New tenancy laws part 2: Important changes for property managers

On 1 July the Residential Tenancies Act 1994(“RTA”) was repealed and replaced with theResidential Tenancies and Rooming Accommodation Act 2008 (“RTRAA”).

Many provisions in the RTRAA are similar to those in the RTA but there are still many important changes that property managers must be aware of.

Rent etc

The amount of rent in advance an owner can charge is now regulated. For fixed-term tenancies the maximum is 1 month; for periodic tenancies, the maximum is 2 weeks. When advertising a property for rent a fixed price must be quoted. The practice of auction-style bidding for rental properties and advertising “rent ranges” (e.g from $200 – $250) has been abolished.

An owner can grant a rental discount if the rent is paid on time but may not initially ask the tenant to pay a higher rent and then discount it on the basis of compliance with tenancy agreement terms. The tenant is not obliged to pay any premium or surcharges on levies, insurance premiums, rates or taxes that the owner pays.

Notices for rental increases and termination

Rent can not be increased during a fixed-term tenancy unless the tenancy agreement allows for this and 1 month’s written notice must be given. As long as the required notice is given there is no limit to the number of allowable increases but they are not permitted more frequently than 6 monthly.

An owner must give a tenant at least 2 months written notice of any rent increase during a periodic (eg monthly) tenancy, but increases are not permitted more frequently than 6 monthly. Owners must give tenants 2 months notice to leave the property without grounds. This applies to both fixed terms in respect of which the notice can only be effective on or after the last date of the term, and periodic (eg monthly) tenancies.

Tenants in a caravan or other movable dwelling must be given 3 months notice to leave if there is a voluntary park closure. If rent is more than 7 days overdue a Notice to Remedy Breach (Form 11) can be served. The tenant then has 7 days to pay the rent. If the tenant fails to pay within that period then the termination process may commence.

New lease after expiration of the earlier term

Tenants are now entitled to dispute significant changes in a subsequent agreement for the same property. These include rent increases and things like whether pets are barred.

Inspections

As before, an Entry Notice (Form 9) is required for all inspections except those in an emergency or where the property is in imminent danger. A general inspection requires 7 days prior notice to the tenant but for most other inspections, including those for repairs or marketing, 24 hours is sufficient.

A new requirement is that a 2-hour inspection window must be specified in the Entry Notice unless the owner or agent is accompanied by another person e.g. prospective buyer, tradesman. Entry must be commenced during the period but the inspection can continue beyond until the inspection is completed. As discussed in July’s eNews, an owner or their agent must obtain the tenants’ written consent to:

• conduct an inspection outside the hours of 8am to 6pm or on a Sunday or public holiday
• hold an open house;
• hold an on-site auction; or
• use photos showing any tenant possessions including furniture,

Such consent can be included in the tenancy agreement itself or contained on a separate “consent” signed by the tenant at the same time as a tenancy agreement but a tenant may withdraw blanket consents at any time. Inspections for marketing also require that the tenant be given an Entry Notice (Form 9) at least 24 hours prior to the proposed inspection time, unless the tenant agrees to a shorter period.

General

New tenancy agreements must be on the new General Tenancy Agreement for houses and units – Form 18a.
As was always the law, the RTRAA clarifies that a tenant’s property or goods can not be seized for unpaid rent, damages or other monies owed.

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