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Reforms to Benefit Landlords and Tenants

22 September 2006 Media Statement

Reforms to Benefit Landlords and Tenants

Building Issues Minister Clayton Cosgrove has today announced a package of reforms to improve tenancy law and tenancy services provision that will facilitate a fairer and better rental market for both tenants and landlords.

The package includes proposed amendments to the Residential Tenancies Act 1986, and significant enhancements to landlords' and tenants' advice and dispute resolution services.

Mr Cosgrove said the changes were important, especially given the growing number of New Zealanders in long-term rental accommodation or owning rental properties.

"After wide-ranging consultation, the key issues identified in the review of the Act included a lack of stable tenure for longer term tenants, variable standards of rental housing and a lack of knowledge among landlords and tenants on their rights and responsibilities," he said. "This review also identified dispute resolution issues."

Benefits for landlords include new property entry rights, and allowing them to recover reasonable debt collection costs incurred in enforcing Tenancy Tribunal Orders through a private debt collection agency. It is also proposed to allow some tenant breaches to become unlawful acts that can result in exemplary damages being awarded, as an alternative to eviction. These would include sub-letting, assigning a tenancy without consent, over-populating the premises or becoming a problem neighbour.

The Government has also instructed the Ministry of Justice to review the way in which civil debts – for example unpaid rent – can be collected faster and easier by landlords.

Mr Cosgrove said the reforms would also strengthen tenants' rights. "Landlords who breach building, health and safety regulations may face financial penalties payable to the tenant," he said.

"Greater protection for fixed term tenants is proposed by compelling landlords to notify tenants at least three weeks before the tenancy period ends if they are not going to renew the contract. Fixed term tenancies that expire with no new agreement being signed will automatically become periodic tenancies, whereby tenants must give three weeks notice and landlords give three months notice, if either party wants to end the tenancy."

Fixed term tenants will also be allowed to apply to end a tenancy early, in the event of a substantial and unexpected rent increase.

In addition to the legislative amendments, Mr Cosgrove welcomed improvements to the Department of Building and Housing's tenancy advice and dispute resolution services. The new measures include face-to-face services in more locations throughout New Zealand, an online application service and telephone mediation.
"These changes will deliver more consistent and accessible services throughout the country," Mr Cosgrove said. "Landlords and tenants will find it easier to get the advice they need, and to resolve disputes faster."
The service improvements include:

 Extended hours for phone advice - 8am to 5.30pm weekdays instead of 8.30am to 4.30pm
 New easy to use Tenancy Tribunal application forms
 Access to face to face services in 17 more locations throughout New Zealand
 Straightforward disputes resolved quickly through a new phone mediation service
 The introduction of online applications to facilitate quicker case turnaround

“No tenancy centres are closing. All of our existing locations will continue to provide services, plus there are now 17 additional locations. In total there are now 85 centres where landlords and tenants can sit down with a mediator, get advice or pick up resources. The Government is effectively providing the public with more choice."

The additional community venues, which will now provide services by appointment, are Putaruru, Mangakino, Murupara, Te Kuiti, Kawerau, Opotiki, Turangi, Paraparaumu, Hornby, Rangiora, Amberley, Waimate, Hokitika, Fairlie, Twizel, Alexandra and Wanaka.

Another new feature is the phone mediation service, Swift, that has been set up to resolve straightforward tenancy disputes within 24 hours.

"Work is also underway into providing more information for both landlords and tenants on their rights and responsibilities, and more enforceability surrounding both,” Mr Cosgrove said.

“Landlords invest a large amount in their properties and need their interests protected, and tenants have a right to stable and secure homes. These changes should result in better relationships between landlords and tenants, and therefore better outcomes for families – for instance, continuity of schooling for children."

Other reforms by the Government to improve standards and services across the building and housing sector include; the review of the Building Code, the licensing of building practitioners while protecting the Do-It-Yourself (DIY) tradition, auditing and accrediting Building Consent Authorities, a major shake up of the Weathertight Homes Resolution Service, the introduction of a financial assistance pilot for the worst affected owners of leaky homes, product certification and investigating a home warranty insurance scheme.


Background Information

Why are these changes needed?
Following extensive public consultation, the Government has identified where improvements need to be made to tenancy legislation and service delivery. The enhancements aim to create a more confident and effective rental housing market where tenants and landlords can make informed decisions and have better access to information and support services.

What does the Residential Tenancies Act 1986 do?
The Act sets out the rights and obligations of people who rent their homes and the landlords they rent from. It covers things like rent and bond payments, property repairs and giving notice. It also sets out dispute resolution procedures.

Why did the Government review the Act?
The review was needed in light of significant changes in the nature and scale of the residential rental market since the Act was introduced in 1986. In particular:
 The increasing importance of rental housing in New Zealand’s housing mix (now around a third of New Zealand households rent)
 Rental accommodation becoming a long-term tenure for more households
 Changes in demographic structure – for example an "ageing population" is joining the rental market traditional dominated by students and people saving for their own home.

What are the key gains for landlords?

 Allowing landlords to recover reasonable debt collection costs incurred in enforcing Tenancy Tribunal orders through a private debt collection agency. In the past landlords were only able to recover costs incurred when enforcing an order through the Court system
 Providing for some tenant breaches to become unlawful acts that can result in exemplary damages as an alternative to eviction. These would include sub-letting or assigning a tenancy without consent, over-populating the premises or creating neighbour problems
 Working party to be established to investigate greater flexibility in the redirection of benefits to landlords
 New right of entry for the purposes of an appraisal by a real estate agent or building inspector. (Currently landlords are reliant on tenant good will to negotiate such access)
 Tenancy Tribunal able to make an order against a guarantor of a party to a tenancy agreement. Currently if a landlord wishes to pursue the guarantor to a tenancy agreement (e.g. for rent arrears) they cannot go to the Tenancy Tribunal – they must go to a District Court or Disputes Tribunal, which involves time and expense.

What are the key gains for tenants?
 Creation of new unlawful acts such as landlords interfering with the supply of services (e.g. water) to the premises or breaching building, health and safety regulations
 Landlords who intend being abroad for more than three weeks will be required to appoint someone in New Zealand to manage their tenancies for the duration of their absence
 Landlords will have to notify tenants at least three weeks before a fixed-term tenancy ends if they are not going to renew the tenancy. Fixed term tenancies that expire with no new agreement being signed will automatically become periodic tenancies, whereby tenants must give three weeks notice and landlords give three months notice, if either party wants to end the tenancy. Currently there are no written rules on the rights and obligations for either party giving notice once a fixed tenancy term has expired

How will landlords and tenants know about these changes?
The Department will be undertaking an education campaign aimed at landlords and tenants once the Residential Tenancies Act has been amended.

What does this mean for landlords and tenants?
These changes should result in better relationships between landlords and tenants, with each party more aware of their respective rights and responsibilities under the Act. The amendments to the Act will clarify and strengthen their roles.
Better landlord – tenant relationships will mean greater protection for landlords' assets as well as more stable and secure home lives for tenants, who are less likely to move due to fewer disputes with their landlords. This means better outcomes for families – for instance continuity of schooling for children

What is the process and timeline for establishing the working party to investigate redirection of benefits to landlords?
The working party will be an officials working group run jointly by the Department of Building and Housing and the Ministry of Social Development in consultation with other agencies. The working group is scheduled to report to the Minister for Building Issues and the Minister for Social Development and Employment in April 2007.

What happens next?
Further work is being done on how the Act connects to other related legislation, such as the Retirement Villages Act and the Unit Titles Act. Once the final decisions are taken, a draft Bill will be developed for Parliament to consider next year.

Service delivery changes

What will these changes to tenancy services deliver?
More consistent tenancy services around the country, connect more communities, and make services more accessible for tenants and landlords.

Why did the Government decide these changes are needed?
A review conducted in 2004 found that while Tenancy Services were generally well regarded, some tenants and landlords wanted more options for accessing services. There was also strong feedback around the changing nature of the rental market and the need to update service delivery. A wide range of stakeholders was consulted. The changes are effective now.

What are the changes?
There are five key changes, promoted to the public through service locations.
The changes are:
 Extended hours for phone advice. The free phone line, 0800 TENANCY, is available from 8.00am to 5.30pm weekdays
 New, easy to use Tenancy Tribunal application forms – one for landlords and one for tenants to fill in when making a formal complaint about the other party.
 Access to face-to-face services in 17 new locations throughout New Zealand, bringing a total of 85 locations. Most offices are appointment-based but walk-in services are available in the Auckland CBD, Manukau, Hamilton, Wellington and Christchurch
 A new phone mediation service called Swift aimed at resolving straightforward tenancy disputes that meet certain criteria, within 24 hours. If Swift phone mediation is unsuccessful most applications will then be scheduled for phone or face-to-face mediation.
 The ability to file applications to the Tenancy Tribunal online 24 hours a day, seven days a week and to pay the standard $20 fee by credit card.

Is the $20 fee for making a Tenancy Tribunal application new?
No. The enhanced services just mean that tenants and landlords can now make an application online at www.dbh.govt.nz and pay the application fee with their Visa or MasterCard online also. Up until now applications could only be made on paper forms and the application fee paid at Westpac bank or by purchasing pre-paid stickers from the Department. These options are still available.

What sort of disputes would go through the new, quicker phone mediation?
Swift phone mediation will be offered to landlords and tenants who may be able to resolve their disputes within 24 hours. An example is an application for rent arrears where both the tenant and landlord agree that the rent is behind and they require mediation to reach an agreement about how the arrears will be paid.

What will these changes mean for staff numbers overall?
Overall the number of staff has remained the same – they are doing different things. The focus is on better service. Centralised processing will allow for faster and more uniform and accurate processing of applications. It will also allow resources to be put into helping avoid disputes by providing advice and information to tenants and landlords.

Have any centres closed as a result of these changes?
No. There are an additional 17 community venues at Alexandra, Wanaka, Hornby, Hokitika, Amberley, Rangiora, Twizel, Fairlie, Waimate, Paraparaumu, Te Kuiti, Opotiki, Mangakino, Murupara, Kawerau, Turangi and Putaruru.

Where are the 85 locations for advice and mediation?
At the Department of Building and Housing Tenancy Services locations in;

Northern region Central region Southern region
Auckland CBD Dannevirke Taupo Alexandra
Dargaville Fielding Tauranga Amberley
Helensville Gisborne Te Awamutu Ashburton
Henderson Hamilton Te Kuiti Balclutha
Kaikohe Hastings Te Puke Blenheim
Kaitaia Hawera Thames Christchurch
Kerikeri Huntly Tokoroa Cromwell
Mangere Kawerau Turangi Dunedin
Manukau Levin Upper Hutt Fairlie
Orewa Lower Hutt Wainuiomata Gore
Pukekohe Mangakino Waipukurau Greymouth
Takapuna Marton Wairoa Hokitika
Waiheke Masterton Whakatane Hornby
Warkworth Murupara Wanganui Invercargill
Whangarei Napier Wellington Kaikoura
New Plymouth Woodville Motueka
Opotiki Nelson
Paeroa Oamaru
Pahiatua Picton
Palmerston North Queenstown
Paraparaumu Rangiora
Porirua Takaka
Putaruru Timaru
Rotorua Twizel
Ruatoria Waimate
Taihape Wanaka
Taumaranui Westport

How will services improve for both tenants and landlords?
Landlords and tenants will have a greater range of choice over how, when and where they access tenancy services and advice, as well as new tools to facilitate the fast resolution of straightforward disputes. The extra locations mean more face-to-face advice for those who want it. Those who prefer to use the phone or Internet will be able to resolve problems easier and faster without having to travel.
Both parties will also have a greater awareness of their rights and responsibilities.

ENDS

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