Residential tenancies amendment bill (No 2)

 

The Bill aims to amend the Residential Tenancies Act 1986 and address issues of liability for damage to rental premises caused by a tenant, methamphetamine contamination in rental premises (clarity on landlord and tenant rights), and tenancies in rental premises that are unlawful for residential use with clarity on the Tribunal’s role.

The Bill has had its first reading in the House.  

 

Tenant Liability:

The Bill is proposing to insert new sections 49A to 49E to the Residential Tenancies Act 1986 in respect of responsibility for damage. The new provisions propose changes in respect of liability for any accidental or careless damage that arose out of the Osaki decision causing widespread confusion and discussion amongst property professionals and investors. The Osaki decision has meant that landlords were unable to recover the cost of damage caused to a property by tenants including claiming any excess on insurance policies.

The Bill proposes circumstances where a tenant can be held liable.  It also reinforces the need for landlords to have appropriate insurance for their investment properties. Dr Nick Smith announced that “under the Bill, tenants will be held liable for the cost of their landlord’s insurance excess up to a maximum of four weeks’ rent for each incident of damage is caused by carelessness”. Under the Osaki decision, the tenant still remains liable for any willful or intentional damage and where damage is a criminal offence. The landlord remains liable for any fair wear and tear to a property and where damage is caused by a force majeure type event – earthquake, flood, fire etc (fire being the event that occurred with the Osaki decision). These responsibilities arising out of the Osaki decision and clarity on liability are reflected in the Bill. 

 

Unlawful tenancies:

A further suggested change centres around the jurisdiction of the Tenancy Tribunal being limited to residential property. The current jurisdiction of the Tenancy Tribunal is limited to residential buildings, meaning that currently those who rent out unlawfully converted garages, warehouses or industrial buildings as living spaces can avoid accountability. The Bill proposes a change to allow the Tribunal to hear and make orders for property being used as a residential tenancy but is not a residential property (unlawful tenancy). Dr Smith stated this will “better protect responsible landlords and tenants and help our residential tenancy market function more effectively”.

 

Methamphetamine in properties:

The final change is in relation to methamphetamine in properties. This will dovetail with the review of Standard NZ8510 which is currently in progress and due for release shortly.  The Bill recognises methamphetamine contamination in properties being a significant issue and clarifies the landlord’s right to test for methamphetamine by providing adequate notice to do so.  The Bill also clarifies the process for termination by either landlord or tenant.  The levels that will be deemed “uninhabitable” hinge on the work by the Committee reviewing Standard NZ8510. 

It is possible that the three tier standard could become one standard and that the current level of 0.5 mcg/100m2 which the Tribunal have been using to determine we whether a property is habitable or not could increase (0.5 deeming a property uninhabitable).

 

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