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Even though it's 'new', Diana Clement points out the updated law governing tenancies is either vague with some key concepts causing confusion, or completely misses dealing with modern intensive living issues

Even though it's 'new', Diana Clement points out the updated law governing tenancies is either vague with some key concepts causing confusion, or completely misses dealing with modern intensive living issues

This article originally appeared in LawNews (ADLS) and is here with permission.


As tenants and landlords grapple with the biggest changes to our residential tenancy law in 35 years, loose definitions around some of the key provisions in the new legislation are creating uncertainty for both sides.

And, with the Tenancy Tribunal now able to make awards of up to $100,000, an increase in litigation is expected as landlords, tenants and bodies corporate seek certainty about the limits of the law.

One of the most difficult legal issues is likely to be the replacement of ‘no cause’ termination notices under the Residential Tenancies Act 1986 with new requirements for three recorded instances of antisocial behaviour within a 90-day period. The legislation, however, fails to define ‘antisocial behaviour’.

Likewise, new rights allowing tenants to make ‘minor changes’ to properties have not been spelled out in anything near black and white.

Antisocial behaviour

Section 55A of the Act defines antisocial behaviour as “harassment or any other act or omission (whether intentional or not), if the act or omission reasonably causes alarm, distress, or nuisance that is more than minor”.

A fact sheet published by the Ministry of Housing and Urban Development (MHUD) in February 2021 notes “a list of all behaviour that would warrant a notice warning cannot be definitively provided, but this guidance will be updated after some Tenancy Tribunal orders are made”.

This creates gaps and the meaning isn’t clear, says Smith & Partners litigation lawyer Alana Kalinowski.

“There’s a definition but what exactly does that mean? Whether [an action] amounts to harassment or some form of nuisance that’s more than minor will depend on the situation.”

Pidgeon Law partner and former ADLS President Joanna Pidgeon questions where the line will be drawn between major and minor breaches. ”What if someone is seen to be overly sensitive?” Pidgeon asks. “Is it a subjective or an objective test?”

The Tenancy Services fact sheet outlines some real examples of antisocial behaviour complaints to the Tenancy Tribunal under Covid-19 legislation, and possible examples, covering issues such as repeated banging noises, loud television noise, tenants’ dogs defecating on neighbours’ lawns, accumulated smelly rubbish that attracts mice and tenants blocking shared driveways.

Collecting evidence

Pidgeon is also acting chair of the Auckland City Mission and understands the desirability of people having stable housing. She says the issue for landlords will be collecting evidence of the original antisocial behaviour. All three events need to pass the bar of ‘antisocial’ for the tribunal to agree to the eviction.

Landlords must be careful to ensure they file notices that comply with the letter of the law. Otherwise the 90-day clock will be reset.

Pidgeon says one of the big issues with the new legislation will be persuading neighbours to come forward with evidence of antisocial behaviour.

“I have, in the past, had a situation where a client bought their first property,” says Pidgeon. “The tenant gave false references. It turned out it was actually a gang family with the husband in jail and a new gang partner in the property. The neighbours were very upset and concerned about the things happening there, but were too scared for fear of retribution to give evidence in a way that my client could actually use to deal with all the breaches in relation to the tenancy agreement.

“If the landlord lives next door it’s a totally different thing. They can observe and take those steps themselves.”

Recently published order [2020] NZTT Tauranga 4275277 shows exactly why neighbours might not come forward to report incidents of antisocial behaviour.

The neighbours in that case reported a range of concerning behaviours from the tenants at the property in question, including threatening behaviour, threats to kill, indecent exposure, throwing items into the grounds and onto the rooves of neighbouring properties, wandering onto their sections, abusing contractors and domestic disputes.

The landlord told the tribunal that neighbours felt intimidated and, in some cases, terrified. One neighbour had stopped work because of concerns for a family member. Some neighbours were reluctant to walk the street and some would not allow their children to walk to school. Some neighbours had even sold their homes and moved away.

On October 2 last year one of the tenant’s sons assaulted a neighbour. His son jumped the fence into another neighbour’s property, accusing the occupant of being a ‘snitch’. The victim, who intervened, was assaulted by the son, receiving broken ribs and a punctured lung. The tribunal ordered immediate termination of the tenancy.

Minor changes

Section 42B is the other section of the Act where the language is imprecise.

This makes it unreasonable for a landlord to withhold consent to a ‘minor change’ to premises. The legislation says a ‘minor change’ is “any fixture, renovation, alteration, or addition of or to the premises”. The change must have low risk of material damage to the premises or pose a risk to health and safety or compromise the structure or character of a building. It must not need consent or breach obligations or restrictions such as those imposed by body corporate rules or covenants.

The landlord must not unreasonably withhold consent but can impose conditions, such as having the work done by professionals.

If a minor change is made in accordance with a request under s 42A, the tenant must, on or before the expiry of the tenancy, return the premises to a condition that is substantially the same as the condition the premises were in before the minor change was made.

That’s where the wording of the Act ends and the differences of opinion begin. Is painting the walls black a minor change? Landlords commenting on a property investment group about the new law cited other examples. In one case the tenants had changed the height of a cupboard above the fridge, misaligning it with the others. Tenants have been known to add or remove walls and rip up carpet to polish floorboards. Not all landlords would approve.

The other issue needing to be ironed out in the tribunal or the courts is the requirement for tenants to return the premises to a condition that is substantially the same as before the minor change was made. 

Is doing an amateur paint job over what was a professional job in the first place returning it ‘substantially’ to the same condition? Or if the tenant removed the carpet and polished the floorboards, is recarpeting with a cheaper quality carpet returning the property ‘substantially’ to the same condition?

“Again, this is quite broad,” says Kalinowski. “How is that going to be enforced?”

Pidgeon anticipates situations where the property becomes more difficult to tenant, thanks to the quality of the ‘minor change’ made by the tenant.

Barrister and member of the ADLS Property Law Committee Des Wood adds ,”You start looking at things like the bond. Is the bond adequate to cover the cost of damage or repainting?”

Precedents

Tenancy Tribunal decisions don’t set precedent. However, orders from the tribunal will be watched carefully by lawyers and landlords. Multiple decisions could help give direction, says Wood, providing guidance on how the law is being applied.

If the tribunal’s decisions start to follow a pattern, that gives tenants, landlords and lawyers a good indication of the direction, says Kalinowski.

“It’s going to be decisions that are coming out of the tribunal to fill in those gaps. It’s not necessarily always binding and it’s obviously going to be very factually-dependent on the circumstances of each case.”

The Tenancy Tribunal has had a significant increase in its jurisdiction and has powers to award up to $100,000, points out Wood, meaning it will be dealing with more than minor cases. He predicts some quite severe penalties set out in the schedule will lead to considerable litigation before the Act beds in.

Small landlords will not have the deep pockets of insurers, which saw Holler v Osaki go to the Court of Appeal. Some, however, will take their cases further.

Kalinowski predicts some landlords will be willing to pay the $200 filing fee and represent themselves in an appeal to the District Court.

Unit Titles Act

Another issues with the new Act, says Pidgeon, is how it will interact with the Unit Titles Act. What happens if a tenant breaks body corporate rules but his or her behaviour can’t be described as antisocial, or there is no damage to property?

An example might be where body corporate rules ban tenants from drying their washing on balconies but a tenant persists. Would the tribunal consider it to be more than a minor nuisance under the Act if tenants ignore this body corporate rule?

Pidgeon adds: “The thing that has never really been addressed properly is how residential tenancies connect and correspond where body corporate rules are part of the tenancy agreement. I don’t know that [the Act] really contemplates the closeness and proximity of modern living and of apartment buildings.” 


This article originally appeared in LawNews (ADLS) and is here with permission.

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15 Comments

Tauranga City Council commissioner Anne Tolley says the decisions she and the other commissioners will be making should have been made 10 years ago.... The City is at a crisis point - 'It's worse than I thought'

The same could be said of most of our country and its regulatory regimes.
The only disagreement I have with Ms Tolley is that - it all should have been addressed longer ago than a decade.

I forsee a combination of large service cuts and significant rate increases. Then Tolley can waltz back to Wellington, declaring it to be a job well done.

crownlaw.govt.nz and they can't draft watertight law without holes in it

Another outcome is that investors with tenants will struggle to sell. FHB need vacant possession for Kiwisaver withdrawal, but the landlord needs to give 3 months notice (best case) or wait for a fixed term to end (worst case). So a FHB is locked out unless both parties accept long settlement dates. With LVRs and other investor handbrakes coming into play, I wonder how many investors are taking for granted their ability to sell easily in the current market.

And holiday houses which were rented out for fixed periods until next Christmas will now not be rented. The new rules make it a risk that the tenant can decide to stay. Then the owner can only end it, if they or their family are moving in as their principal residence. Eg. A lot of houses near ski areas used to be rented autumn to spring to ski field workers.

I have an apartment in a 9 unit complex on the beach at Mt Maunganui. For years most were fully tenanted with 1 being winter let and owners using over summer, 1 has been AirBnB for some years. Only 2 are tenanted currently, rest are now short term holiday lets including mine which was tenanted. Over 50% reduction in long term rentals. Another example of unintended consequenses. I think its going to be much harder for people to find rentals with these new laws.

AirBnB income sounds riskier than regular rent to me. Out of curiosity, how is the occupancy and return after business costs?

this will probably suit First home buyers who are renting and wont pay mortgages until they take possession(although eager to stop paying rent - they do have flexibility on vacancy dates given the tenant only has to give 28 days notice) - it will be upgraders or downgraders that need to sell their house that will have challenges with the new law.

Some of these wouldn't be problems if we had a more mature rental market, eg. if you rent in Germany it's a long-term lease (8 years, say) and the place is bare -- it's up to you to install fixtures beyond the bare necessities, you can paint the walls, have a dog, whatever.
But here, most rentals are owned by Mum and Dad (whose Mum and Dad, by the way? Not mine) and they only want one-year leases because God knows when they'll want to cash out for a jetski or something.

Oh yeah, let's see how it all goes. Some reshaping of legislation will probably be required, whether this happens in a timely fashion is questionable.

Though Tenancy Tribunal decisions don’t set precedents, I imagine decisions will set precedents in the adjudicator's minds. A legal system is only as good as the people administering it. You're naïve if you don't believe that.

Vague and confusing? Like so much that comes out of government. Lack of attention to detail results in ill-conceived laws and rules.

Seems to be the Labour way.. that and no action at all lol :)

I believe that fixed term tenancies no longer offer protection to landlords, as the new regulations provide that a tenant can opt to remain in the property after expiry. In that case the tenant will become a tenant for life.
Blame this growing mess on the tenancy protection groups who obviously wrote the regulations for the Labour Greens government. Just wait for the real problems to arise, especially as rents rocket up and landlords either get out of the market or don’t get in. Be careful what you wish for.

“ and landlords either get out of the market or don’t get in. ”
What landlords do or do not do will not affect the actual supply of property in the short term, so why would that make “ rents rocket up “?
Maybe if landlords sell or don’t buy, FH Buyers will be able to buy, at a lower price. Wouldn’t that be good?

It was obvious to me that the new RTA act had been written by a woman skilled in commercial law. Just look at the rent increase timings. Old clause said not six months. It said 180 days. I could see the new laws were not based on experience but on what could be expected from commercial tenants. It is early days since 11 February but the wheels are already falling off. It would be nice to hear from National about what they think of the law. I am going to make a killing out of this new law.