Looking Back at the Residential Tenancy changes – next month we’ll be looking Forward
Owners of Residential Rental Properties have had quite a few Government Policies inflicted on them over the last ten years, I won’t go back the 29 years I have been directly involved in the Industry and 16 years in the Building Industry.
It is especially tough if you have been an Investor for all of that time and you have had to comply with all of these changes.
Since 2010 the scourge of Methamphetamine drug use was highlighted with Landlords having to provide healthy homes for their Tenants (as per The Residential Tenancy Act), we had to introduce Testing before a Tenant moves into a Property so we could promise them they were living in an uncontaminated drug free house, unfortunately the powers that be can’t now decide on what level of contamination constitutes a healthy home. This is why we test every house before and between Tenants, firstly to reassure Tenants the house is healthy, secondly to remind Tenants we are watching for unlawful acts and to satisfy most Insurance Companies.
In 2015 the Government introduced the Bright-Line Test which meant if you sold your Residential Investment within two years of buying it, if after the 1st of October 2015 you would pay tax on the profit, then in 2018 they decided to extend the Bright-Line Test to five years if you bought it after the 29th of March 2018 and then again they have extended the test to 10 years if you bought after the 27th of March 2021, we hope this doesn’t have to much impact on long term investors but it will capture those Investors that have to sell for reasons that may include a marriage break up or the settlement of a Deceased Estate.
So since 2016 we have done over 550 tests with less than 1% being positive for Methamphetamine and I thank our Property Managers for the very low number and selecting the right Tenants
In 2016 we were told we had to have Smoke Alarms within three meters of every bedroom and one on every level of the house, smoke alarms are reasonably cheap but it meant we had to go to every house, take the alarm down if already installed, make sure they hadn’t expired (less than ten years old), replace if too old or install them if none there with new Photo Electric (PE) Smoke Alarms with built in ten year batteries (ours also have a ten year warranty)
Also, in 2016, we had to ensure all of our Properties had Insulation in the ceiling and under the floor, once again we had to visit every Property and assess what Insulation each house had, get quotes if they weren’t up to standard and then have them all comply by the 1st of July 2016. If we didn’t comply Tenants could go to the Tenancy Tribunal and get awarded up to three thousand dollars compensation (and they still can, more on that below)
In November 2017 we got told we had to revisit all of our Insulation requirements in each house and they increased what was required, no longer was 100 mm of Insulation good enough, we had to increase it to a minimum of 120 mm and foil under the house no longer complied and we had to remove it and install insulation at a rating of R.1.5, we at least had until July 2019 to comply with this increase in Insulation
In May 2018 we got reminded by Tenancy Services of our health and safety responsibilities: we are to supply an Asbestos Survey of every house to our Tradespeople working on our houses and our Tenants living in these houses, this Legislation came in in 2016 and is to keep both Tradespeople and Tenants safe from this deadly material
From the 12th of December 2018 we were no longer allowed to charge Tenants the Letting Fee for renting a Property to them, this cost was then transferred to the Owner of the Property, fortunately we haven’t seen an increase of Tenants moving around willy nilly like some thought they would due to them no longer having those costs
In February 2019 the Government announced the new Healthy Homes Standards, they must be complied with, within 90 days of any new tenancy after the 1st of July 2021 or the 1st of July 2024 whatever is the earliest date
- These Standards include heating the living area to a minimum of 18 degrees, a Heat Report must be supplied to confirm the heat source is adequate or what is required to be installed
- Ventilation required in all kitchens and bathrooms which must be vented to the outside and be able to leave any opening windows on a security latch
- Moisture and drainage include having efficient drainage and guttering, downpipes and drains, also if the house has a closed in subfloor we must install a ground moisture barrier, when we have this done we are padlocking off this area so Tenants can’t damage the barrier, use it as storage or to chuck their rubbish
- Draught stopping by ensuring there are no holes in walls or unnecessary gaps with unused fireplaces with chimneys blocked off, none of our Rentals have holes in them but unfortunately there are still a lot of rundown houses out there that are Rentals and need to be improved
On the 30th of July 2019 the new Tenancy Legislation was passed called the “Residential Tenancies Amendment Act 2019” which limits Tenants liability for careless damage in rental premises, gives the Tenancy Tribunal full jurisdiction over cases concerning unlawful premises including garages and sleepouts, give Tenancy Services the ability to take enforcement action against Landlords who rent Properties which don’t meet minimum standards and allows for regulations to be made to address drug contamination of Rental Houses by Drug Testing (they still haven’t developed these new regulations)
February 2020 “The Residential Tenancies Amendment Bill” was introduced to Parliament to improve Tenants security by stopping the 90 day no reason eviction, stopping Fixed Term Tenancies being ended, letting Tenants be anonymised if they go to the Tenancy Tribunal, allowing Tenants to be able to make minor changes to your Properties and letting tenants install Ultra-Fast Broadband – this Legislation was passed in August 2020 and became law on the 12th of August 2020, the first part of this new law is Rent increases are limited to once every 12 months starting on this day
March 2020 rents were frozen, all rent increases were cancelled and all Rental terminations were cancelled because of Covid-19 for six months
From June 2020 we were meant to provide Healthy Homes Standards Statements for all new Tenants, this has now been extended to December 2020 because of Covid-19, all new Tenancies must be provided with this Statement which tells your Tenant what Legislation you comply with and what you must have done to the Rental house going forward after the 1st of July 2021
From the 1st of July 2020 all Landlords are required to include a separately signed statement confirming intention to comply with the Healthy Homes Standards to be attached to all new Tenancy Agreements, the Statement is also required if there is a written variation or renewal of a Tenancy Agreement
More of “The Residential Tenancies Amendment Bill” came into effect on the 11th of February 2021, there are two other changes which take effect on the 11th of August 2021 including for Family Violence and a Landlord being assaulted
From the 11th of February 2021 we can no longer give a Tenant a 90 day no cause eviction notice. We can only give them 90 days’ notice if we require the property to sell, if the Property has an unconditional sale on it, if you are demolishing it or are going to take out extensive renovations. You will have 90 days to carry out these changes. If you want the property for yourself, a family member or employee you must give 63 days’ notice and you must live there within 90 days of the Tenancy ending. However, if the Tenant wants to give notice, they now have to give 28 days’ notice, up from 21 days
Next month I will go over what you will have to plan for as a Residential Investment Owner