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Residential Tenancies Act 1986 Update (Part Two): Tenant Liability for Damage, Unlawful Residential Premises, and Contamination of Premises

10 October 2019

Part Two of our Residential Tenancies Act Update considers a number of further changes to the Act, which took effect from 27 August 2019.

Tenant Liability for Damage

Where a tenant carelessly causes damage to the premises, the tenant’s liability for that damage is limited to a maximum of four weeks’ rent or the insurance excess (if the landlord is insured) whichever is the lesser. However, where the tenant damages the premises intentionally or through an act or omission that constitutes an imprisonable offence, the tenant may still be fully liable for the cost of making good that damage.

With any new, varied, or renewed tenancy from 27 August 2019, landlords will need to include a statement in the tenancy agreement as to whether or not the premises are insured. If they are, that statement must also include the relevant excess amount(s) and inform the tenant that a copy of the insurance policy is available on request. If, during the tenancy, that statement or information changes or is no longer correct, landlords must inform the tenant in writing within a reasonable time of becoming aware of the change. A failure to notify the tenant is a breach of the Act, which may result in exemplary damages of up to $500.

Unlawful Residential Premises

Many will be aware the Act requires landlords to comply with all regulatory and statutory requirements in respect of buildings, health, and safety so far as they apply to the premises.

The definition of “residential premises” has now been amended to expressly include any premises used or intended for occupation by any person as a place of residence; even where, this is or would be unlawful. As a result, premises such as converted garages, self-contained flats, and sleep-outs, which have in some instances been found by the Tenancy Tribunal to fall outside the scope of the Act as they were unlawful or “uninhabitable”, are now captured by the new definition.

The Tenancy Tribunal has full jurisdiction over these premises and may make various orders. These orders include the landlord repay the tenant the whole or some of the rent having regard to the circumstances; the landlord take steps to make the premises lawful and comply with all building, health, or safety requirements; or the tenancy be terminated. A breach of the Act in this respect may result in exemplary damages of up to $4,000.

Contamination of Premises

In recent years, the scourge of methamphetamine has caused millions of dollars of damage for owners of rental properties. In many situations, landlords were not allowed to test the rental premises for methamphetamine contamination while the tenants were living there. The amendments now permit landlords to enter the premises for the purpose of testing for contaminants or taking samples for such testing, provided the landlord gives at least 48 hours’ notice (but not more than 14 days before the intended entry) to the tenant. Within seven days of receiving the results, the landlord must notify the tenant in writing and provide a copy of the results.

The Act also allows for Regulations to be made prescribing maximum acceptable levels of contamination and prescribing methods for carrying out tests and decontamination processes. These Regulations are expected to be developed over the next year and may provide more certainty for landlords when compared to current testing standards. Once the Regulations are in force, landlords will be unable to knowingly rent out premises that are contaminated above the prescribed maximum levels without first decontaminating the premises in accordance with the Regulations.

Should you wish to discuss how these recent changes might impact on your investment property, please do not hesitate to contact Mitch Singh (DDI: (09) 969 1214); m..........@glaister.co.nz, or Paul Kim (DDI: (09) 913 2257); p.......@glaister.co.nz).