The purchase of a residential property with a view to letting it out is a popular investment choice for many New Zealanders. If you are considering such an investment, or indeed already rent out a property, then you need to be familiar with the provisions of the Residential Tenancies Act 1986 (the "Act") which sets out the requirements for many residential tenancies.
In New Zealand, the Residential Tenancies Act governs the landlord-tenant relationship in relation to residential tenancies. It gives both landlords and tenants legal rights and obligations. The Act also provides a dispute resolution service by allowing for mediation, and hearings at the Tenancy Tribunal.
Some of the main points to be aware of under the Residential Tenancies Act 1986 are as follows:
- Tenancy Agreements to be in Writing: The Act provides that all residential tenancy agreements must be in writing. However, an agreement is still enforceable even if it is not in writing.
- Term of Tenancy: The Act recognises two types of tenancies:
- Fixed term tenancies that are for a specified term;
- Periodic tenancies that are not for a defined term but continue until terminated by either party.
The Act does not apply to fixed term residential tenancies that are for less than 120 days or for five or more years. However, in the latter situation, both the landlord and the tenant must agree that the Act will not apply.
- Bond: The Act permits the landlord to require a prospective tenant to pay up to four weeks rent as a bond in advance. The money is held by the New Zealand Tenancy Tribunal and is only refundable once both parties sign a form agreeing on the amount to be allocated to the tenant and/or the landlord. The landlord is entitled to deduct from the bond the cost of any repairs that are the responsibility of the tenant but cannot use it to recover costs associated with fair wear and tear. If the parties cannot agree upon the amount of bond to be refunded, then the matter will have to be referred to the Tenancy Tribunal.
- Form of Tenancy Agreement: The Act prescribes a simple form of tenancy agreement; a copy can be downloaded from the website of the Tenancy Tribunal: www.dbh.govt.nz
- Terminating a Residential Tenancy: Subject to any fixed term of tenancy that has been agreed, either the landlord or the tenant can give notice to bring a tenancy to an end. In the case of the tenant, at least 21 days notice must be given. In the case of a landlord, 90 days notice must be given but only 42 days is required if the landlord:
- Requires the premises for his or her own use or that of his or her immediate family;
- Has entered into an agreement to sell the property and the terms of that agreement require vacant possession;
- Requires the property in order that one of his or her employees can live in it so long as the landlord has previously notified the tenant that the premises are normally used for that purpose;
All notices to terminate a tenancy must be in writing.
- Disputes: The Tenancy Tribunal deals with all disputes arising out of residential tenancy agreements regardless of the issues involved. The Tenancy Tribunal was established under the Residential Tenancies Act 1986 to resolve disputes between such landlords and tenants by providing landlords and tenants of residential properties with a free mediation service; and (if that fails) a quick and inexpensive means of resolving disputes. Either party can make an application to the Tribunal either during the tenancy or after it has ended.
If you are a landlord, it pays to fully familiarise yourself with the responsibilities and duties imposed upon you by the Act. It could save you a lot of time and trouble in the future.
Should you need any assistance with this, or with any other Property matters, please contact Kris Morrison or Tim Rankin at Parry Field Lawyers (379 4383).
