Residential Tenancies Act 1986

Residential Tenancies: Social, Historical Background, and Scope of RTA 1986

• Policy Consideration for Residential Housing

• Historical Context of Tenancy Legislation:

  • First gained prominence after World War II.

  • Addressed the unequal bargaining power between landlords and tenants.

  • Limited landlords' ability to charge unreasonably high rents.

  • Restricted landlords' common law rights to recover possession in case of a breach.

• Current Concerns:

  • Unequal bargaining power still exists.

  • There is a housing shortage in New Zealand.

  • The need to strike a fair balance between the rights of landlords and tenants.

• RTA 1986, 2020 Reform:

  • New Requirements:

    • Rent increases limited to once every 12 months (previously every 6 months).

    • Landlords cannot terminate tenancy without grounds (previously 90 days' notice without reason).

    • Tenants who are victims of family violence can terminate tenancy with 2 days' notice (no previous provision).

    • Rental bidding prohibited; rent price must be included in advertisement (no requirement previously).

    • All requests to assign a tenancy must be considered (assignment could be absolutely prohibited).

• RTA Reform 2024:

  • Landlord can terminate periodic tenancy without cause, provided 90 days' notice is given to the tenant.

  • Landlord can terminate periodic tenancy with 42 days' notice under specific circumstances.

  • Tenants can terminate a periodic tenancy with 21 days' notice.

  • If a landlord terminates the tenancy due to a tenant exercising their rights (e.g., requesting maintenance), the tenant can apply to the Tenancy Tribunal to have the termination confirmed as retaliatory and declared unlawful.

Application of the RTA 1986

• What it Covers:

  • Applies to all tenancies for residential purposes, subject to specific exceptions (s 4).

    • The legal right of exclusive possession is irrelevant; arrangements granting less than exclusive possession cannot be used to evade requirements of this act (contractual arrangements cannot be used to override or undermine any requirements of a tenancy within the act).

    • Covers both fixed-term and periodic tenancies; also applies during the holdover period where a tenancy at will is formed.

    • May apply where occupancy is intermittent (e.g., lease for one month for every month of July); depends if there is one of the exceptions in s5

    • Where leased premises are used for both commercial and residential purposes, they are deemed residential unless it is proved that they were let principally for non-residential purposes.

      • Focus on use, not the overall nature of the premises.

    • Act applies to corporate landlords

    • Probably applies to corporate tenants (no case law on this point in NZ, but see Auckland City Apartments Ltd v Stars & Stripes 2000 Ltd) - Mixed residential tenancies, cancellation of contract. Held that in the case of mixed tenancies, Tenancy tribunal has exclusive jurisdiction over all encompassing matter.

    • Act applies to service tenancies:

      • Tenancies granted in relation to a contract for services between landlord as employer and tenant as employee.

      • Covers contractors, government employees (e.g., teachers), members of the police and armed forces.

    • Contracting in/out of the Act s(11)

      • A tenant is absolutely prevented from waiving their rights/powers under the Act.

      • A landlord may waive any of their rights/powers if they decide to do so.

      • Foundational policy assumption: Tenants have less bargaining power than landlords.

• The RTA 1986 does not apply to (s 5):

  • Tenancies for commercial, industrial, or agricultural purposes (mixed tenancies, onus is on the predominancy of the residential use of the premises).

  • Institutional residential accommodation:

    • Prisons, jails, police barracks, and cells.

    • Hospitals, homes for the care of sick, disabled, or aged persons.

    • Employers' barracks and hostels used for housing employers.

    • Tertiary students' accommodation, where the owner/operator is the education provider.

  • Transient accommodation:

    • Hotels, motels, clubs, holiday homes and apartments, camping grounds, mobile homes, and caravan parks.

    • Long-term accommodation in these types of premises may be deemed subject to the Act.

  • Does not apply to short fixed term tenancies (s 7) of not more than 90 days.

    • Only exempted from provisions on market rent and requirements for minimum periods of notice of termination. (e.g., other important provisions such as the property being up to housing homes standards still do apply)

  • Transitional and emergency housing:

    • Provided that the housing is funded (wholly or partly) by a government department or a Special Needs Grants Programme.

• Parties' Agreement:

  • RTA will generally apply even where a tenancy agreement purports to exclude, modify, or restrict any of its provisions (s 11).

  • If the RTA 1986 does not apply to a particular arrangement, the parties may agree (in writing) to be subject to any or all of the Act's provisions (s 8).

  • RTA can be contracted in but cannot be contracted out

Tenancy Agreements - Requirements under the RTA

• Residential tenancy agreements are contracts, but RTA 1986 limits parties' freedom to contract; many terms are predetermined.

• Tenancy Tribunal – judicial body – has jurisdiction to exercise powers of District and High Courts in relation to contract. Exclusive jurisdiction in relation to residential tenancy agreements.

• Rule of construction: immediate language and express terms specified by parties take precedence over pre-printed terms.
  Writing Requirements

• Tenancy Tribunal may apply equitable remedies (e.g. estoppel, equitable set-off, unjust enrichment).

• Tenancy agreements must be in writing and signed (s13)

  • Before tenancy commences, Landlord must sign the agreement and provide a copy to T

  • T must also sign agreement

• Tenancy agreements not in writing are not unenforceable (s13C)

Form Agreement

• Landlord can add certain extra conditions to the form agreement:

  • Prohibition on smoking

  • Limitation of number of people living on premises

  • Rules about pets

• Landlord cannot add unenforceable clauses:

  • Require tenant to do more than RTA requires

  • Reduce or remove Tenants rights and expand landlords rights

  • Evade requirements of the RTA

Prohibitions under the RTA

• Key Money - additional fee levied to get the 'keys to the property'

  • Absolutely prohibited - unless Tenancy Tribunal grants prior consent (s 17)

  • Option fees may be allowed - rent for up to 1 week for a tenant to decide whether they will take up tenancy

• Letting Fee - Fee or charge by the letting agent

  • No letting agent or other person may require Tenant to pay a letting fee (s 17A)

  • Landlord may nevertheless recover reasonable expenses on consenting to Tenants -(e.g. hiring an agent to advertise the property, drafting of a tenancy agreement by a lawyer)assignment, subletting, or parting with possession
    Bonds - Sum of money payable under a tenancy agreement as security for the observance and performance of Tenants obligations under the agreement

• Cannot total more than 4 weeks of rent (s 18)

• If rent increases or decreases bond amount may increase or decrease accordingly

• Landlord may not require tenant to provide any form of security other than bond (s18A)

• Upon receipt of bond, Landlord must give written receipt (s19)
  Rent - Any money, goods, services or other valuable consideration in the nature of rent to be paid or supplied under a tenancy agreement by tenant; but does not include any sum of money payable by way of bond.

• Landlord must state amount of rent when advertising premises (s22F)

• Landlord cannot invite or encourage a prospective tenant to pay an amount of rent that exceeds the amount stated in the advertisement (s22G)

• Landlord must give written receipt to person paying the rent (s 29)

• Rent accrues day to day (s 31)

• Landlord may not require payment of rent more than 2 weeks in advance (s 23)

• Landlord is prohibited from using rent as a remedy for a breach

  • Cannot demand whole or part of current rent, an increased rent or a sum specified as damages or penalty for a breach by the tenant (s 32)

• Landlord is not entitled to seize or dispose of tenants goods as security for or in payment of rent or for any other reason (s 33)

Rent Increases

• Landlord must give tenant notice in writing of the increase, specifying the amount and date on which it is payable (not less than 60 days after date of notice)

• Rent must not be increased within 12 months after the date of commencement of the tenancy or within 12 months after the date when the last increase took effect.

• Landlord and tenant may agree to increase rent if the Landlord has made substantial improvements to premises that increase their value and are of material benefit to the tenant, or if the landlord has increased/improved facilities/services provided to the tenant (s 28)

• Intervention by Tribunal

  • Tenancy Tribunal may order rent to be reduced to "market rent" if it finds that the rent due exceeds that amount (s 25)

  • Tribunal may order rent to be increased if the landlord has incurred expenses in respect of the premises and the nature/amount could not have been reasonably foreseeable when rent was fixed.

Tenants Entitlements

• Landlord must take all reasonable steps to ensure that there is no legal impediment to the occupation of premises at the commencement of the tenancy (s 36)

• Tenant is entitled to vacant possession of the premises (s 37)

• Tenant is entitled to quiet enjoyment (s 38)

Tenants Right to Assign

• A provision in a tenancy agreement that prohibits tenant from assigning the tenancy is of no effect

• Tenant may assign tenancy at any time with landlords prior written consent and in accordance with any reasonable conditions (s43B)

• Tenant who assigns tenancy ceases to be responsible to landlord on date when assignment takes effects, but remains liable for acts/omissions before date of assignment (s43C)
  Right to Sublet

• Tenancy agreement may prohibit tenant from subletting or parting with possession

• In absence of provision, tenant may sublet or otherwise part with possession at any time, with landlords prior written consent and subject to reasonable conditions

Tenant Responsibilities (s 40)

• Pay Rent

• Ensure premises are occupied for principally residential purposes

• Keep premises reasonably clean and tidy

• Comply with smoke alarm requirements

• Notify landlord of any damage or need of repairs (ASAP after discovery)

• Tenant has no liability or obligation to (s 49A):

  • Meet the cost of making good any destruction or damages

  • Indemnify the landlord against the cost of making good the destruction or damage or

  • Pay damages related to the destruction or damage; or

  • Carry out any works related to make good the destruction or damage

• However Tenant is liable when (49B):

  • The destruction or damage was intentionally done or caused by tenant or any person to whom tenant is responsible for

  • The destruction or damage from an act or omission by the tenant for whose actions the tenant is responsible for and the act or omission occurred on the premises and constitutes an imprisonable offence.

On termination:

• Quit premises

• Remove goods

• Leave premises in reasonably clean and tidy condition

• Remove rubbish

• Return keys to landlords

• Leave Landlords chattels on premises

Tenant is prohibited from

• Intentionally or carelessly damaging the premises

• Using the premises for any unlawful purpose

• Causing or permitting interference with quiet enjoyment of landlords other tenants

• Causing permitting any interference with means of fire escape

• Tenant must ensure no more than maximum number of persons reside at premises

• Tenant is responsible for any act or omission done by anyone other than the landlord or landlords agent on premises (s 41)

Landlords Responsibilities (s 45)

• Provide premises in a reasonable state of cleanliness

• Provide and maintain the premises in a reasonable state of repair

• Comply with

  • Smoke alarm requirements

  • Healthy home standards

  • Contaminants requirements

• Compensate Tenant for reasonable expenses incurred in repairing premises

• Don't need to necessarily insure the property but need to have an insurance statement. If the landlord themselves don't insure property, they are still liable to pay insurance premiums

• Provide and maintain locks etc as necessary to ensure premises are reasonably secure (s46)

• Give Tenant written notice (as soon as practicable) if the property has been put on the market (s 47)

• Provide adequate means of water collection (if no reticulated water supply) (s45)

• Not interfere with supply of gas, electricity, water, phone or other services (s 45)

• Permit and facilitate the installation of a fiber internet connection (in some circumstances) (s45B)

Landlord may not enter except:

• With tenants consent given freely at or immediately before time of entry

• In case of emergency

• For purpose of inspection (8am - 7pm); notice given 48 hours to 14 days prior.

• For the purpose of determining whether the tenant has satisfactorily completed any required work

• For the purpose of carrying out necessary repairs

• For the purpose of complying with statutory requirements (smoke alarms, healthy homes standards etc)

• Pursuant to an order of the tribunal