If you’re a landlord in New Zealand, then hopefully you have already heard about the new tenancy changes that came into effect on 11 February 2021. These changes are aimed at giving tenants more security and flexibility in their rentals. However, the changes haven’t been so well-received by landlords.
The new regulations stipulate that tenants may ask to make changes to a property and as long as these alterations are minor, landlords must agree. That means that a tenant will likely be able to put up picture hooks or paint the walls, as long as they return the home to its previous condition before they move out. This has the potential to turn into a whole raft of new issues for property owners as debates over ‘previous condition’ are already beginning.
Another significant change for landlords is the abolishment of the previously standard fixed-term tenancies. These are now being converted to periodic tenancies unless the tenants expressly agree to a fixed-term lease. That means that rather than being locked in for an entire year (the typical length of a fixed-term tenancy), tenants can now give three weeks’ notice to terminate the lease at any time. This is making the income of landlords less secure, and they may have to quickly find new tenants at short notice. Unfortunately, it often takes more than three weeks to find suitable tenants.
If tenants now request to assign a tenancy to someone else, you cannot decline unreasonably. That will make it challenging for you to prove that you have good reasons for saying no, even if you have genuine concerns about the potential new renters.
Another change from the old way of doing things is that no more rent bidding is allowed. If you’re not sure what that is, rent bidding is when potential tenants offer to pay more than the advertised rent in order to secure the tenancy. Landlords are no longer allowed to advertise a listing without explicitly naming the amount of rent a tenant will be expected to pay. This means that you might start getting less rent for your property than you otherwise would have. Landlords will now need to be highly familiar with the prices they can charge in the area, or risk losing out on extra income.
Landlords without a lot of experience who have not read up on the new legislation are suddenly finding themselves in hot water with these new rules coming. It is no longer easy to become a landlord unless you are prepared to spend a lot of time reviewing the new rules. Most landlords work a full-time job as well, and don’t have time for this. However, if you do not comply with the existing or more recent laws and regulations regarding rental properties, there are also stricter new measures in place to enforce this.
That’s why many rental property owners are now choosing to sell their homes. It is no longer a simple case of finding tenants and making sure that they pay rent. There are a whole lot of rules that you must follow, or you risk being taken to the Tenancy Tribunal. If you have six or more properties with tenants, you can also be fined extra for more serious breaches. This is a considerable amount of financial risk to those who own rental properties.
If you no longer want the hassle and risk of owning and managing a rental property, it could be time for you to sell the place. With real estate in Dunedin booming, it’s an excellent time to sell. Properties are currently selling for well over the recommended value, so you’re likely to turn a profit from the sale.