The Residential Tenancies Amendment Act 2020 was passed in August of last year, promising significant changes to tenancy law and the original Residential Tenancies Act 1986. However, most of the changes have only recently come into force.
As of 11 February 2021:
• The 90-day no fault eviction option has been removed. Landlords will no longer be able to terminate a periodic tenancy without cause by providing 90 days’ notice. Instead, a specific ground of termination must be raised (see below).
• Fixed-term tenancies now automatically convert into periodic tenancies at the end of the fixed term(with some exceptions, see below).
See our summary of the new rules here for more information and the full list of changes.
So, what do these changes mean for landlords who wish to sell their rental property?
TERMINATING A TENANCY TO SELL WITH VACANT POSSESSION
All fixed-term tenancy agreements will now convert to periodic tenancies at the end of the fixed term unless:
• the parties agree otherwise;
• the tenant gives at least 28-days’ notice (increased from 21 days); or
• the landlord gives notice in accordance with the termination grounds for periodic tenancies.
For periodic tenancies, notice periods for termination notices issued by a landlord without Tenancy Tribunal involvement will increase to either 63 or 90 days (depending on the grounds for the notice). Some of these grounds include:
• The owner or a member of the owner’s family requires the property as their principal place of residence.
• The property is required for occupation by employees or contractors of the landlord.
• The property is to be sold.
• Extensive alterations or redevelopment are to be carried out.
• The premises are to be converted into commercial premises, or demolished.
SELLING A PROPERTY AS AN ONGOING RENTAL WITH EXISTING TENANTS
Landlords are required to notify tenants in writing of their intention to sell. Likewise, landlords must get tenants’ permission before entering the house to take photos or to show the property to prospective buyers.
Tenants can refuse to allow photos of their personal possessions.
While tenants cannot unreasonably refuse access, they can set reasonable conditions, such as limiting access to certain times of day or days of the week.
Tenants may refuse to allow open homes or auctions to take place at the property. They have a right to be present during viewings and may insist that the property be shown by appointment only. They can also ask for a temporary rent reduction in return for allowing open homes. Landlords do not have to grant this.
Communication and negotiation are important. Once access terms are agreed upon, they should be put in writing and signed by all parties.
Once the property is sold, the landlord must tell the tenant who the new owner is and when they will take over.
They should also provide the new owner with a copy of the tenancy agreement.
As you can see, the new Act has significant implications for both landlords and tenants, particularly when it comes to the sale of a rental property. If you are or plan on becoming a landlord or tenant in the near future, or if you are a landlord seeking to sell your rental property, we suggest seeking legal advice from a trusted professional in order to ensure your rights and obligations under the new laws are correctly observed and complied with.
If you have any questions or concerns regarding the Residential Tenancies Amendment Act 2020, please do not hesitate to get in touch with one of the team at GML Lawyers. We are committed to providing all our clients with practical, tailored advice.
The team at GML Lawyers