In response to the Covid pandemic, changes continue to be made around tenancies – both residential and commercial – as well as mortgages and lending.
Healthy homes standards compliance
To accommodate delays arising from the Covid restrictions, the deadline for landlords to provide healthy homes standards compliance statements to their new tenants has been extended by five months.
The healthy homes standards have been introduced to ensure that all rental properties have, for example, adequate heating, insulation and ventilation. As part of the first stages of these standards, you must provide any new tenants or tenants renewing their existing agreement with information on whether your property meets the healthy homes standards. This is called a healthy homes standards compliance statement.
Originally, the healthy homes standards compliance statement was to be mandatory from 1 July 2020. However, the Covid restrictions have meant that some landlords have been unable to inspect their properties and gather the necessary information for their healthy homes standards compliance statements. To assist landlords in this position, the mandatory start date has been extended to 1 December 2020.
The deadlines for the later stages of the healthy homes standards remain unchanged and you will still need to meet the following deadlines for ensuring your property complies with the healthy home standards:
- From 1 July 2021, you must ensure that your rental properties comply with the healthy homes standards within 90 days of any new tenancy, and
- From 1 July 2024, all of your rental properties must comply with the healthy home standards, regardless of whether your tenants are new or existing.
Landlord alert – changes to commercial tenancies
As of 1 April 2020, the process for ending commercial leases for the non-payment of rent has been altered. Usually, your commercial tenant must be at least 10 working days behind in rent before you can cancel the lease. Under Covid-related changes, this time period has been extended to 30 working days.
On 4 June 2020, the government announced it would pursue further changes around rent reductions for commercial tenants who are under financial pressure due to Covid. The proposed changes would require a fair reduction of rent for a commercial tenant with 20 or less full-time staff. However, no law changes have yet been made as we publish this edition of Property Speaking.
Mortgages and loans for property owners
To alleviate subsequent pressures on landlords and other property owners, policy initiatives have been introduced to provide short-term assistance with loans secured against property – such as the mortgage repayment deferral scheme and the Reserve Bank’s associated removal of its loan-to-value ratio (LVR) restriction. The LVR restrictions usually limit how much a bank may lend compared with a property’s value.
Until 1 May 2021, it is likely to be easier to borrow more than 80% of a property’s value. One benefit of this change for property owners is that it may allow access to the mortgage repayment deferral scheme even where existing lending is high.
These policy initiatives sit alongside law changes which are designed to slow the process to mortgage default and give you time to recover if your cash-flow is poor as a result of Covid. Temporary amendments to the Property Law Act 2007 have changed the timeframes for the enforcement of mortgage-related debt. If you are in default of your mortgage, you must be given at least 40 working days to remedy the default before your mortgagee can take control of your property or require its sale. This is extended from the usual 20 working day period.
Further information on the changes for commercial tenancies and mortgages can be found here.