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9 April 2020

New rental rules during Covid-19 pandemic

How will the changes made to the Residential Tenancies Act impact tenants and landlords?

On 23 March 2020 the Government announced changes to the Residential Tenancies Act 1986 (RTA) to ensure that people can stay in their homes during the COVID-19 lockdown. These changes will enable those in tenanted accommodation to self-isolate, stay home, maintain physical distancing, and support the public health of all New Zealanders.

Under the new rules, which took effect on 26 March 2020, the Government:

  • Imposed an immediate freeze on rent increases for six months, no matter the circumstances;
  • Prohibited the termination of tenancies during the lock-down period, except in limited circumstances, or unless the parties agree otherwise;
  • Allowed for Tenants who had previously given notice ending their tenancy, to stay where they are during the lock-down period if they need to;
  • Allowed Tenants to terminate their tenancy as normal, if they wish.

No rent increases are permitted after 26 March 2020, regardless of when a rent increase notice is delivered to a Tenant. This is aimed at protecting Tenants from the additional financial stress, arising from the potential for loss of income related to redundancies or job losses through COVID-19. Also, Landlords cannot terminate for non- payment of rent unless the rent is at least 60 days in arrears.

All tenancy termination measures will apply for three months, and this period may be extended if necessary. Moving house is not considered 'essential' during the lock-down period. Tenants cannot be evicted during the lock-down period, except in very limited circumstances. Fixed-term tenancies expiring during the lockdown period will automatically convert to periodic tenancies.

The Government has also made it clear that Tenants have obligations as well. Tenants must not:

  • abuse the present situation by refusing to pay rent if they are able to do so;
  • cause any significant property damage; or
  • carry on any significant anti-social behaviour.

Importantly, where a Tenant has symptoms of Covid-19, or is confirmed as positive, this is not grounds for a Landlord to terminate a tenancy. Nor is a Tenant required to notify their Landlord if they test positive for Covid-19. They should do so however where, for example, the Landlord needs to attend at the property to undertake urgent repairs.

Landlords should be aware that breaching the rent increase provisions or the tenancy termination provisions is an unlawful act, with damages of up to $6,500 payable in each case, in addition to what may be necessary to compensate a Tenant for their loss.

The Tenancy Tribunal has been charged with making sure that Landlords and Tenants don’t break the rules. The Government encourages Landlords and Tenants to take care of and keep each other informed wherever possible, and try to come to an arrangement that works for both parties.

For more tenancy related information for Landlords and Tenants during the COVID-19 pandemic, refer to the Tenancy Services website www.tenancy.govt.nz

Please contact us to provide advice regarding any matters discussed in this article.

Disclaimer

The above information is of a general nature only. The information in this article does in no way constitute legal advice and all readers should contact a law firm for advice relating to your specific circumstances.

Sources: Tenancy Services and Ministry of Housing and Urban Development

Mark Bond

About Mark Bond

Mark is a member of our Property Team. He assists clients with various residential and commercial property transactions, including associated company and trust structuring.

View all posts by Mark Bond