New rental laws will have unexpected outcomes

Watch out – some of the tenancy reforms now set to become law will have unintended consequences and cause more harm than good, REINZ is warning.

REINZ chief executive Bindi Norwell

The Government’s Residential Tenancies Amendment Bill, which is intended to increase security and stability for tenants, passed its final reading in Parliament last night.

But property professionals are joining landlords to warn that while the Bill might achieve some positive things for tenants, the changes to rental law will have some unexpected outcomes.

REINZ chief executive Bindi Norwell says that in a recent survey around half of landlords and investors (46.3%) said it is likely or highly likely they will sell their rental property if removal of the right to issue a 90-day notice went ahead.

“Given we already have a shortage of quality rental stock across the country, this is problematic as it will further reduce the pool of rental properties available and likely push up rents even further.

“With median rents in Auckland having risen 9.8% in the last 3 years (from $510 to $550) and in Wellington by 20.2% (from $420 to $505), it will be interesting to see how much higher rents go as more landlords withdraw from the market.”

On top of this, tenants without an “excellent” rental history may now find it even harder to successfully secure a rental property than they already do, given how hard it will now be to remove tenants who end up significantly in arrears, she says.

“This is especially true, considering landlords will need to apply to the Tenancy Tribunal to terminate the tenancy therefore, extending the average timeframe to resolve claims and extending backlogs further.”

“Both REINZ and the New Zealand Property Investors’ Federation who represent a significant portion of landlords across the country have warned this would be a likely outcome as landlords and property managers seek to take a more risk averse approach to selecting tenants.”

However, REINZ does welcome some of the positive provisions in the reforms. These include the banning of rent bidding, limiting rent increases to once a year and enabling tenants to make minor changes to a rental.

Norwell says they are also broadly supportive of the changes introduced in a supplementary order paper at the last minute.

These include allowing victims of family violence to end a tenancy with two days’ notice, allowing landlords and property managers to terminate tenancies with 14 days’ notice if a tenant physically assaults them and the extension of the time the Tribunal can hear cases via phone/video conference.

The bulk of the reforms are set to come into effect in six months and REINZ will actively support its members nationwide with implementing the changes in due course, Norwell adds.

Read more:

Radical tenancy reforms now law 

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