passed its third reading with support from Labour, NZ First and the Greens, will make charging a tenant a letting fee an unlawful act.
A letting fee is usually one week’s rent+GST and will save tenants in New Zealand up to $47 million per year.
The law will come into effect on December 12, in time for the busy letting season of January and February.
The maximum penalty for property managers who attempt to charge a letting fee after this date will be $1000 exemplary damages.
Landlords or property managers will still be able to seek reimbursement from a tenant for expenses reasonably incurred as a result of a tenant assigning, subletting, or lease breaks.
In a survey of 500 property managers, conducted by tenancy.co.nz, 70% of property managers said they would charge the owner a letting fee instead, 12% said they would increase their management fee and 18% said they would charge the landlord half a week letting fee and a slightly increased management fee.
National and Act opposed the bill, saying it would see higher rents in the long-term and may force some landlords to quit the residential rental market.
Wellington landlord wins precedent setting Airbnb District Court appeal
The landlord of a Wellington apartment has been awarded the full amount of the tenant’s profits from Airbnb subletting in what is believed to be a precedent setting District Court appeal.
The tenant, Jeff Walter Patterson, had illegally sublet the Bellagio apartment, in central Wellington, on 54 occasions over six months in 2017.
Earlier this year, the Tenancy Tribunal awarded the landlord only $2,150 of the $13,695 profits Patterson is believed to have made through the subletting platform.
The Tenancy Tribunal took into account net profit and ‘services fees’ the tenant would have incurred.
But District Court Judge Chris Tuohy said that figure was wrong, and “it is self-evident that the Tribunal made errors in its calculations.”
Judge Tuohy subtracted $6,107.30 off the Airbnb profits for rent paid and other expenses.
As a result, Mr Patterson has now been ordered to pay the landlord $7, 587 for profits made through Airbnb, on top of the $9,369.29 he already owed for rent arrears, exemplary damages and the cost of replacing a door. A further $6000 was awarded to the owner for legal costs.
The total debt owed to the owners is $22, 950.99.
Keith Powell, from Nice Place Property Management, who represented the owners with a legal counsel, said this District Court judgement will now hold precedent against all tenants who breach a subletting clause in their tenancy agreement.
“It is clearly precedent setting. My legal councel is very happy with it,” Powell told tenancy.co.nz
“It does send a clear message to tenants that they will not get away with illegal subletting.
“There was a subletting clause in the agreement that said the tenant should not use Airbnb so the tenant has no excuse. There is no way he could have misunderstood it.”
Judge Tuohy agreed and said that tenants shouldn’t be allowed to profit through illegal subletting.
“The term breached was as clear as a bell,” Tuohy wrote in his judgement. “It is obvious from the figures in this case that a tenant could make several hundred dollars profits each week simply by renting the apartment and then subletting it through Airbnb continuously in blatant breach of the tenancy agreement.”
Powell is now pursuing the debt owed for the owners.
Letting fees set to be outlawed by Christmas
Tenants in New Zealand should receive an early Christmas present with letting fees set to be outlawed by December 12.
As promised, the Labour-led Government will outlaw the practice that allows a property manager to charge one week’s rent for assigning a tenant a rental property.
The final report by the Select Committee says that time is of the essence and passing the Residential Tenancies (Prohibiting Letting Fees) Amendment Bill will be to the benefit of thousands of tenants.
“We were advised that tenancy turnover around New Zealand is highest between November and February. Our amendment would help to maximise the reduction in costs for tenants who sign up for new tenancies over the peak period,” the report says.
The report also indicates that this cost will invariably be passed on the landlord.
“The Bill aims to ensure that the costs associated with letting a rental property are met by the landlord, rather than the tenant. It also seeks to reduce the upfront costs faced by some tenants when renting a property.”
However, in the report, the National party warns “the bill fails to recognise that the cost will have to be passed on to the tenants by way of increased rent.”
Exemplary Damages & Charging for Lease Breaks
The bill would make it an unlawful act to charge a tenant a letting fee, with a maximum level of exemplary damages set at $1,000.
Landlords or property managers could still seek reimbursement from a tenant for expenses reasonably incurred as a result of a tenant assigning, subletting, or lease breaks.
Tenancy.co.nz consultant Scotney Williams says this figure will be at the discretion of the property manager or landlord and could include costs for time and credit checking.
“If the (property manager or landlord) does (a lease break) on time and attendance basis they will never be wrong,” Williams said.
“And if they’re charging for credit checks and background checks as well the Tenancy Tribunal will unlikely say that is unreasonable.”
The next stage in the legislative process is the Second Reading, with no date confirmed yet.
Scrapping of ‘no cause’ terminations will create new blacklist of tenants, says real estate boss
A real estate boss is warning that a proposal to scrap ‘no cause’ tenancy terminations will force landlords to utilise other provisions of the Act to evict tenants – making it more difficult for some tenants to find a new rental when they move on.
The proposal to end ‘no cause’ terminations is one of a suite of measures being proposed by the Government in an effort to ‘modernise’ the Residential Tenancies Act.
According to Housing Minister Phil Twyford, “a small minority of landlords (are) giving the whole sector a bad name (and) rental law reform is needed”.
Under the proposal, which has been put out for consultation, Landlords would no longer be able to evict tenants, without reason, after 90 days. Instead, evictions will need to comply with defined ‘causes’ – a provision which was in the previous Act but for which the eviction period has been increased from 42 to 90 days.
First National Real Estate Chief Executive Bob Brereton says that this change will have significant unintended consequences because landlords will now be forced to use provisions which could make it difficult for tenants to find another property to rent.
“Currently, it’s often easier for a Landlord or Property Manager to issue a 90 day notice than to take a tenant through the Tenancy Tribunal and get an order for eviction,” Brereton said.
“For example, in cases where a tenant is behind on rent, causing complaints from neighbours, exceeding the number of people allowed to occupy the home, or just generally making life difficult for the Landlord or property manager it’s often easier to just issue a 90 day notice – even though there might be sufficient evidence to take the tenant to the tribunal”.
However, if the 90 day clause is removed, Landlords and Property managers will be forced to provide details of these breaches in order to obtain an eviction notice – which means a ‘black mark’ will be registered, against that tenant, on the Tenancy database making it much more difficult for those tenants to secure a new property”.
Mr Brereton says that the Government seems to be under the impression that the 90 day clause is being abused by landlords to get rid of tenants and that it disadvantages tenants by not giving them security in their home.
“This is nonsense. The reality is that the 90 notice is often used to protect the tenant from a stigma which would stay with them in future rental situations”.
Tenancy.co.nz consultant Scotney Williams argues that the ‘no cause’ termination is often used for tenants who push the boundaries of what is considered acceptable behaviour.
“If the government was to change (the ability to issue 90-day no cause terminations) it would certainly make it more difficult to manage tenants who were doing things which are just below the case of obvious (breaches) and in which case evidence is difficult to get,” Williams said.
Landlords and property managers criticised for checking bank statements
Landlords and property managers are being criticised for asking prospective tenants for their bank statements when vetting for new tenancies.
NZ First MP, Darroch Ball, said the practice is exploitative and risks being used as a mechanism for discrimination.
“It only serves to prejudice tenants who have very little choice about the demands if they are competing for a home,” Ball said.
Housing Minster Phil Twyford said that it wasn’t necessary illegal but said it should be.
“When property managers or landlords request that information they are skating very close to the line of discrimination,” Twyford told media.
Tenancy.co.nz legal consultant Scotney Williams said there are other ways to get the necessary information from a prospective tenant.
“Property managers and landlords simply need to know that the tenant has the money and can pay the rent on time,” Williams said.
“A previous landlord reference, a payslip or bank statement showing your wages going in every week or your rent going out every week is enough in most circumstances.”
“But a bank statement could be a useful way of showing you’re a suitable applicant if you have no prior history of being a tenant. This could be appropriate for a first-time tenant or someone who is new to the country.”
Landlords and property managers have other vetting methods they can use including credit checking and background checking.
Maintenance delay proves costly
The Tenancy Compliance and Investigations Team has successfully taken a Rotorua property management company to the Tenancy Tribunal for failing to fix serious problems in a rental property it manages, sending a clear message to all landlords that failing to address maintenance issues impacts severely on the wellbeing of tenants.
The Tenancy Tribunal has ordered McDowell Real Estate Limited of Rotorua pay $3000.00 in exemplary damages for failing to provide and maintain the premises in a reasonable state of repair, in accordance with the Residential Tenancies Act (RTA) and regulations.
Steve Watson, National Manager Tenancy Compliance and Investigations Team (TCIT), said that the most concerning thing about this case is the length of time the tenants had to live in a substandard premises which severely impacted their health as well as their daily lives.
“These tenants repeatedly told their landlord of the problems with their rental property, and while ultimately fixed, they took 16 months to be addressed,” said Mr Watson.
“When the living situation of the tenants gets to the point where vulnerable tenants, including a school-aged child, have to move out due to the conditions in the house, this is not only legally unacceptable, but also morally.
“Tenants have an obligation to inform their landlord if they feel their rental home needs repairs, and tenancy law clearly sets out a landlord’s obligations to attend to this in a timely manner.
“In this case the damage was caused when a water pipe in the celling burst and the roof was not fully repaired, causing the house to be cold, damp and draughty – all of which would not have occurred if the repairs had been done properly at the time. Due to the time taken by the landlord, the tenants had to tape up the holes with cardboard,” Mr Watson said.
The TCIT was established following the changes to the RTA that came into effect on 1 July 2016. The team focuses on significant or ongoing breaches of the Act which pose a significant risk to vulnerable tenants.
Professionals join the Tenancy eBundle club
Professionals are the latest property management brand to join the Tenancy eBundle family as an entire franchise.
With the help of website developers Property Suite, Professionals have made this integration to their nationwide brand.
“We are delighted to join the Tenancy eBundle and the feedback from our offices has been really positive,” Professionals CEO Mike Henderson said.
There are a number of reasons for this integration:
Driving Web Traffic
Applicants are pushed to the Professional website to apply for tenancies. It not only strengthens their brand, but ensures the application process is the same, or similar, to other major industry brands.
The application and agreement process is seamless. It saves the property manager time by compelling the tenant to do the data entry when they apply online.
The combination of mandatory fields and the application form structure, result in a higher quality tenancy application being submitted.
eBundle clients gain access to the tenancy.co.nz online tenancy agreement. This is updated regularly to reflect changes to legislation and relevant case law.
At least 20,000 tenancy applications will be submitted to over 1,600 property managers this month.
If you want to find out more about our online tenancy application and agreement, CLICK HERE
Who is Fiji bound with Tenancy eBundle?
The end of the year is finally here so it’s time for our grand draw to see who wins a trip for two to Fiji.
If you were at the LJ Hooker, Harveys, IPMA or First National Conferences and have joined the Tenancy eBundle this year… you have a chance to win the grand prize.
Our 16 finalists were: Karen Silby, Christina Morse, Arun Ranchood, Vicky Harris, Zafrina Kahn, Lynn Goldsmith, Shonagh Harris, Nikki Parsons, Liz Stewart, Penny Leigh, Trish Lillis, Jill Burgess, Grace Jenkins, Cushla Wilmshurst, Emma Brown, Courtney McLean.
WATCH THE VIDEO ABOVE TO SEE WHO WON THE TRIP
To learn more about the Tenancy eBundle CLICK HERE
Tenancy eBundle marks 1-year anniversary
The Tenancy eBundle is now 1! And we can now proudly say that it’s become an essential tool for property managers all over New Zealand.
The growth has been phenomenal, with over 1600 property managers now using the online tenancy application and agreement.
Check out these numbers:
– 59,942 prospective tenants have applied for tenancies through the Tenancy eBundle
– Over the next year we have forecasted (based on November numbers) 125,928 applications to be processed through the Tenancy eBundle in 2018.
– 15,275 tenancy agreements have been signed through the Tenancy eBundle
-Over the next year we have forecasted (based on November numbers) 39,156 tenancy agreements to be processed through the Tenancy eBundle in 2018.
So to celebrate what the Tenancy eBundle has achieved and what is to come, we have a special offer just for the month of December.
*There are a limited number of RTA handbooks. Offer only applies while stock lasts.
Home buying ambitions high among Auckland renters
A survey of Auckland renters has found a strong majority maintained their ambition to own a home of their own – with 59% saying they intended to buy in the next two-to-five years.
The Barfoot & Thompson survey was conducted in August and discovered some surprising results.
“We were taken by surprise by the positive response around buying a home in the next few years. It’s very encouraging particularly given much of the recent commentary around it has been negative,” says Barfoot & Thompson Director Kiri Barfoot.
“From the media reports, I would have expected fewer renters to say that they are aiming to buy a home, but perhaps there has been a change in sentiment towards the future of buying a house.”
A random sample of one thousand tenants (response rate 31%) from its database of 15,000 tenants were contacted.
Renters were asked what the important factors were in choosing a rental property.
88% of respondents said price, and 85% said location. The number of bedrooms (67%), and kitchen space (52%) were also important.
The most popular ‘extras’ influencing renters’ choice in a property included additional car parking spaces (57%) and extra storage space (53%). Outdoor space, a fully fenced section, and pets being allowed were also popular; each considered an influential factor in choosing a property by over 40%. Spa pools proved popular with just 13%.
When asked who they would prefer to manage their tenancy, 48% of respondents said they would prefer a professional agency, 25% said an owner, and 28% said they had no preference for one or the other.