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RTA rewrite a long time coming but is it foolproof?

Friday, June 20th 2008, 2:16PM 9 Comments

by Philip Macalister

One thing all property investors and landlords should be aware of now is the long-winded re-write of the Residential Tenancies Act (RTA).

As, hopefully, all landlords know the RTA is the bible for how to manage your rentals and sets the rules around what tenants and landlords can do.

The RTA rewrite has been a torturous process. It started eight years ago and nearly got derailed last year when another competing bill was presented to Parliament – but then withdrawn.

The final bill is 67 pages long and tough reading.

What has been fascinating is that although this is the central book of instructions for landlords, very few have seen the bill which has been presented back from the select committee. And even organisations you would expect to have read it, such as the National Party housing spokesman, hadn't done so when the NZ Property Investor magazine first contacted them.

One of the most contentious items in the bill is the issue of making tenants liable for only four weeks of rent for any damage.

Feedback so far is that this is far too low and that it is not something the officials discussed with the industry reference group which was consulted about the changes.

Another change is that rental property owners must appoint an agent if they are going to be out of the country for more than 21 days and also let the bond centre know who the agent is.

The key point is that this piece of legislation is now on the runway and getting ready to take off. All investors should be aware, or at least find out, what these changes mean for them.
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Comments from our readers

On 20 June 2008 at 5:36 pm AAA said:
Four weeks rent to cover damages to carpets, paint, sheds, carport/garage, jib, joinery, electrical switches, curtains, plumbing - you've got to be kidding... And then the opportunity and legal costs of enforcement and recovery - at the rate of $5 per week if you are lucky. Goodbye renting... and goodbye NZ...
On 20 June 2008 at 5:57 pm Yvonne said:
There are a number of critical issues with this Bill, however the 'four weeks for damage' is a major problem.

Many tenants are very aware of their 'rights', and I see such a move as encouraging them to treat rental properties with disdain. The current policy of allowing state tenants to abuse the accommodation provided is now being forced onto private landlords.

Recent refurbishment of a tenanted property has cost me over $3,500 - all because of tenant damage. That was the equivalent of almost thirteen weeks rent. (This tenant had passed all the checks prior to moving in 18 months previously.) Given the current mortgage interest rates, it is hard to see any benefit from being the owner of 'budget' accommodation in what used to be a very pleasant part of South Auckland. I wonder how the current Government will respond if a sufficient number of private landlords decide to cut their losses and invest away from the rental market.
On 20 June 2008 at 6:14 pm richard evans said:
It's a political football for election year - appease the tenant and try to appease landlords by making some new crimes for tenants to be fined for.

And doing away with a letting fee is crazy. Why should tenants expect to get a free service? All we'll do is charge the owner who will then increase rents by $5 a week which will cost the taxpayer about $17 million a year in extra benefits.

What about tenants paying interest on late rents? The owner who misses a mortgage payment gets penalised by the bank, so the tenant MUST be responsible and yet this idea was hooted down by the officials who wrote this paper. I was there and they snorted in derision at the very idea.

Lets hope we get a decent crack at submission time.
On 20 June 2008 at 10:11 pm JK said:
Four weeks rent to cover damages - unbelievable. I agree entirely with AAA. All for tenants, no rights for landlords. Some of us are just trying to build a little security (so we can pay for our own retirement rather than relying on the government!).

But it seems to me they want to make it all too hard. We pay for our welfare state in our taxes - and I don't have a problem with that. But when we are expected to pay again simply because we have worked hard to try to cover our own futures, that just isn't fair. When my current good tenants move on, I think my rental will be on the market. The risk in owning rental property now seems to outweigh the potential return.
On 21 June 2008 at 5:26 am Oversea's said:
I have been involved in renting in Europe, West and East, and the landlord has the right to, and nearly always does, ask for bank statements as proof of ability to pay, references and an address of a parent or similar. At first I thought how can they, but it is their property, their investment and they should have every right to make sure it's looked after. The law makes it hard to recover costs and as a result the tenant pays for it in higher rents and often an outright refusal to be able to rent if they are trying to rent for the first time etc...

Does allowing tenants more rights and allowing them to get away with more actually help them in the long run?
On 22 June 2008 at 11:50 am Ram Nehara said:
As stated before, the RTA has become political football and the reason for this is to attract more votes for Labour.

It is becoming strange in New Zealand that somebody will do damage to your property and you will pay for that damage. It seems that New Zealand is becoming a place to commit crime and individual is free. If this happens then people will start moving away from properties. The RTA discriminates and it is only for tenant not for landlords. I hold several residential properties across New Zealand and I have seen time and time again that most decisions from court (Tenancy Tribunal) were ruled in favour of the tenant. Whatever the tenant says in court is considered a strong proof.

This kind law does not exist in the developed world, I live in the States and hold rental here too but laws are very good. For example if the tenant fails to pay rent on time, they have to pay a late fee set in their contract. Why then do they have double standard in law? If you fail to pay your mortgage on time, you pay a late fee. The same rule should apply here. I believe this will draw economic loss to the country in the long run if the Govt doesn't take the appropriate steps.

We invest money for gain not for loss; this law will put us landlords at a loss. If the Govt bring this kind of law then this country will become the capital of crimes in each sector, as you have seen theft; burglary, we are close to one ranking. People are getting very concerned about these kind of things. There should be mass protest nation-wide against this new RTA and more submissions. I believe that is the only way for this kind of Govt.
On 26 June 2008 at 3:34 pm RGH said:
The RTA rewrite is just another example of what you can expect from the inane minds of NZ politicians. It used to be a great country to live in, but not anymore. Beautiful scenery and enviroments, but at a very high price...expensive everything, small-minded attitudes, poor wages and often poor conditions as well, serious racial tensions, and a political correctness that would make you vomit. No wonder so many have made the shift to Australia.
On 21 July 2008 at 6:03 pm Adrian said:
I agree with other comments, esp that the tenant should be charged interest on late rent,and generally be held responsible.
My concern is also with proposed compliance issues: There are rentals out there that are not legal but perfectly fit for habitation, there are also fully permitted dwellings out there that have not been maintained for years that are not habitable. This new building act has made the situation worse by getting rid of 'safe & sanitary'. There should be something to repalce it esp if landlords can hauled over the coals over it (which I don't agree with).
After all, whos property is it?! Not mine, Im just the mug who pays the mortgage ETC & does the repairs.
I feel my property rights have been systematically violated over the last few years with the RTA & The RMA (Resource MISmanagement Act).
This country is being run by morons... The newsmedia are too incompetant &/or biased to say anything about it!
On 6 September 2008 at 6:31 pm Joe Schmo said:
To put in another voice... Being that I was a renter for ages and now have property investments.

In some tenancies, the renter is given very little personal respect and is expected to comply with every single whim. Also, getting a landlord to reimburse urgent repairs can be a veritable nightmare. They pay your bloody mortgages so you CAN have that "secure future". Some of them can be pretty screwed at the end of day when it comes to your decisions, due to the financial situations they find themselves in etc. How would you like having lookiloos traipsing through your private space three times a day because the owner of the property you are renting, decides he/she wants to sell it? It gets EXTREMELY frustrating. Now that I am a property owner (who has been renting out for years now) and have experienced this, I give my tenants total respect and in return I have never had a bad experience. If you treat them like they are just bums on seats and just there to pay for your investment, you will get the same treatment back - that your house is just a dirt box for them to crap in.

The way some of you sound on here infuriates me and makes me wonder if some of your bad experiences were in part due to your own actions. This is why insurance exists. From the DBH website... "It is up to a landlord to insure their rental property against any damage, either through accident or otherwise." Grow a brain and get a policy.
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ANZ 5.19 ▼4.05 ▼3.95 4.49
ANZ Special - ▼3.55 ▼3.45 3.99
ASB Bank 5.20 4.15 3.99 4.39
ASB Bank Special - 3.65 3.49 3.89
BNZ - Classic - 3.65 3.49 3.99
BNZ - Mortgage One 5.90 - - -
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BNZ - TotalMoney 5.30 - - -
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Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
Housing NZ Corp 5.19 4.15 4.09 4.39
HSBC Premier 5.24 3.35 3.35 3.35
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HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kiwibank 5.80 4.30 4.24 4.74
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.55 3.49 3.99
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.69 4.79 -
Resimac 4.50 4.86 3.89 3.94
Lender Flt 1yr 2yr 3yr
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.65 3.59 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 ▼3.49 3.59 ▼3.89
The Co-operative Bank - Standard 5.15 ▼3.99 4.09 ▼4.39
TSB Bank 6.09 4.49 4.39 4.85
TSB Special 5.29 3.69 3.59 4.05
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.34 - - -
Westpac Special - 3.65 3.49 3.99
Median 5.34 4.15 3.99 4.05

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