The many farmers who are also landlords will want to check whether and how the second phase of changes under the Residential Tenancies Amendment Act 2020 will impact them.
The first phase of changes took effect from August last year, with the major reform being that rent increases were from then limited to once every 12 months (previously once every six months). Most of the remaining changes take effect from 11 February, 2021.
Federated Farmers took the opportunity to submit on the amendment bill at select committee stage last year as many farmers, especially those in remote areas, provide accommodation to staff. The 2020 Federated Farmers/Rabobank Remuneration Survey showed that of the 872 respondents, 80% provided accommodation to permanent employees (87% for dairy employees, 76% for sheep & beef employees).
This is generally in the form of a service tenancy, whereby accommodation is linked to the offer of employment. (Some farmers may not realise it, but if they provide rental accommodation as part of the employment offer, they are landlords in terms of legislation.)
Service tenancies are covered by the Residential Tenancies Act 1986 so all the standard rules apply except for some differences in regards to rent and ending a tenancy.
Under a service tenancy, when an employment agreement comes to an end, so too does the tenancy. In fact, a landlord can only give notice to end a service tenancy if the tenant’s employment has ended. The tenant/landlord notice period is also different to other tenancies. (For the Tenancy Services guide on ending a service tenancy – click here.)
While service tenancies are the predominant form of tenancy arrangement on farms, the Feds’ submission to the select committee noted that farmers are increasingly providing periodic of fixed term residential tenancies for workers and other tenants, motivated by a need to provide additional accommodation and, where provided for workers, to enable a clear delineation between employment and accommodation.
One of the main tenancy law changes taking effect from February 11 is that landlords will not be able to end a periodic tenancy without a reason just by providing 90 days’ notice.
A landlord will have to apply to the Tenancy Tribunal to end a periodic tenancy. In addition to the existing grounds (relating to rent arrears, damage, assault and breaches), a landlord may also apply on any of these grounds:
- The landlord has issued the tenant three notices for separate anti-social acts in a 90-day period.
- The landlord has given notice a tenant was at least five working days late with their rent payment on three separate occasions within a 90-day period.
- The landlord will suffer greater hardship than the tenant if the tenancy continues.
If the Tenancy Tribunal grants the application, it will also stipulate the required notice period.
There are new notice periods applying from February 11 for the previously existing allowable reasons for ending a periodic tenancy:
- 63 days’ notice is now required where the owner of a property requires the residence as their principal place of residence or for occupation by employees or contractors of the landlord.
- 90 days’ notice is required if the property is to be sold or if extensive alterations are to be carried out, or if the property is to be demolished.
Other changes coming in from February 11:
- Changes for fixed-term tenancies – All fixed-term tenancy agreements will convert to periodic tenancies at the end of the fixed term unless the parties agree otherwise, the tenant gives a 28-day notice, or the landlord gives notice in accordance with the termination grounds for periodic tenancies.
- Prohibitions on rental bidding – Rental properties cannot be advertised without a rental price listed. Landlords cannot invite or encourage tenants to bid on the rental/pay more than the advertised rent amount. (Does not apply to service tenancies).
(Note, all of the following also apply to service tenancies.)
- Making minor changes – Tenants can ask to make changes to the property and landlords must not decline if the change is minor. Landlords must respond to a tenant’s request to make a change within 21 days.
- Fibre broadband – Tenants can request to install fibre broadband, and landlords must agree if it can be installed at no cost to them, unless specific exemptions apply.
- Privacy and access to justice – A suppression order can remove names and identifying details from published Tenancy Tribunal decisions if a party who has applied for a suppression order is wholly or substantially successful, or if this is in the interests of the parties and the public interest.
- Assignment of tenancies – All requests to assign a tenancy must be considered. Landlords cannot decline unreasonably. If a residential tenancy agreement prohibits assignment, it is of no effect.
- Landlord records – Not providing a tenancy agreement in writing will be an unlawful act and landlords will need to retain and provide new types of information.
- Enforcement measures being strengthened – The Regulator (the Ministry of Business, Innovation and Employment) will have new measures to take action against parties who are not meeting their obligations.
- Changes to Tenancy Tribunal jurisdiction – The Tenancy Tribunal can hear cases and make awards up to $100,000. This is a change from $50,000.
Phase 3 of the law changes taken effect on 11 August this year (but they may come in earlier if the Government agrees):
- Family violence: tenants experiencing family violence will be able to terminate a tenancy without financial penalty.
- Physical assault: a landlord will be able to issue a 14-day notice to terminate the tenancy if the tenant has assaulted the landlord, the owner, a member of their family, or the landlord’s agent, and the Police have laid a charge against the tenant in respect of the assault.
Disclaimer: While this article has been checked with Tenancy Services for accuracy, it does not constitute legal advice.
- More information about the reform of the Residential Tenancies Act 1986 (Ministry of Housing and Urban Development)
- This link could also be useful – https://www.tenancy.govt.nz/law-changes – as this page will soon have more in-depth information added to it.
- Residential Tenancies Amendment Act 2020 (New Zealand Legislation website)