Meth, Osaki, poor landlord behaviour tackled in proposed changes to RTA
The tenancy industry has received a significant boost with three proposed changes to be made to the Residential Tenancies Act.
Building and Construction Minister Dr Nick Smith says the changes will provide better protections and clarity for tenants and landlords.
The Bill tackles three of the biggest issues in recent tenancy law, with the Government clarifying methamphetamine contamination, liability for careless damage and the tenancy of unsuitable properties.
“These changes have been eagerly anticipated by the tenancy industry,” tenancy.co.nz legal consultant Scotney Williams said.
“Meth, Osaki and poor landlord behaviour are three of the biggest issues for property managers, landlords and tenants.”
“We welcome these changes and we also want to let the property management industry know that these important legislative changes will be immediately updated in the Tenancy eBundle.”
The Tenancy eBundle, which is an online tenancy application and agreement, is updated weekly and offers property managers in New Zealand the most up to date and robust tenancy agreement in the market.
The Bill implements changes in respect of liability for careless damage arising from the Osaki decision last year.
This present court ruling means landlords cannot recover the costs of damage, including the excess charge on any insurance policy.
“The changes are needed to ensure tenants have an incentive to take good care of a property, and for the landlord to have appropriate insurance,” Smith said.
“Under the Bill, tenants will be liable for the cost of their landlord’s insurance excess up to a maximum of four weeks’ rent for each incident of damage caused by carelessness. A tenant remains fully liable where the damage is deliberate or a criminal act, and the landlord liable for fair wear and tear and damage beyond the control of the tenant, like a natural disaster.”
Williams believes this is a gamechanger for landlords.
“The industry will be very interested to see how the release works out in practice in relation to careless damage,” Williams said.
“It looks as if tenants will be liable for careless damage on formula which closely follows the insurance rules. Tenants may be sued for each “ incident” of damage to a maximum of four weeks rent equivalent, but further capped at the maximum of the excess of the landlords insurance policy.
“When landlords claim for damage, the insurance policy usually treats each item of damage as an “event or incident” to which an excess applies. The landlord has to show that all damage was part of one event or incident to have them all covered by one excess.
“As we read the release, where the tenant knocks over a bottle of wine in two different rooms which do actionable damage, the tenant will be liable for both incidents separately, each as an “incident” to which the formula will apply. Even though each claim is capped, it sounds as if it is a fair and reasonable approach to assigning both accountability and liability. Tenants should be liable for the damage they cause.”
Meth contamination has become a far reaching problem for property managers, landlords and tenants alike, and the new Bill recognises this, although new contamination levels have yet to be finalised.
“This Bill recognises that meth contamination of properties has become a significant issue that needs clearer direction. We want homes to be safe but we also don’t want properties being vacated when the risks are low, Dr Nick Smith said.
“Landlords will have easier access to test for meth and tenants will be able to terminate their tenancy if it presents at unsafe levels. Standards New Zealand is working on appropriate contamination thresholds and the Bill will enable these to be legally recognised and enforceable before the Tenancy Tribunal.
The Bill also strengthens the law for prosecuting landlords who tenant unsuitable properties.
The current jurisdiction of the Tenancy Tribunal is limited to residential buildings, meaning those who rent out unlawfully converted garages, warehouses or industrial buildings as living spaces can avoid accountability.
“These improvements to our tenancy laws will better protect responsible landlords and tenants and help our residential tenancy market function more effectively,” Dr Smith concluded.
The Bill still has to get through a First Reading and a Select Committee in June before being passed into law.
September’s election could yet change the direction of the Amendment Bill.