Blog - Cooper & Co

The word ‘reasonable’ is found throughout the Residential Tenancies Act 1986 but this can be difficult to navigate because one person’s interpretation of  ‘reasonable’ is not the same as another’s. One area that has proven troublesome for landlords and tenants is to establish what is ‘reasonably clean and tidy’ when it comes to vacating a property.

As per section 40 of the Residential Tenancies Act 1986, “the tenant must ensure that the premises are left reasonably clean and tidy and remove all rubbish”.
A recent Tenancy Tribunal case clarified what ‘reasonably clean
and tidy’ means:

The Tribunal stated that “the words ‘reasonably clean and reasonably tidy condition’ do not impose an absolute standard. This standard will vary according to the age and condition of the premises. There is no requirement that each and every individual item in the premises be left ‘reasonably clean and tidy’, only an overall obligation in relation to the tenancy premises. Also, a tenant generally should not be expected to keep the premises any cleaner and tidier than they were at the commencement of the tenancy.”

Harcourts property managers conduct thorough vacating inspections, comparing the in going and outgoing reports to establish the condition of the property when the tenant took possession and when the tenant vacated, using photographic evidence where possible. If some items in a property are not clean when a tenant vacates, a property manager will request that these items are cleaned and if necessary, apply to the tribunal for cleaning costs. We are finding, however, that we may not be awarded the cleaning costs, as the tribunal has stated that there is no requirement for each and every item to be clean.
Landlords should be aware that some Adjudicators are stating that landlords should expect to professionally clean a property between tenancies. We consider this acknowledgement that
‘reasonably clean’ is not actually considered clean enough for the commencement of a tenancy and we tend to agree. To hand over a ‘very clean’ property at the commencement of a tenancy is the best possible start to a trouble-free tenancy. The opposite can also hold true for the beginning of a troublesome tenancy, something good landlords and property managers avoid. Fortunately, many tenants do leave the property in a very clean and tidy state and professional cleaning to take the property from ‘reasonably clean’ to very clean is not always required.

You can view the tribunal case here.

The Government has announced a suite of proposed changes to the Residential Tenancies Act 1986 (RTA). They will be drafted into a Bill to amend the RTA which will be introduced to Parliament in the first half of 2020. The proposed changes are not law yet and are still subject to change.

The key changes for landlords and tenants |
• Landlords will not be able to end a periodic tenancy without a reason, whereas previously landlords were able to issue 90 days notice without disclosing why. The legislation sets out specific reasons that a landlord may use to end a periodic tenancy:

  • If the landlord has issued a tenant three notices for separate antisocial acts in any 90-day period and applies to the Tenancy Tribunal to end the tenancy.
  • If the landlord has given notice that a tenant has been at least five working days late with their rent payment on three separate occasions within a 90-day period and applies to the Tenancy Tribunal to end the tenancy.
  • The landlord intends to make the property available for sale within 90 days of the tenant leaving the property.
  • If the property was acquired for a business use other than residential rental accommodation and termination is required for the purposes of the business.
  • The landlord intends to carry out extensive alterations or redevelopment at the property and it would be unpractical for the tenant to reside at the property during the process.
  • The landlord wants to change the use of the premises.
  • The premises are to be demolished.
  • The landlord is not the owner of the property and the landlord’s interest ends.

• Fixed-term tenancies will become periodic tenancies at the end of the fixed term. This applies unless the landlord and tenant agree otherwise, the tenant gives 28 days notice which has increased from 21 days notice, or the landlord gives notice using one of the specified reasons listed in the RTA for periodic tenancies (above).
• Notice periods extend from 42 days to 63 days when a landlord or a member of their family requires the property to live in, and they must reside in the property for at least 90 days.
• Notice periods extend from 42 days to 90 days when a property is sold with a requirement by the owner for vacant possession.
• The minimum period between rent increases will be raised from six months to twelve months.
• Tenants must request permission to install a minor fitting and landlords can only decline for specified reasons. Tenants must pay for the installation cost. Landlords can place reasonable conditions around how the minor fitting is installed and tenants must remove the fittings and remediate the property when the tenancy ends if the landlord does not agree to the fittings staying. Minor fittings could be securing furniture or appliances, installing child safe latches or baby gates.
• The Regulator, the Ministry of Business, Innovation and Employment (MBIE), will have new compliance tools to take direct action against parties who are not meeting their obligations:

  • Penalty amounts will be increased in line with rental increases since 2006, when the penalty amounts were set.
  • Issue infringement notices for straightforward breaches of the RTA.
  • Issue improvement notices to correct behaviours where parties have breached the RTA.

• Soliciting rental bids, for example, by advertising a property without a rental price, will be prohibited.
• A party who is successful in the Tenancy Tribunal can have their identifying details removed from the Tribunal’s decision.
• Assignment of lease requests can only be declined if this is reasonable in the circumstances. Landlords must provide a breakdown of any costs, conditions and processes they are applying upon giving a tenant consent.

Harcourts has vast experience and expertise in residential property management and our property managers ensure that they are up to date with changes to the Residential Tenancies Act 1986. We remain committed to protecting our client’s interests and helping them meet their responsibilities under the RTA. Any breaches of the Act by tenants are well documented when they occur, offering protection for landlords.

Help us protect tenants, landlords & property managers

New Zealand is one of the few countries in the OECD that does not regulate its property managers. Property managers are the gatekeepers of housing for some of New Zealand’s most vulnerable residents.

With home ownership at its lowest level in 60 years and the demand for rentals increasing, the Real Estate Institute of New Zealand (REINZ) is calling on the Government to formally review the need to regulate the property management industry, including public consultation, and announce its recommendations for reform before the 2020 election. Harcourts fully supports this initiative
by REINZ.

Harcourts and REINZ believe that regulation is necessary to protect tenants, landlords and the reputations of those property managers who are acting professionally.

Why should property management be regulated?
The impact of poor property management practices is often reported in the media and is supported by research carried out by other groups who have called for regulation. Despite these reports, the changes in home ownership levels and demand for rentals in recent years, comprehensive public consultation on the need to regulate property managers has not been undertaken by the government since 2009.

No regulation means:

  • Anyone can set up business as a property manager, without any experience or qualifications.
  • Property managers don’t have to hold funds in a trust account.
  • Property managers don’t have to hold insurance.
  • Money collected by property managers can be paid into the property managers personal account.
  • There is no compulsory code of conduct for property managers to keep them accountable.
  • There is no clear mechanism to remove poor performers from the industry.

Some examples of the damage caused by a lack of regulation:

  • According to liquidators, a property manager allegedly went out of business owing around $358,000 to 67 landlords.
  • A property manager allegedly admitted to a Parliamentary Select Committee that she was asking tenancy applicants to provide their bank statements to see where they were spending their money.
  • A property manager allegedly charged a tenant $4,140 as bond money and two weeks rent in advance, but failed to refund the amount when the tenancy application was rejected. View the Tenancy Tribunal Order here.
  • A property management company allegedly failed to lodge tenancy bonds and provide tenants with compliant insulation statements. View the Tenancy Tribunal Order here.

What could regulation look like?

Regulation could require property managers to have:

 

  • A minimum level of education to operate, such as the NZ Certificate in Residential Property Management.
  • Ongoing education obligations to ensure that they stay up to date with law changes.
  • Police or background checks before operating.
  • Tenant and landlord funds held in a trust account.
  • A mandatory Code of Conduct or set of standards to keep them accountable.
  • Fines or sanctions applied if they don’t follow the Code of Conduct or standards.

Together with REINZ, Harcourts is committed to protecting tenants, landlords and the property managers who do act ethically and transparently, by advocating for the regulation of the residential property management industry.

In response to the property management industry becoming deregulated over a decade ago, Harcourts offices maintained professional standards and our offices continue to hold rental funds in audited trust accounts and hold business insurance that protects our people and clients. Harcourts has its own accreditation programme that ensures our property managers maintain a high level of service and attend Harcourts and industry training annually. Harcourts also supports our property managers who are working towards the NZ Certificate in Residential Property Management (level 4).

There is some trepidation amongst private sector landlords at the prospect of meeting the new healthy homes standards for rental homes that have been set by our Government. However, we must not lose sight of why these minimum standards have been created and what they will ultimately achieve.

Currently there are almost 600,000 households in rental accommodation in New Zealand and they tend to be older and of poorer quality than homes that are occupied by the owner.

These measures will improve the standard of housing in New Zealand and will improve the health and wellbeing of New Zealanders.

There are five healthy homes standards that all rental properties will need to comply with by 1st July 2024, and sooner if you have a change to a tenancy after 1st July 2021.

Let’s look at each standard:
Heating Standard

A fixed heating device must be installed that can achieve a temperature of at least 18°C on the coldest of days. This temperature is a standard recommended by the World Health Organisaton for the minimum indoor temperature. It is important to note that this requirement is only for the living room of the property.

It is anticipated that in most cases the fixed heater will be a heat-pump or wood burner for the larger living rooms, however a fixed electric heater may be enough for smaller rooms.

If you have existing heating at your property, it may not meet the new standards if it’s inefficient, unaffordable or unhealthy to run. Examples of these are un-flued gas heaters, open fires and electric heaters (excluding heat pumps) – depending upon home size and the number of heaters provided.

An online tool will be available later this year to assess the requirements for heating the living room at your property. Your Harcourts property manager can perform this assessment on your behalf and advise you of a recommended course of action, if any.

Harcourts and Noel Leeming are working together to bring our clients a special deal* with regards to purchasing heating devices.

Insulation Standard

Properties managed by Harcourts are set to meet the 2016 insulation requirements by the 1st July 2019 deadline. However, under the new insulation standard, there is a new group of rental homes affected. The minimum level of ceiling and underfloor insulation must now either meet the 2008 Building Code, or for existing ceiling insulation, have a minimum thickness of 120mm. These affected rental homes will already have approximately 70-120mm of ceiling insulation, so the requirement is to increase this to a minimum of 120mm.

Adequate insulation provides health benefits through minimising heat loss and is key to maintaining a warm, dry and healthy home.

Ventilation Standard

Ventilation is an important factor in preventing mould which can result in respiratory illnesses and worsening asthma. If that isn’t bad enough, mould can damage properties and belongings. Under the new standards, all kitchens and bathrooms must have mechanical extract ventilation. In addition, all living rooms, dining, kitchen and bedrooms must have windows that can be opened.

The Real Estate Institute of New Zealand (REINZ) is calling for the Government to make an exemption for shower-steam domes, arguing that these are cheaper and quicker to install than an extractor fan and don’t have an ongoing cost to run. Harcourts works closely with REINZ and will ensure that we are abreast of any changes to this standard.

Your Harcourts property manager is connected with a team of tradespeople including electricians and will be able to arrange the installation of any mechanical ventilation required. In addition, through our partnership with Noel Leeming, we will be able to provide discounts on kitchen rangehoods for our clients*.

Moisture Ingress and Drainage Standard

Properties must have adequate drainage and guttering, downpipes and drains.
If there is an enclosed subfloor, it must have a ground moisture barrier (if possible to install) that will protect the home from rising moisture.

Draught Stopping Standard

We can insulate and heat our houses; however, this is ineffective if we do nothing to prevent draughts. Guidelines will be made available as to how we can best prevent draughts, however the standard states that landlords must stop any unnecessary gaps or holes in the walls, ceilings, windows, floors, and doors.

If there is an unused chimney and/or fireplace, these will need to be blocked.
Your Harcourts property manager will be across these guidelines when they are released and can identify if there is any action to be taken at your property.

We can then advise you what work if any, is required to meet these standards.
As we typically inspect our rental properties every three months, we are taking note of what standards your property may or may not meet now, so we can get this information to you as soon as possible.

Your Harcourts property manager will then work with you to formulate a plan to action the required work to an agreed timeline. Be aware that the final date for complying with the new healthy homes standards is 1st July 2024, however if you have a new tenant or a varied tenancy after the 1st July 2021, you will only have 90 days to comply.

We anticipate that now the healthy homes standards have been set, savvy tenants will be asking to have these requirements met when looking for new rental accommodation. If the property they are renting does not comply on the
1st July 2021, you may find them looking for properties that are compliant with the new standards rather than remain in a damp cold home for another three years.
If your tenants leave and new tenants move in, you will only have 90 days to complete any work.

Smart property investors will want their property to be attractive to prospective tenants and/or retain their existing tenants and will therefore be planning to meet these standards before July 2021.

Find out more here.