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Terminating tenancies and rent freezes

Terminating tenancies and rent freezes National Propertyscouts

Is the Government biting the hand that feeds them or doing the right thing for tenants and landlords?

On the 26th of March the Government passed special legislation placing a six month freeze on rent increases and limiting the situations where tenancies could be terminated and extending the period in which termination action can be taken against tenants in rent arrears from 21 days to 60 days. The ‘termination’ provisions of the special legislation were for a period of 3 months, but the Government announced at the time that they would review this closer to the end of the 3-month period (26 June 2020). It won’t come as a surprise to us if they do use the Covid 19 situation to extend these provisions – after all it’s in line with law changes, they are proposing. We’ve previously written about our concerns around the proposed changes to the Residential Tenancies Act but on the off chance here are the two biggies that concern us the most:

  1. The proposal to remove a landlord’s right to use “no cause” terminations to end a periodic tenancy agreement. If passed Landlords must use a justified reason to end a periodic tenancy and the Bill includes new provisions to deal with anti-social behaviour.
  2. That fixed-term tenancy agreements are required to become periodic tenancy agreements upon expiry unless both parties agree otherwise.

We here at Propertyscouts, and most of the owners we work for struggle to fully understand the Governments reasoning and, timing. Yes, tenants’ rights need to be protected but so do the rights of landlords, yes rental properties need to be ‘fit for purpose’ and safe for the tenants to live in – any decent landlord would agree with that. But the timing of the Governments initiatives are questionable as most have potential for a negative financial impact on investors. The result, a lot believe, will be less properties available in the rental pool – at a time when we might need them most. Of the 600,000 tenancies in NZ around 90% are privately owned by ‘mum and dad’ investors who records show generally only own one or two investment properties. These are the people who have opted to provide rental properties here in NZ. To the Government we say “don’t bite the hand that feeds you”.

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