New Zealand Property Investors' Federation
The NZPIF is the umbrella body for 17 local Property Investors' Associations throughout New Zealand.
New Zealand Property Investors' Federation
The NZPIF is the umbrella body for 17 local Property Investors' Associations throughout New Zealand.
Submission of the
New Zealand Property Investors’ Federation Inc
to the
Social Services Select Committee
examining the
Residential Tenancies Amendment Bill
July 2009
Martin Evans
President
New Zealand Property Investors’ Federation Inc
PO Box 20039, Bishopdale
Christchurch
Email: Martin@a1prop.co.nz
Ph: (03) 351-7643
Mobile: 027 222-8286
TABLE OF CONTENTS
| SUMMARY | 3 |
| RECOMMENDATIONS | 3 |
| NZPIF | 6 |
| Industry BACKGROUND | 6 |
| What is the extent of the private rental industry? | 6 |
| Who rents? | 6 |
| 6 | |
| 7 | |
| 7 | |
| BILL - Clause by clause analysis Clause 4 Interpretation Clause 9 Contents of tenancy agreement Clause 10 New section 13AB inserted “13AB Address for service Clause 13 inserts new sections 16A and 16B Clause 14 New section 18A inserted18A Landlord security Clause 15 amends section 19. Landlord’s duties Clause 22 Tenant’s goods not to be seized Clause 23 New section 39 substituted - Responsibility for outgoings Clause 24 Tenant’s responsibilities Clause 26 Assignment and subletting by tenant Clause 27 Landlord’s responsibilities Clause 28 Landlord’s right of entry Clause 31 Termination by notice Clause 35 Termination on non-payment of rent, damage, or assault Clause 38 Destruction of premises Clause 40 New sections 60A to 60C inserted Clause 41 Abandonment of premises Clause 42 Abandoned goods Clause 58 New sections 86 and 87 substituted Clause 66 Costs Clause 69 amends section 109 Clause 79 Residential Tenancies Trust Account | 8 |
| Principal Act Section 17 Requiring key money prohibited |
The New Zealand Property Investors’ Federation welcomes the opportunity to input into the Residential Tenancies Amendment Bill.
The proposed legislation is well-intentioned and rightly clarifies and rebalances the rights, obligations and penalties imposed on landlords and tenants as many of the law’s current provisions are inconsistent, iniquitous and weighted against landlords.
Landlords have a great deal of capital invested in the residential tenancy market and provide an invaluable service to the community. It is only reasonable that the law recognises the contribution of landlords and their need to be fairly protected.
Balanced and fair residential tenancy laws are essential if landlords are to continue providing rental dwellings and accommodation for people in New Zealand.
| Clause 4 (2) Interpretation | That a new sub-clause be inserted: “(g) any other person who is a trustee of a trust and director of a company
|
| Clause 9 Contents of tenancy agreement | That the proposed new sub-clause “(na)” be omitted
|
| Clause 10 New section 13AB inserted “13AB Address for service
| That the clause should enable and recognise the address for service given as a Lawyer or Accountants address be acceptable. Email addresses should not be permitted as an “address for service”. |
| Clause 13 inserts new sections 16A and 16B | The Bill specifies that an agent can be a friend or family member That the change of landlord form should be temporary or allow Property Investor Associations to have ability to refund bonds. An agent can have all the necessary forms but would not file them unless an incident occurred. |
| Clause 14 New section 18A inserted 18A Landlord must not require security other than permitted bond | Delete 18A |
| Clause 15 amends section 19. Landlord’s duties under the Act to pay bond monies also apply to partial bond payments | The Bill should amend the Act to enable a minimum of two and a maximum of 12 weeks (in line with the 90 day termination period), negotiated bond agreement between landlord and tenant |
| Clause 22 Tenant’s goods not to be seized | Landlords should not be required to keep a former tenant’s items after the tenancy has ended, unless suitable arrangements have been made, and should be entitled to dispose of it accordingly |
| Clause 23 New section 39 substituted - Responsibility for outgoings | That section 39 (1) and (2) of the principal Act be amended to reference service connection fees but excluding reconnection fees due to disconnection following a tenant failing to pay their account) and all charges for water supplied to or from the premises (including the cost of charges for standard meter readings) if the charge is identifiable to the premises and the period of occupation by the tenant be payable by the tenant. |
| Clause 24 Tenant’s responsibilities | Damages should be $3,000 in line with landlord breaching a works order New sub-clauses be inserted 24(3A) (e) non-compliance with relevant and applicable body-corporate rules 24(3A) (f) gaining a tenancy through a false identity or information 24(3A) (g) wilfully damaging property 24(3A) (h) tampering with fitted smoke alarms 24(3A) (i) Tenants stopping their rent payments after they have given notice to end a tenancy |
| Clause 26 Assignment and subletting by tenant | Damages should be $3,000 in line with landlord breaching a works order |
| Clause 27 Landlord’s responsibilities | Delete 45(1A) |
| Clause 28 Landlord’s right of entry | The Bill define what constitutes “reasonable time” and we suggest that this be: times between 8am and 7pm. , The clause should also provide for the making of consent within 2 days subject to any reasonable conditions.
|
| Clause 31 Termination by notice | s31(2) be amended by inserting an additional sub-clause, to read: (b) Owner of the premises includes a Trustee of a family trust and or a Director of a company |
| Clause 35 Termination on non-payment of rent, damage, or assault | Damages should be of the level of $2,000 in line with a landlord using force to enter a premise |
| Clause 40 New sections 60A to 60C inserted | Section 60A should include - during the last 21days of a fixed term tenancy either party can give 21days notice if no other agreement has been entered into. That Section 60C be further clarified as currently when resigning at the end of a fixed term the rent can increase. This implies 60 days notice must be given prior to the increase. |
| Clause 41 Abandonment of premises | Damages should be of the level of $3,000 in line with landlord breaching a works order |
| Clause 42 Abandoned goods | Clause 42 be amended to reflect Clause 25 ie abandoned goods pass to the landlord unless arrangements have been made. |
| Clause 58 New sections 86 and 87 substituted | There should be some terms guiding the CE’s decision making |
| Clause 66 Costs | This clause must be included in standard tenancy agreements |
| Clause 69 amends section 109 | The jurisdiction of the Tenancy Tribunal should be extended to include an Order of Examination and an Attachment order at the time of the hearing |
| Clause 79 Residential Tenancies Trust Account | Unclaimed and abandoned bond monies amounting to around $6million should be retained by Tenancy Services to assist and fund Tenant and Landlord education initiatives |
Other amendments to the Principal Act | |
| Clause 17 Requiring key money prohibited | The clause be amended to enable property managers in the grant or assignment of the tenancy to charge any fee or other for services rendered |
This submission has been prepared by the New Zealand Property Investors’ Federation Inc (the Federation) in response to the select committee invitation to provide feedback on the Residential Tenancies Amendment Bill.
Established in 1983, the Federation has twenty affiliated local associations situated throughout New Zealand. It is the national body representing the interests of over 7,000 property investors on all matters affecting rental-housing.
The Federation welcomes this opportunity to participate and comment on the draft legislation.
To assist readers understand the extent of the economic and social importance of the private rental industry in New Zealand and the implications of residential tenancies legislation the following background points are offered.
Renting is increasing in popularity for a multitude of reasons including:
No responsibility for maintenance and repair issues
The private rental sector plays a very significant role housing New Zealanders and makes a huge contribution to the overall housing system, the economy, and downstream industries.
The private rental sector sustains a range of businesses including the financial, legal, accountancy, property managers, tradespersons, cleaners, gardeners, suppliers (of appliances, carpets, wall coverings, etc) and other professionals over decades.
With this critical contribution it is important to acknowledge that the rental housing market works well. Good and reasonably priced rental accommodation provides a healthy living environment, positively affects New Zealand’s standard of living and contributes directly to the productive sector and indirectly through assisting workers to be healthy.
It has been suggested by some commentators that renting and specifically more people renting is somehow a problem.
There is no basis for this viewpoint. To balance this perspective, renting is considerably cheaper than owning your own home. Renting carries fewer risks of events such as interest rate fluctuations and provides more accommodation flexibility.
The residential rental market is highly efficient and works well.
To this end, the Federation is supportive of the Bill. Its proposed legislative reforms are needed to bring the Residential Tenancies Act 1986 up to date with the modern rental market and modern needs.
Although the current Act is working reasonably well, there are a number of areas where it can be improved.
The proceeding commentary follows the headings and numbering sequence of the Bill.
The Federation believes that the definition concerning “member of the landlord’s or owner’s family” should also include trustee of a trust and director of a company.
Property is often owned through a third party such as family trust or Loss Attributing Qualifying Company (LAQC). Under the proposed amendment these people would be excluded.
That a new sub-clause be inserted: “(g) any other person who is a trustee of a trust and director of a company
The clause proposes that if the premises have had to be cleansed under a statutory order (e.g. because the premises have been contaminated due to methamphetamine or “P” manufacture) this be disclosed in the tenancy agreement.
The Federation believes this disclosure requirement is unnecessary. If a premise has been professionally cleansed to the satisfaction of a territorial authority, there is no risk or disadvantage to the prospective tenant. This may then create a further downside for the proposal. It may mean the landlord is not liable in any later tenancy issues as the territorial authority has issued an approval for habitation. In other words, the territorial authority would carry any future health implications.
Further, the proposed disclosure would unfairly penalise the landlord, a victim under these circumstances, doubly. Firstly, for the initial cost of the incident (eg decontamination, lost rent, testing, certification, etc) and secondly the potential for not being able to re-tenant the rectified property or only for a reduced rental.
There are many different levels of initial contamination; however the proposed disclosure would be indiscriminate. A recent case publicised on TV3 news saw the tenant abandoning the property and seeking recompense from the owner when only a trace level of P was found on a light bulb, most likely placed there by the tenant themselves or an invited guest. Under the current proposal, this would then have to be notified on the Tenancy Agreement for an undisclosed period.
Following cleaning and being certified as safe and healthy to live in, then the owner can do nothing more. Rental property owners should not be penalised further, especially when they have no method of ever correcting what has occurred.
If a rental property has been certified safe and healthy to live in then it should not be necessary to insinuate a problem through a permanent notification on the tenancy agreement. If the regulations regarding certifying a property as fit and healthy for living in are inadequate, then these should be altered.
That the proposed new sub-clause “(na)” be omitted.
Many landlords are highly vulnerable to the actions of disenchanted tenants. A tenant who has been evicted for not paying their rent may want to take out their frustration on a landlord. By knowing the home address of their landlord it is easier for them to locate the landlord and either assault them verbally or physically, or damage their home or other property.
A landlord should have the ability to protect their own peace, comfort and privacy by having the option to offer a different physical address for service than their private home.
The clause at 2(b) enables the specification of an email address for the purposes of “address for service”. The Federation sees two major flaws with this, namely, if the email recipient changes address there is usually no redirection order for emails sent to the old address and there is no guarantee that the recipient is going to open them.
The Federation recommends that the clause should enable and recognise the address for service given as a Lawyer or Accountants address be acceptable.
And, email addresses should not be permitted as an “address for service”.
New section 16A proposes landlords who are absent from New Zealand for longer than 21 days to appoint an agent and to notify the tenant of the agent’s name, contact address, and address for service.
Property Investor Associations currently encourage members to provide an alternative contact person for tenants when they are out of the country. Many members form support groups between members that works very well.
We are eager to ensure that these arrangements are able to continue following the additions of section 16A and B to the Act. Consequently we want to make it explicit that an agent can be a friend or family member.
The Bill specifies that an agent can be a friend or family member.
The new section also states that if a bond is held in respect of the tenancy, the chief executive must be notified of those particulars in the prescribed form. An agent appointed under this section has all the rights and obligations of the landlord regarding the tenancy.
It is highly unlikely that a tenant will give notice during the time that a landlord is out of the country. The Federation believes that this proposal will create an administrative burden for landlords and the Bond Centre, that will be unnecessary in the vast majority of cases.
An alternative arrangement could be to have both the landlord and the agent sign a form recording the appointment of the agent. In the event that the agent is required to arrange for a bond refund to the tenant, a copy of this form can be sent with the bond refund form so that the Bond Centre can verify the legitimacy of the refund.
The Federation recommends that change of landlord form should be temporary or allow Property Investor Associations to have ability to refund bonds. An agent can have all the necessary forms but would not file them unless an incident occurred.
The Federation supports this section.
This is consistent with proposed revisions in the Unit Titles Bill. As part of section 25 (see below) compliance with body corporate rules should be part of “Tenant Responsibilities” and non-compliance be included as an “unlawful act”.
The proposal that the body corporate rules are deemed to be and form part of the tenancy agreement is fair and sensible. Body corporate rules establish codes of conduct and practices for the better operation and regulation of the property for owners and residential tenants.
Tenants at all times must abide by the body corporate rules. In the event tenants are in breach of the rules, subject to appropriate notice from the landlord (or property manger) to the tenant the offence(s) should be considered an “unlawful act” and subject to exemplary damages.
The Federation believes that using a credit card facility agreed with and authorised by a tenant should be a legitimate form of Bond payment. Tenants often don’t have the funds to provide a bond when signing a tenancy agreement and this would provide security for a landlord until the tenant can fully pay their bond in the regular manner.
Continuing the ability for landlords to be able to use a credit card facility until the Tenant is able to pay the bond would provide security for the landlord and make them more inclined to accept the tenant, thereby making it easier for the tenant to secure rental accommodation.
Delete 18A
Landlord’s duties under the Act to pay bond monies also apply to partial bond payments.
Section 19B should be amended so that the landlord must lodge the initial bond payment within 23 working days but if the balance of the bond is being paid off then the balance should not have to be lodged until all the balance is received. It is common for the tenant to pay 2-3 weeks at the start and pay the rest off at say $50 per week.
In reference to the principal act – bonds are currently restricted to be no more than 4 weeks' rent. There may be circumstances where a bond in excess of 4 weeks is desirable where a tenant has either a bad track record or is a flight risk such as an overseas resident in New Zealand temporarily.
A move to a bond in excess of a 4-week bond would assist Residential Tenancy Services income through additional interest earned on the funds.
The Bill should amend the Act to enable a minimum of two and a maximum of 12 weeks (in line with the 90 day termination period), negotiated bond agreement between landlord and tenant.
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