Rental housing standards explained: without knowing these, you cannot even be a tenant in New Zealand!

RTA amendments:

More rights for tenants. In 1986, New Zealand enacted the Residential Tenancies Act 1986, known as the RTA.

This meant that 1986 marked the formal establishment of a legal framework for New Zealand's residential rental market.

In the blink of an eye, the RTA has been in force for 34 years. Over those 34 years, it has undergone numerous amendments and improvements, large and small.

In fact, even a very minor amendment can affect countless New Zealand households, much as the flap of a butterfly's wings might trigger a tornado.

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Yet no previous amendments to tenancy law have struck such a nerve with New Zealanders as those in 2019. The amendments made in 2019 aimed to protect tenants and make the rental market fairer and safer, addressing the following issues:

• Liability for damage or loss caused by tenants

Following the amendments, tenants are liable for damage caused by carelessness as well as deliberate damage.

Compensation is set at the landlord's insurance excess or up to four weeks' rent. When assessing damage, landlords must provide evidence that it resulted from deliberate or careless conduct rather than fair wear and tear; tenants must provide evidence that the damage was not caused by their own deliberate or careless conduct.

The Act also states that insurers cannot recover compensation payments from tenants.

Once the amendments take effect, landlords must also include property insurance information in new tenancy agreements. Tenants with existing agreements can request this information separately.

• Rules for testing and removing contaminants

These RTA amendments classify methamphetamine as a contaminant and give landlords the right to test properties during a tenancy.

If landlords detect methamphetamine contamination before letting a property, they must first remove it. If contamination is detected during a tenancy, they must promptly remove it in accordance with the regulations before allowing the current tenants to continue staying there.

Under the amended Act, New Zealand's Governor-General may, on a minister's recommendation and by Order in Council, prescribe maximum acceptable methamphetamine levels and the procedures and details for testing and removing contamination.

• Regulating unlawful residential premises

All unlawful residential premises are brought within the scope of the RTA and the Tenancy Tribunal's jurisdiction.

This means that all unlawful residential premises let as rental accommodation, such as garages and basements converted without approval, are subject to enforcement by tenancy authorities and the Tenancy Tribunal.

• Other amendments

The amended provisions also prohibit agents from charging tenants letting fees and key money, although agents may charge these fees to landlords.

This restriction does not cover fees arising from subletting or letting individual rooms.

The amended Act also requires landlords to install compliant smoke alarms in every bedroom or within 3 metres outside bedroom doors. Tenants are responsible for maintaining smoke alarms and replacing batteries during their tenancy.

Healthy homes:

Warmth and air conditioning attract the most attention. Unlike the RTA, with its 30 years of history, the new Healthy Homes Standards for rental properties only became law on 1 July 2019. Their main purpose is to make rental homes warmer, drier and healthier. They establish minimum standards across six areas: heating, insulation, ventilation, drainage, moisture protection and draught stopping.

The Healthy Homes Standards will be phased in over 5 years:

• After 1 July 2019, all new, renewed and extended tenancy agreements must include an insulation certificate and a statement of intent to comply with the Healthy Homes Standards.

• After 1 July 2020, all new, renewed and amended tenancy agreements must include a statement of current compliance with the Healthy Homes Standards.

• After 1 July 2021, all private landlords must fully comply with the Healthy Homes Standards within ninety days of a new, renewed or extended tenancy agreement.

• After 1 July 2024, all rental properties must meet the Healthy Homes Standards. Although implementation is still being phased in, the new rules have already sent ripples through the rental market.

The Government believes that improving the quality of rental housing will improve tenants' health, with corresponding reductions in healthcare costs and hospital admissions. Some experts, however, say the Healthy Homes Standards will push rents higher, while 92% of owner-occupiers are unwilling to comply with them… The debate continues.

In November last year, Crockers Property Group conducted its latest survey. The results showed that 96% of respondents knew about the new Healthy Homes Standards requirements, but 37% of those aware of them were unclear about their specific responsibilities. The latest findings also showed that, compared with previous years, warmth and air conditioning were now tenants' leading priorities, while freshly painted walls or wallpaper attracted much less attention. This illustrates the new regulations' influence on the rental market.

Earthquake insurance amendments:

Property insurance premiums rise. Alongside the legislative amendments directly affecting the rental market, the Government also amended the Earthquake Commission (EQC) Act in 2019.

This Act affects all property owners whose home insurance includes fire cover. Its amendments are also a major reason for rising property insurance premiums.

The key amendments are:

• Extending the deadline for lodging a claim after a natural disaster from three months to two years

• Removing NZ$20,000 of personal possessions cover, leaving EQC to handle only claims for damage to homes and land caused by natural disasters;

• Increasing the maximum home cover from NZ$100,000 to NZ$150,000 plus GST;

• Allowing the Earthquake Commission to collect and share property claims histories to prevent or reduce threats to public health and safety.

Looking back at 2019 and reviewing the events affecting the rental market helps us analyse residential rental property investment.

For example, the impact of the Healthy Homes Standards on returns from older properties may make newly built homes more attractive.

The legislative amendments also strengthen protections for landlords and tenants and raise living standards. Finally, a reminder to landlords signing agreements with new tenants:

1. Provide an insulation statement

2. Provide a Healthy Homes Standards statement

3. Provide an insurance certificate and policy information

4. Consider arranging methamphetamine testing before tenants move in

5. Check, install or replace smoke alarms

About the author

Franklyn Young

A University of Auckland graduate with a bachelor's degree in property management, he has worked for several major property companies managing residential and commercial properties and bodies corporate. He is currently a business development and project manager at Crockers Property Group.