David Whitburn

Posts Tagged ‘DBH’

The foundation document for the rights and obligations of Landlords and Tenants for residential properties is the Residential Tenancies Act 1986 (“RTA”). The RTA covers a huge variety of aspects to govern payments of rents, bonds, repairs, giving notice, dispute resolution and much more.  Since 1986 a lot has changed with new technologies, new demographics of tenants, more people renting rather than owning property and a trend for longer term tenancies.

The review includes providing a good balance between the needs of tenants for a decent home, and the needs of landlords to effectively manage their rental properties.

Residential Tenancies Amendment Act 2010

After a lengthy review process (some 8 or so years!!), the Residential Tenancies Amendment Act 2010 (“RTAA”) takes effect as the new law from 1 October 2010.  So you don’t have long to make the necessary changes.  Basically the changes are on the whole Landlord friendly.  I particularly like the ability to charge tenants’ penalties for unlawful acts (a new concept brought in).  As for the RTA, I would advise that you also print out the RTAA and put it into a folder or bind it.  After all it is an important document as it sets out the rules for you to manage your property portfolio.

Some of the key amendments include:

• letting fees – enabling all property managers to charge letting fee.
• fixed term tenancies – fixed term tenancies will revert to periodic tenancies on the tenancy expiry date, unless the tenant or landlord gives notice.
• addresses for service – landlords and tenants will be able to use an email address, PO Box or fax number as an alternate address for service.
• agent for landlords overseas – if a landlord is going to be overseas for more than 21 consecutive days, a New Zealand based agent must be appointed.
• body corporate rules – rules will be required to be attached to tenancy agreements when a property is part of a Unit Title complex.
• notices to remedy – previously a “10 working days notice”, this will change to a 14 consecutive days notice.
• terminating a tenancy – new rules have been added for termination of tenancy by notice, for example landlords will be required to set out the reason(s) when giving less than 90 days’ notice of termination.
• unlawful acts – a number of unlawful acts have been added, including interference with the supply of services (eg. water, electricity, gas), having inhabitants than the maximum number of persons the Tenancy Agreement prescribes
• abandoned goods – new rules have been added for landlords dealing with abandoned goods.

IN DETAIL

Below is a list of other changes coming from the RTAA to amend the RTA:

Section 4 – Letting Fees: All property managers (REINZ and Independents) are now called Letting Agents and they can all charge a letting fee (previously only REINZ Members and lawyers could)

Section 7 – Short Term Leases: Previously a rental property owner could take a new tenant on under a short term fixed tenancy, essentially as a trial period. The Tenancy Tribunal will now be able to over-rule trial tenancies of less than 90 days duration.

Section 13 – Address for Service: Addresses for service can also be a Post Office box number, email address or a facsimile number

Section 16A - Absentee landlord: If a landlord is going to be outside of NZ for more then 21 days they have to:

• Appoint a New Zealand based agent (can be family or relative);
• Notify tenant of agent’s name contact address and address for service;
• If a bond is held, notify the chief executive on the proscribed form

Section 16B – Body Corporate Rules: Tenancy agreements on Unit Title properties are now subject to the body corporate rules.

Section 32 – Collection costs: The debtor can now be required to reimburse the creditor for any reasonable expenses or commission incurred by the creditor in recovering or attempting to recover the debt.

Section 39 – Outgoings:

• The Landlord is responsible for outgoings that are incurred as if the premises were empty.
• The Tenant is responsible for all outgoings direct attributable to their occupancy

Section 40 – Tenants Responsibilities: The following become unlawful acts with exemplary damages to the landlord

• Tenants failure to comply with a Termination order ($1000)
• Using or permitting the premises to be used for unlawful purposes ($1000)
• Harassment of other tenants or neighbors ($2000)
• Assigning or subletting when prohibited to do so without landlords written consent($1000)
• Abandonment of the premises without reasonable excuse and while the rent is in arrears ($1000)
• Inference with the means of escape from fire ($3000)
• Intentional breach of a works order($3000)
• Exceeding the maximum number of residents($1000).

Section 45 – Landlords Responsibilities: The following become unlawful acts with exemplary damages to the Tenant:

• Unlawful discrimination ($4000).
• Landlord failing to appoint agent when outside NZ for more than 21 days ($1000)
• Requiring key money ($1000)
• Landlord requiring bond greater than amount permitted ($1000)
• Requiring unauthorised form of security ($1000)
• Landlord requiring rent more than 2 weeks in advance or before rent already paid expires ($1000)
• Failure of landlord to give receipts for rent ($200)
• Landlord seizing or disposing of tenant’s goods ($2000)
• Interference with privacy of tenant ($2000)
• Landlord’s failure to meet obligations in respect of cleanliness, maintenance, or building or health and safety requirements ($3000)
• Unlawful entry by landlord ($1000)
• Landlord interfering with supply of services ($1000)

Section 50A - Death of a Tenant: upon the death of a tenant the personal representative or the next of kin shall be able to give 21 days notice whether it is a fixed term or periodic tenancy.

Section 56 – Notice period: The 10 working day notice period is changed to 14 consecutive days.

Section 58 – Mortgagee gaining possession: both the tenant or the mortgagee can give the other party notice terminating as if it was a periodic tenancy.

Section 60 – Ending of a Fixed Term Tenancy: at the end of a fixed term tenancy it is proposed that it will become a periodic tenancy under the same terms and conditions as the previous fixed term. Either party with an intention not to continue with the tenancy at the end of the fixed term must give the other party written notice of their intentions no earlier than 90 days and no later than 21 days before the end of the fixed term. The tenant must advise the landlord (in writing) at least 21 days before the end of the fixed term.

Section 62 – Abandonned Goods: under the proposed changes, tenant’s goods left at the premises on termination of the tenancy (abandoned goods) can be disposed of in the following order;

• foodstuffs and other perishables can be disposed of;
• with other goods the landlord must make reasonable efforts to contact the previous tenant and come to an agreement upon a period within which the tenant can collect the goods;
• if unable to contact the tenant, agree on a period with the tenant or if the tenant fails to collect the goods within the agreed period the landlord may remove them to safe storage and apply to the tribunal for a disposal order (as at present) or he or she can get a market assessment of the goods, and if the market assessment value is less than the cost of storing, transporting and selling them then the landlord may immediately dispose of the goods. If the market assessment is greater than the cost of storage, transporting and selling them, the landlord must secure the goods for not less than 35 days and after that the goods can be sold for a reasonable market price (by auction or private treaty) with personal documents surrendered to the police. The landlord can then apply to the tribunal for an order specifying the amount owing to the landlord from the tenancy from the sale proceeds. The landlord is not liable in respect of the goods sold nor can the ex-tenant claim them back from the purchaser.

Section 66 - Boarding houses come under RTA: All Boarding Houses will come under the Residential Tenancies Act. A Boarding House is specified as 6 or more tenants at any one time when the landlord specified which tenant has which room – i.e. studio room.

Section 77 - Award against a tenant guarantor: the tribunal can now award against a guarantor of a tenant (previous this had to be taken to the disputes tribunal)

Section 102 - award costs of filing fee: if the applicant is wholly successful in his or her claim, the tribunal must order the respondent pay the filing fee paid or if partially successful the tribunal may order the respondent pay the applicant the filing fee.

Don’t worry too much if you don’t understand all of the changes.  APIA will be hosting at least one workshop on them, with the first one on 20 October 2010.  I am working with the Department of Building & Housing’s Troy Churton and Jessie Henderson and also Jan Galloway (a property manager with over 25 years of experience in Auckland, owner of Corinthian Limited – boutique property management company, APIA Board Secretary and runner-up with her husband Lyle Galloway in the 2009 NZPIF-DBH Landlord of the Year awards), and Andrew King (best selling author on property investment, APIA President from 2000 – 2007, current NZPIF Vice-President).

Sources: with huge acknowledgements to Jeff Montgomery and all of his hard-working team at the Department of Building & Housing, and the New Zealand Property Investors’ Federation, Auckland Property Investors Association and other Property Investor Associations around our country.

David Whitburn LL.B BSc

President – Auckland Property Investors’ Association (Incorporated)

Barrister & Solicitor of the High Court of New Zealand

New Zealand’s Building and Construction Minister Maurice Williamson, this afternoon announced that the Government will introduce amendments to the Building Act 2004 that will help cut red-tape and bureaucracy and make builders more accountable.

The planned changes to the Act will be phased in over time.  Some of the incentives to build it right first time to be introduced to Parliament this year include:

• explicitly stating that builders and designers are accountable for meeting Building Code requirements;
• mandatory written contracts for building work above $20,000 that set out expectations, warranties and remedies, and how any disputes will be resolved;
• requiring those doing the work to explain what, if any, financial back-up or insurance they have to remedy any faults.

The planned amendments will also see some minor, low-risk work, exempted from the need for a building consent.  Examples of such exempted work will include:

• Replacement or alteration of internal wall and floor linings and finishes in a dwelling.
• Adding lightweight stalls (eg, used at fairs and exhibitions) to the current exemption for tents and marquees.
• Fabric shade sails and associated structural supports that do not exceed 50 square metres in area (with limitations on matters such as the level on which the sails are installed and distance from a legal boundary).
• Installation, replacement or alteration of thermal insulation in existing buildings (excluding exterior walls and fire walls). This clarifies that retrofitting ceiling and underfloor insulation will not need a consent.
• Penetrations with a maximum diameter of 300mm (including associated weatherproofing, fireproofing and any other finishings) to enable the passage of pipes, cables, ducts, wires, hoses and the like through any existing building. This clarifies that for example a heat pump can be installed without needing a consent, although the wiring must be done by a registered electrician.
• Signs and associated structural supports where the sign is no more than 3 metres high and the face area of the sign does not exceed 6 square metres.
• Height restriction gantries (e.g. a vehicle height warning in a car park).
• Private playground equipment used in association with a single household where no part of the equipment extends more than 3 metres above the ground.

Mr Williamson says the Government can only make changes to the building consent process to reduce costs once it has confidence in the quality of what is being built.

The Government is proposing to introduce a ‘stepped’ approach to building consents and inspections after mid-2012 once the other improvements are in place to drive quality, including the licensing of building practitioners.

You can read the Minister’s media release and find out more on the Department of Building and Housing’s website at: www.dbh.govt.nz/buildingactreview