Property briefs

Allowing for Covid-related settlement delays

When New Zealand headed into Covid Level 4 in March, real estate transactions stalled because of difficulties completing essential elements of settlement, such as the legal paperwork, giving of vacant possession and the inability of moving companies to access the property. In response, a number of buyers and sellers adjusted their agreements to delay settlement until alert levels decreased.

Since then, we have found that many parties continue to include a clause in their agreement that addresses Covid and associated restrictions on movement. There are various versions of this clause that are being used.

If you are buying or selling, it is important that you check that any such clause in your agreement is suited to your particular circumstances, particularly if you are buying or selling property outside of the region in which you live.

As the recent Auckland lockdown has shown, regions may have different restrictions on movement. Also, with the introduction of ‘0.5’-style alert levels, the alert level alone may be insufficient to indicate whether settlement can take place.

You should consider whether your agreement needs flexibility to allow settlement to take place at a time when:

  • You will be able to shift in or out of the property
  • Any tenant in the property will be able to move out of the property
  • You will be able to visit the property to complete a pre-purchase inspection, and
  • You will be able to meet with us in advance to sign the documents necessary for settlement.

Before signing any agreement, we recommend you discuss with us whether to include a clause addressing the possibility of further COVID lockdowns and the wording to use, particularly if you are dealing with property outside of your region.

Residential Tenancies Amendment Act 2020: three stages of changes

Changes aiming to modernise the Residential Tenancies Act 1986 (as briefly outlined in our Autumn 2020 edition) are now coming into effect.

Since 12 August 2020: As part of the first phase of the Residential Tenancies Amendment Act 2020, the frequency with which landlords can increase rent for a residential tenancy has been reduced.

Since 12 August, rent can only be increased once every 12 months (replacing the previous timeframe of once every 180 days, ie: six months).

From 11 February 2021: The second phase will begin on 11 February and includes changes to:

  • Increase the level of awards the Tenancy Tribunal can make from $50,000 to $100,000
  • Prohibit landlords from inviting ‘bidding wars’ between prospective tenants
  • Introduce a requirement that landlords must consider all requests to assign a tenancy
  • Limit when a landlord may terminate a periodic tenancy, and
  • Provide that all fixed term tenancies will convert to periodic tenancies unless a tenant gives 28 days’ notice, the landlord and tenant otherwise agree or a landlord has grounds to terminate the tenancy.

From 21 August 2021: Phase three is currently scheduled to introduce new rules from 21 August 2021. These allow tenants to end a tenancy in situations involving family violence and to allow a landlord to end a tenancy with 14 days’ notice if they, their agent or a member of the landlord’s family is assaulted by a tenant.

There is further detail on the changes here. If you have any queries about the new tenancy rules, please be in touch.

Reminder: Temporary Covid residential tenancies changes have ended

The temporary changes introduced to protect renters of residential housing during the initial stages of the Covid pandemic have now ended.

In our Winter edition, we set out the law changes made to increase certainty for renters between 26 March and 25 September 2020. These protections had prevented landlords from terminating residential tenancies except in exceptional circumstances or making any rent increases.

Although the greater restrictions on terminating a tenancy were lifted on 25 June, landlords were still unable to increase rent for residential tenants until 25 September.

Since 26 September, the Residential Tenancies Act 1986 reverted to its usual rules – albeit with some adjustments. Landlords can increase rent provided tenants are given the required 60 days’ written notice of the increase and comply with the new timing requirements.

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