Residential Tenancies Amendment Bill

I thought if I opened proceedings just with a number of thanks—first, to the two colleagues from the Green Party and the New Zealand First Party who I’ve liaised with most in order to get the bill to this stage that it is in now. So can I acknowledge the Hon Ron Mark and Marama Davidson for their pragmatism but also sticking very close to the principles that their parties were pushing for with this bill as it is now.

A number of people have made comments that there is a need for change—I think I’ve even heard that to my left. But the fact of the matter is that this piece of legislation is well over three decades old, from an environment where 25 percent of New Zealanders were renting, and we’re now, as I say, in 2020, where over 30 percent of people are now renting homes—600,000 households—and it is time for change.

So to the Hon Ron Mark and Marama Davidson, can I thank them for their pragmatism and their patience during the process to get the bill to where, I think, we have struck the right balance in ensuring that we have made sure that security of tenure for tenants and security of peace of mind around rents is secured for tenants, but also making sure that the protections that most landlords would like to have enforced when they do have trouble with tenants is within this piece of legislation.

I don’t want to get Mr McKelvie in any trouble with his whips, but he was right: the vast majority of people will have no problem with this piece of legislation, because despite this debate being had at the extremes, most people who live in rented accommodation and most landlords have extremely good relationships. But there is no debate that this decades-old piece of legislation and the conditions within it needed to be amended.

So in that respect, too, can I acknowledge those who have advocated both for tenants and for landlords. Andrew King from the Property Investors’ Federation—who I met with a number of times and disagreed with on many occasions—I would like to point out, for those who are opposed to this legislation, fought hard for the landlords. At the end of the day, we disagreed on quite a number of points, but he was reasonable during those conversations. For the likes of the tenants’ organisations—I don’t want to single out any, but they, obviously, have been fighting for decades to make sure that these amendments that we’re making within this bill are right.

I know a lot of the debate in this committee stage will be focused around the removal of the 90-day no-cause terminations. So I just wanted to get on the table nice and early that the stats that we have available to us say that 3 percent of terminations use the no-cause termination ability through the current Act—3 percent. So 97 percent of terminations of tenancies happen when a reason is given.

Now, I can understand why landlords might want to protect that, but, in all reality, a small minority of cases where there are terminations use this course, and, I think, in 2020, when more people are renting and are going to be lifelong renting, on this side of the House, we believe if they are going to have their termination ended, they deserve to know a reason why, and it should be a valid reason why. Because while only 3 percent of people might have this thrust upon them, 100 percent of people who are in tenancies have that hanging over them at every moment that they are in their tenancy. So that security of tenure for those tenants is not there, and 35 years after this piece of legislation, when the situation has changed, on this side of the House, we believe that that needs to change.

I want to acknowledge one of the comments from the Minister in the chair, the Hon Kris Faafoi: “It’s time for change.” I suspect he was referencing the bill; I might like to think it was about something else.

Secondly, I think it’s fundamentally from this side—I know it’s committee stage, the Minister is absolutely right that this is only a few people. But our concern on this side, to the extent that this is a statement and a question, is that, in attempting to address the very few, the bill is actually going to affect pretty much everybody and, arguably, landlords disproportionately.

My question, though, is around Supplementary Order Paper (SOP) 565. If the Minister could explain to the House why he tabled it at 2.56 p.m. today, a little over an hour ago.

Quite simple. I’ve been waiting for this stage, or the bill to be debated in the House, and that’s when the Government saw fit.

Is it not usual and a courtesy to the democracy of this Parliament that, actually—

💬 Hon Members: Ha, ha!

And there we go: the Government couldn’t care less.

💬 Hon Peeni Henare: The House is still sitting, chief.

Couldn’t care less, and someone else has said the House has been sitting. It may have failed that Minister’s understanding that the House has been sitting since 9 a.m. this morning.

So maybe I could ask when, Minister—and your officials will certainly be able to tell me this—was the Supplementary Order Paper ready?

The Supplementary Order Paper was ready for tabling roughly during my speech.

Is the Minister, therefore, confirming his supernatural powers that he’s able to write 15 pages of documentation, have them tabled and printed, within seconds of his speech?

For the member, I don’t possess any supernatural powers.

So, again, would the Minister like to confirm to the committee, when the Supplementary Order Paper which has been properly formatted, drafted, and was in the hands of the Table Office, when it was ready?

To address the member’s question, we’ve been working for some time on the amendments within the bill, trying to match up the time frames with the termination of the rent freezes around the COVID rent freezes that were brought in under emergency legislation; also, to make sure that that matched up with the 12-month rent increase and bringing that forward in the bill to make sure that they are aligned. Otherwise, there would have been a gap between the end of the COVID rent freeze and the beginning of the 12-month rent freeze that was already within the bill. The family violence components of the SOP, we’ve been working on for some time; it certainly was something that I was watching very closely from the Social Services and Community Committee and asked officials as to whether or not that could be changed, and I do think it’s an extremely good component of the SOP. So to answer the member’s question, we’ve been working on it for some time because I wanted to make sure that we get that right.

Could the Minister confirm to the House who he or his officials may have consulted around the SOP. Was there—obviously, tenant groups, landlord groups—wide consultation?

I don’t think I can give you particulars, but I understand there was limited time in order to consult with appropriate stakeholders, obviously especially around the family violence component of the SOP. Again, some of the issues that are within the SOP came from the select committee, but also some of the issues arose because of the concern the Government had around particular components around rent freezes and the introduction of the 12-month increase of rents within the bill as it stood.

To thank the Minister, obviously, I’m not particularly thrilled that an SOP, to me, feels like it was withheld from the House when it could have been put in front of us earlier, because, actually, there are elements within it, Minister, that I think this side is comfortable with and supports. The question, though, is: is he able to give the House—and this goes much broader than the SOP. Have there been any projections done by his officials around how many private landlords might exit the market as a consequence of this legislation?

Look, I wouldn’t necessarily take for granted that that is going to happen. Certainly, the data that has been afforded me over the last just a little over a year has suggested that, in the time that we’ve been considering these changes—obviously, the consultation first happened under Minister Twyford as the Minister of Housing, and then this piece of legislation was introduced. So this has been no surprise. The data that has been given to me is that, actually, the number of rental properties available on the market has increased. Again, using the contribution of Mr McKelvie, he has said the majority of landlords and tenants will not have to worry about the changes in the amendments within this bill, and I agree with Mr McKelvie. But, again, there are, over the last 3½ decades, issues that have compiled that need addressing, and we believe we’ve got the balance right here, in this bill.

I do want to acknowledge the Minister in the chair, the Hon Kris Faafoi, as a hard-working Minister. When he stated his integrity that he actually has been working on it for some time, it’s a pity that it wasn’t included during the select committee process, because here we are now—and I’m bringing this question to the Minister because the fact is that we haven’t had a chance to deliberate in select committee, which I think is critically important. If I can draw the Minister to his Supplementary Order Paper 565, and, in particular, the new section 56B(3) “If there are other tenants (remaining tenants) under the tenancy at the time of the withdrawal,—(a) the tenant withdrawing from the tenancy (the withdrawing tenant) ceases to be responsible to the landlord for obligations under the tenancy agreement and this Act,”.

Now, further on down in new subsection (5) there’s a calculation there. Now again, because of the shortness of time, I’m just trying to work out this calculation. I wonder if the Minister, with the help of his officials, can help us understand this calculation, because it is quite confusing to understand this. We’ve got “a”, which is rent that’s payable over a two-week period, then “b” is the rent that would otherwise have been payable for the two-week period. So is that the reduction of that? Then it’s got divided by “c”, which is the number—say there’s two tenants and one withdraws because of this subsection, leaves one, times the one. So if the Minister can give us just, I suppose, an example of what that would look like so that members of the public would know what this actually means for them, that would very helpful. Thank you.

Thank you, Madam Chair. Can I thank the member for the question, because it is a very good one. Just to inform the committee, what this is about—the new component of the bill—is that we’ll allow victims of family violence to leave that tenancy under two days’ notice if they are feeling unsafe. So that obviously leaves a situation where you’ve got remaining tenants who might be liable for the full rent.

The calculation within the section that the member speaks to—sorry, I’ll just put my glasses on—might look complicated, but I think it’s relatively simple. I’ll give the example: if five of us were on a tenancy and weekly rent was $500, we would divide the $500 by five. Then the rent that the remaining tenants would be liable for for a two-week period would be $400, because we would all be liable on an average for $100 of rent. That is only a responsibility of the remaining tenants for two weeks, and then they would return to full rent, giving some time to either sort themselves out or get another tenant in. So, again, it depends on the number of people who are on the tenancy, divided—I’ll start again. So if five of us were on the tenancy agreement at $500 a week, we would divide the $500 by five. The remaining tenants would pay—if it were, obviously, four tenants left—four times the $100. So that’s how the formula for that relief for the remaining tenants for two weeks is calculated. Then it’s back to normal, because we don’t want that to have an undue burden on the landlord.

So another question then to that. So who incurs the cost or who wears the burden? Is it the landlord, then the shortfall, and in this case over the two-week period, would be $200. Is that the case, because, again, I’ve just been looking through the other sections that are here. I can’t quite see, with some clarity, who then wears the burden of that cost of the $200, given the Minister’s calculation?

Yeah, look, given some of the situations that tenants who might be in this sort of situation might be in, there is, obviously, a sharing of the burden. We’re working on averages here, but some people have different rental arrangements. But the reduced rate of rent is, obviously, what the remaining tenants would pay—again, only for two weeks. So, obviously, the tenants would pay the rent to the landlord, who would, for two weeks, forgo whatever the difference is in order, I think, to make sure that the remaining tenants can make up their minds as to what they want to do: either remain in the tenancy or, if they are forced to give notice, to end the tenancy. We believe that strikes, again, the right balance between making sure that the person who is leaving the tenancy isn’t leaving an undue burden or feeling like they can’t leave for financial reasons.

One last question to the Minister then. So given the scenario the Minister has given, there are five that are in there, but one is leaving because, I take it, it could be an unsafe environment. So I’m looking into the new section. If this is to deal with the issues of family violence or domestic violence, if the perpetrator of that violence is inside that tenancy, then I’m just trying to see whether this would address that, because, in most cases, a tenant wouldn’t normally leave, because if there is no risk issues or unsafe place, it wouldn’t be the reasons that they would leave their tenancy in this case. So I’m just trying to understand from the Minister, because we know that these issues are quite complex, but in this case the potential harm to other tenants that are in there, if the Minister can hear the scenario I’m trying to play out here for the Minister.

Look, I don’t disagree with the member that situations would be complex, but the principal aim of the amendment that he’s referring to is the safety of the family violence victim in order to be able to give them the ability to leave the tenancy as quickly as possible to ensure their safety. So, again, depending on the situation that you’re in, the perpetrator may or may not be within the tenancy; if they were, then I’m making an assumption that the remaining tenants might have to think about their future. But, again, the tenant may not be party to the tenancy. Again, the overriding principle is making sure that we give the victim of family violence, who feels that they need to exit this tenancy to keep themselves safe, that safety valve in order to do that.

Just a quick follow-up question: did the Minister in the chair, the Hon Kris Faafoi, consider the Crown, if you will, wearing the cost of this? I think no one in this House is going to disagree with the principle that we want family violence to end and that we want to get people into a safe space, but, in effect, what this bill is creating is a cost on a landlord whose got, in a sense, nothing to do with it—they’re not the cause, they’re not the agent, and they’re not the recipient. They’re completely not at fault, but now they’re wearing the cost, as small as it might be, hence the question: did the Minister consider that the Government or the Crown would step in and pay the cost?

In short, no, there was no consideration of that, essentially because I think that would probably create bureaucracy that was probably unneeded in this situation, and the tenants have a direct relationship with the landlord as well. Again, when we were thinking through this, we were trying to get the appropriate amount of time, depending on how people might cycle their rent, but we landed on two weeks, as it is in the bill at the moment, because we’re trying to balance up the burden between the principle of safety for the exiting tenant, and not, again, wanting to put any uneven or unbalanced burden on the landlord.

Thank you, Madam Chair. Could I acknowledge the Minister in the chair, the Hon Kris Faafoi, for his willingness to engage with the Opposition as we ask these questions. He also acknowledged at the start of the second reading speech that there have been thousands of people who have expressed concern about this particular measure and, in particular, the fact that there are a large number of small investors and landlords who are warning that this bill will drive them out of the rental market. So I do have a few quick simple questions of the Minister and I hope he’ll be willing to answer them. The first is, very simply: what is his response to those submitters?

Look, I think there—and I’m not sure if I mentioned this in my opening remarks, a lot of this debate has been at the extremes, and, again, I’m going to get into trouble, because I like Mr McKelvie, for quoting him. Because the vast majority of landlords and tenants are not going to be affected by this, but there’s been a fair bit of debate stirred up in the community and the media. There are still legitimate reasons why a tenancy can be ended by a landlord within this bill. What we are removing and what we are steadfast in removing is the no-cause terminations, which for any tenant has hung over them for the last 35 years, that, essentially, means that regardless of your conduct and what you do in the house, or the property, sorry, your tenancy can be terminated for no reason whatsoever.

Now, if you are a tenant who isn’t paying rent on time repeatedly or if you’re a tenant that is repeatedly having antisocial behaviour, or if a landlord has a good reason to move on, like selling the property or renovations to the property, those mechanisms still are within this bill to end a tenancy. In fact, with the help of New Zealand First, we’ve added another way to finish a tenancy if a landlord is assaulted or their family’s assaulted, because obviously that will be the right thing to do.

So my message to them is: please, don’t necessarily listen to the hype around the changes within this bill, because if you do have tenants that are acting the fool repeatedly, then you still have the right, if you can prove it and evidence it, to end that tenancy. If they’re not paying rent, again, on a regular basis, you still have the right to end that tenancy. But what we don’t think—and, again, it’s only been used in 3 percent of tenancy terminations, no-cause terminations.

So the mass there doesn’t necessarily match up, because, certainly, landlords have been furiously emailing us, wanting to maintain that right—have only used it 3 percent of the time. Again, I would acknowledge that the overwhelming majority of landlords and tenants have good relationships, but we do need to make sure that we’ve got a regime that when there is trouble on both sides, we have remedies for it, and I would acknowledge that we have a Tenancy Tribunal that has been able to deal with these issues for well over 30 years.

I hope that the Minister is right in saying that the overwhelming number of landlords and tenants have good relationships, and I’m sure that is true. I certainly know of many who have and, as I mentioned, when I was a tenant, I believed I always had a good relationship with my landlord as well. But I do think that he’s fairly naive in his suggestion that those landlords and small investors who submitted to the Social Services and Community Committee, and who have subsequently written to MPs, haven’t studied carefully what is in the bill, because they have. They have looked very carefully at the provisions of this bill, and that is why they have expressed such a strong concern that they, and many others they know, will be deterred from providing rental properties in the future.

So my next question to the Minister, which is related to the one he’s just answered but is different, is: what is his prediction for this bill’s impact on the supply and availability of properties in the private rental market?

I don’t have a crystal ball, but what I do have is some data over the last couple of years—and, again, I’d just like to remind the House that this is not a process which started last week. Minister Twyford started quite extensive public consultation on this process and the amendment at the beginning of our term. I think it was over 4,000 submissions to that public consultation. So both landlords and tenants have known about this process for some time.

The best data that I have available to me is that during that period where landlords knew that this was our intent has actually seen the number of investment properties increase slightly. It’s not as high as 5 percent, but I don’t think it’s as low as 1 percent—somewhere around the 2 or 3 percent mark.

So in that time, property investors, despite knowing this Government’s intent around rebalancing the Residential Tenancies Act—the figures show—have continued to buy investment properties. So I believe we’ll have to watch it closely, but I don’t believe a scaremongering around a mass exodus of property investors in the rental market is going to happen. Let’s not forget, there are 600,000 households in rental accommodation at the moment, and I believe overwhelmingly, whether you’re a mum and dad investor or whether you’ve amassed a large rental portfolio, property investment is still something that New Zealanders hold dear. I think New Zealand landlords will see this legislation, once the dust has settled, is still giving them the power to do what they need to do in a small number of situations.

I know that people are filing into the galleries, and I just ask them if they could keep the chatter down to a minimum, please, because we are still debating in the House, and it’s quite hard for the person who’s talking if there’s other noise in the area.

Thank you, Madam Chair. It’s always great to see the galleries full.

Minister, notwithstanding the fact that the vast majority of landlords and tenants are good people who look after the property and look after each other and respect their rights and obligations, the fact of the matter is—as all MPs, I’m sure, will be able to attest—that there are some dreadful situations out there. At the moment, the perception is that the law is already heavily weighted on the favour of tenants where there are issues of antisocial behaviour and damage to property. In my political career, I can think of a number of landlords—and they’re certainly not wealthy people. They’re mum and dad investors, as the Minister has just described them. They have done their best to provide a rental property for somebody or for a family who has needed it, only to find that that property is damaged, that the neighbours are abused, and that all sorts of terrible things are happening, yet their ability to evict those tenants and put right the damage and get a better family in there is already very challenged, and it is their strong view that this particular measure will make it even worse.

So my next question to the Minister is: what is his message to landlords who are already the victims of significant property damage and who will now face the prospect of that damage intensifying, because of the time frames that are built into the new bill, while their rights and ability to reclaim their property are eroded?

What I would say to them is they’ve actually got more certainty now, because I think what they found is—

💬 Hon Tim Macindoe: They don’t see it that way.

Well, if the member would like to read the bill, perhaps, then he may differ his opinion, because the amendments in the bill make it very clear that if there are three instances of either antisocial behaviour, for example, or repeated late payment of rent, then the landlord is able to seek the termination of that tenancy as of right. I think one of the frustrations that landlords have had for years is that going to the Tenancy Tribunal can be a bit of a lottery around the threshold for termination around some of those issues. So there is criteria now, quite clear for landlords, that if you do have three incidents of antisocial behaviour or three incidents of rent being late, then you have the right to go to the Tenancy Tribunal to say, “That’s it.”, because of the repeated behaviour. Frustration has certainly been one of the issues that has come through from landlords within the select committee process, and, obviously, correspondence through to us.

The member said “perception” in his question, and that perception of the Act as it stands now is incorrect that landlords are powerless to deal with some of these things, because the issue that has caused the most concern that we are trying to deal with is the absolute power of the landlord to say, “That’s it.” with no good reason. So they may have the perception, but the reality of the law is that they have the ability to end a termination without having to evidence any good cause.

💬 Hon Tim Macindoe: I’m talking about people that have had that experience; it’s not a perception.

Well, I would say—and the question was what I would say to them. It’s actually clearer in the legislation now, the threshold for termination. What we’ve had in the past is landlords, again, trying their luck in the lottery of the Tenancy Tribunal, dependent on what the behaviour was, or late payments of rent. Now it is codified within the amendment bill what that regime is. If the tenants don’t meet the regime, then, again, the landlord has the right to go to the Tenancy Tribunal and say, “I’m terminating this tenancy.”

Changing tack, Minister, to your Supplementary Order Paper 565 around the new section 55AA regarding termination if there’s a physical assault by the tenant. Granted, I’ve only, literally, had minutes to read it, and I think the overall concept is good, but the question is: does he think allowing 14 further days of a tenancy is going to work?

In other words, a tenant has assaulted the landlord and they’ve got to give 14 days’ notice. Now, at one level that makes sense, but it’s going to open up a potential problem that if that tenant’s pretty annoyed already and has used physical violence, things are only going to get worse, either again with the landlord or to the property. Did he consider a shorter period of time?

That was the amount of time that was suggested by officials was enough to do a couple of things. First of all, it gives the tenant enough time to leave the property, and also, if the tenant wanted to challenge that at the tribunal—which they do have the right to do—to lodge an appeal without having to leave the property. I’m not imagining that many might do that, given that it has to be a physical assault on the landlord, their family, or an agent, but I think making sure that there is the means to be able to exit the property in a timely manner, it takes some time to move out of a property, but also give a right of reply or appeal through the Tenancy Tribunal is where we landed with the 14 days.

Just a supplementary on the point that was made—just in regards to it. Is there not an inconsistency? Already, we’re regarding two days in regards to family violence for a tenant if they experience harm or there is risk, and now, when it comes to an actual landlord itself, we’re only giving 14 days. Surely there’s an inconsistency that officials have not given you the advice to protect the landlord, because they too, at the moment, are prey to the predator of violence themselves. Surely there should have been another way to address it within a shorter period of time?

The issue with the two days was that the tenant who’s leaving lives at the property. It’s almost probable that the perpetrator of the violence might also be living at that property. The issue with the difference between the two and the 14 is, obviously, the landlord does not live at the property, so there wouldn’t be as much of an immediate issue between the landlord and the tenant.

But that still is inconsistent with what the Minister had said. Regardless of where the perpetrator may be—whether they are tenant at the property or where they’re absent at the property—it’s still the risk factor of harm to the victim. So in this case the victim is the landlord. Surely the officials would see, again, this is an issue of violence. Irrespective of whether it’s family violence or domestic violence, it is an issue of violence.

The Minister has taken great care and has worked through a process, and we agree with the Minister that there should be some protections around the landlord. So, irrespective of whether the landlord is present—some landlords are actually adjacent to a property: they’ve subdivided a property; there’s a sublease—and so there is potential that the landlord could still be at risk. Surely the Minister would have taken some consideration.

I suppose this goes to the point that we were making earlier—five minutes into the speech in the second reading. We’ve not had a time to have a robust process to deal with some of the minor issues that are before us and before this House.

It’s not that the consideration wasn’t had. It certainly was around making sure that there was consistency across a number of other measures or time frames within the bill. It’s just that it’s more highly likely that a victim of family violence has had that thrust upon them by someone who lives in the property. The best way, obviously, to prevent any further violence between a landlord and a tenant is for them to not be in the same place, and it’s very unlikely that that would happen if they’re not at the same property.

The question was put that the amendments set out on Supplementary Order Paper 565 in the name of the Hon Kris Faafoi, and the following amendments in his name to Supplementary Order Paper 565, be agreed to:

after the item relating to clause 5, insert:

In clause 25(2), replace “assignment,” with “assigning,”.

In the item relating to clause 31(1B), new section 50(1)(ac), after “fixed-term”, insert “tenancy”.

in the item relating to clause 31, replace 31(1C) with:

(1C) In section 50(1)(b) (as inserted by subsection (1) of this section), after “53B,”, insert “55AA,”.

after the item relating to clause 31, insert:

In clause 32(4), replace “After section 51(8),” with “After section 51(9),”.

In clause 32(4), new section 51(9), replace “(9)” with “(10)”.

after the item relating to clause 39, insert:

After clause 42, insert:

42A Section 64 amended (Possession orders)

In section 64(3), replace “section 55 or section 56 or section 56A or section 59 or section 61” with “any of sections 55, 55A to 56A, 59B, and 61”.

in the item relating to Schedule 4, replace “section 95A(1) to (3) and (6)” with “section 95A(1), (2), (3), and (6)”.