RTA Act 2020 Update
Below are the latest RTA updates. Your Crockers property manager will make sure that all requirements are undertaken correctly on your behalf and are happy to discuss any of these with you.
- Rent increases limited to every 12 months
- Tenancy agreements must include minimum information
- Requirement to retain documents
- Removal of the right to issue no-cause terminations
- Grounds for ending Periodic Tenancies
- 14 days’ notice
- Termination of fixed-term tenancy agreements
- Conversion of fixed-term tenancy agreements to periodic tenancies
- Withdrawal by tenant experiencing family violence
- Anti-social behaviour
- Tribunal considerations
Besides terminations and tenancy agreements, what other changes are included in the Residential Tenancies Amendment Act?
- Consent for tenant’s fixtures/minor changes
- Fibre broadband
- Landlord must state amount of rent when advertising
- Tenancy Tribunal jurisdiction
- Privacy and access to justice
- Enforcement of the RTA
When do these changes come into effect?
Royal assent was achieved on 11 August 2020 and the first of the changes, regarding rent increases, came into effect on the following day. Most of the other changes were set to come into effect six months following this. These are now effective, being 11 February 2021.
The termination grounds of a tenant physically assaulting a landlord, and the ability of tenants to terminate a tenancy because of family violence, require regulations to be developed. Those provisions must come into effect 12 months after the date of Royal assent (11 August 2021), but may come into effect earlier if the Government agrees, using an Order in Council.
What do the Residential Tenancies Amendment Act reforms mean for tenancy agreements?
Rent increases limited to every 12 months:
Previously, rent increases were limited to once every 180 days (six months).
Under the new law, landlords can only increase rent once every 12 months for any given tenancy. This change came into force on the day following Royal Assent of the Bill, 12 August 2020. Any rent increase notices given to tenants from 12 August 2020 onwards must comply with the new 12-month rule.
Tenancy agreements must include minimum information:
Previously, while the Act listed the minimum information required for a tenancy agreement there was no penalty for failing to provide this information, even though it could result in parties having difficulty enforcing their rights.
Under the new law, landlords who fail to ensure that the contents of their tenancy agreements include all the required information will be committing an unlawful act and exemplary damages may apply. The maximum penalty which may be ordered for failing to comply with this part of the Act is $750.
Crockers processes have always ensured that all these requirements are met and will continue to do so.
Previously, fixed-term tenancy agreements could prohibit assignment.
Under the new law, all requests to assign a tenancy must be considered. If a residential tenancy agreement prohibits assignment, the prohibition is of no effect.
- All assignment requests must be considered by the landlord and landlords cannot unreasonably decline an assignment request.
- A landlord must not attach any unreasonable conditions to the consent.
- If a tenant makes a written request for the landlord’s consent to an assignment and identifies and includes contact details for the proposed assignee, the landlord must respond to the request in writing within a reasonable period.
- A tenant engages in an unlawful act if the tenant assigns the tenancy without the prior written consent of the landlord.
The maximum penalty which may be ordered against a tenant for assigning without the landlord's consent is $750.
Requirement to retain documents:
Previously, landlords could charge reasonable fees on agreement to assignment, subletting or ending a tenancy (break lease fees), but did not have to disclose how the fees were calculated. Under the Healthy Homes Standards, landlords must keep various records and provide them on request to the Regulator (MBIE).
Under the new law, landlords will have to provide tenants with a breakdown of fees charged on agreement to assignment, subletting or ending a tenancy. This will allow tenants to have the opportunity to consider whether the fees are reasonable. Landlords will be obligated to provide Healthy Home Standards records to tenants on request. Landlords will have to retain additional documents and provide them to the Regulator if required.
Crockers will have all this required information to hand unless a client has done their own work to meet the Healthy Homes Standards. If that is the case, you as the landlord must ensure that you have ready access to the type of information that may be requested. For example, the specifications for a newly installed kitchen extractor fan showing it meets the relevant Standard.
What do the Residential Tenancies Amendment Act reforms mean for terminations?
Removal of the right to issue no-cause terminations:
Previously, periodic tenancies could be ended by the landlord for any reason without a requirement to tell the tenant why, with 90 days’ notice.
Under the new law, “no cause” terminations have been removed, preventing landlords from being able to end a periodic tenancy without a reason. Instead, landlords will be able to end a periodic tenancy on various specific grounds.
The Tenancy Tribunal can order penalties of up to $6,500 for a breach of this portion of the Act.
Grounds for ending Periodic Tenancies:
Under the new law, periodic tenancies will only be able to be ended for the following reasons:
- The landlord has issued the tenant three notices for separate anti-social acts in a 90-day period.
- The landlord has given notice that a tenant was at least five working days late with their rent payment on three separate occasions within a 90-day period.
- The landlord will suffer greater hardship than the tenant if the tenancy continues.
- Existing provisions relating to rent arrears, damage, assault, and breaches still apply.
- The landlord must apply to the Tenancy Tribunal to end a tenancy on the above grounds. If an order to end the tenancy is granted, the notice period will be determined by the Tenancy Tribunal.
14 days’ notice:
- If a tenant physically assaults the landlord, their family or their agent and charges are laid by the police, the landlord will be able to give notice ending the tenancy on 14-days’ notice. Regulations are to be made around this point regarding evidence and the ability to contest the notice in the Tenancy Tribunal.
63 days’ notice can be given to end the Tenancy if:
- The owner, or their family, requires the property to live in. The landlord or their family must intend to take up occupation within 90 days of the end of the tenancy. This does not apply if the ownership is a company or trust as these are not ‘people’ and therefore cannot live in the property.
- The landlord customarily uses the premises for occupation by employees or contractors and the premises are needed for that purpose (and this is stated in the tenancy agreement). This clause is mainly intended to apply to businesses like farms, where accommodation is often provided as part of an employment package.
90 days’ notice can be given under the following circumstances:
- The owner intends to put the premises on the market.
- The property has been sold with a requirement by the new owner for vacant possession.
- The landlord is not the owner of the property, and the landlord’s interest ends.
- The premises need to be vacant to facilitate the use of nearby land for a business activity (and this is stated in the tenancy agreement).
- The landlord wants to change the use of the premises to a commercial use, and the premises must then be used for that purpose for at least 90 days.
- The landlord intends to carry out extensive renovations at the property and it would be impractical for the tenant to live there during that process. Work must commence within 90 days of termination of the tenancy.
- The premises are to be demolished.
- Reasons specific to social housing tenancies.
Termination of fixed-term tenancy agreements:
Previously, fixed-term tenancy agreements could not be ended early unless by mutual agreement or Tribunal order.
Under the new law, a landlord will be able to terminate a fixed-term tenancy with 14 days’ notice where the tenant has physically assaulted the landlord, their family, or their agent and the police have laid a charge. See above re the need for regulations to be drafted, and the later effective date for these provisions.
Conversion of fixed-term tenancy agreements to periodic tenancies:
Previously, fixed-term tenancy agreements converted to periodic tenancies unless:
- A landlord or tenant gave notice between 21 and 90 days before the term ended.
- The parties agreed to extend or renew the fixed-term tenancy.
Under the new law, fixed-term tenancy agreements will convert to periodic tenancies unless:
- A landlord gives notice using the reasons listed in the RTA for periodic tenancies.
- A tenant gives notice for any reason at least 28 days before the end of the tenancy.
- The parties mutually agree otherwise, for example, to renew the fixed term or to end the tenancy.
This means that a landlord will be unable to end a tenancy at the conclusion of a Fixed Term period should the tenant wish to stay on, unless for the same reasons as periodic tenancies and with the same notice periods.
Withdrawal by tenant experiencing family violence:
Previously, there was nothing in the Act to support tenants experiencing family violence.
Under the new law, tenants who are experiencing family violence can withdraw from a tenancy by giving two days’ notice, accompanied by appropriate evidence of the family violence. Regulations will be created to specify what constitutes evidence. Provisions are also included for protecting the privacy of a victim from unauthorised disclosure of this notice and in relation to Tenancy Tribunal hearings. Remaining tenants in the tenancy may receive a temporary rent reduction formula.
Previously, landlords could evict a tenant following one example of anti-social behaviour.
Under the new law, a landlord must issue a tenant three written notices for separate anti-social acts within a 90-day period before they can apply to the Tenancy Tribunal to end the tenancy. The landlord must apply to the Tribunal within 28 days after the third notice.
Where a tenant challenges a notice of anti-social behaviour in the Tribunal, the landlord must prove the behaviour occurred.
Anti-social behaviour means: harassment; or any other act or omission (whether intentional or not), if the act or omission reasonably causes alarm, distress, or nuisance that is more than minor.
What does the notice need to include?
Each notice for anti-social behaviour must describe clearly which specific behaviour was considered to be anti-social and, if known, who engaged in it. The notice must also provide the tenant with the date, approximate time and location of the behaviour and state how many other notices the landlord has issued the tenant within the same 90-day period. Finally, the notice must advise the tenant of their right to challenge the notice by making an application to the Tribunal.
If the Tribunal considers that the notices were issued reasonably and fairly, it must make an order terminating the tenancy. The Tribunal will not make an order for termination if it considers the circumstances in which the behaviour occurred, or the notices were given, would make termination unfair; or where the landlord was motivated, wholly or partly, by the exercise or proposed exercise by the tenant of any right, power, authority, or remedy conferred on the tenant by the tenancy agreement or any complaint by the tenant against the landlord relating to the tenancy (unless the Tribunal is satisfied that the purported exercise or complaint would have been frivolous).
What about tenant notice?
Previously, tenants had to give 21-days’ notice of their intention to terminate a tenancy.
Under the new law, this will change to 28 days. The tenant does not need to give a reason for termination. This applies for both periodic tenancies and for non-renewal of a fixed term tenancy.
Besides terminations and tenancy agreements, what other changes are included in the Residential Tenancies Amendment Act?
Consent for tenant’s fixtures/minor changes:
Previously, tenants had to get their landlord’s consent before making any alterations to their rental property, however minor. Landlords did not have to provide their consent to these requests.
Under the new law, the landlord must not unreasonably withhold consent for a fixture, renovation, alteration, or addition. If the landlord consents to the request, they can impose reasonable conditions for minor and major changes. An example of a reasonable request could be a landlord asking that shelving is installed in a slightly different position to avoid disrupting existing wiring.
If the tenant makes a written request for consent, the landlord must respond in writing within 21-days after receiving the request. Failure to comply is an unlawful act. In response, the landlord must indicate whether the landlord considers the change to be a minor change.
If the change is more than minor, the landlord can only withhold consent if the request is unreasonable. In this case, the landlord may take longer than 21 days to consider the request if they notify the tenant within 21 days of the date the tenant made the request. For example, Body Corporate rules may prohibit a requested change, and it may take longer than 21-days for the landlord to make an enquiry and receive a clear response from the Body Corporate. The landlord must still respond in a reasonable amount of time. Failure to comply is an unlawful act.
If the landlord does not consent to the request, the tenant cannot make the change, even if the change is minor or the landlord is being unreasonable. In this case, the tenant can apply to the Tenancy Tribunal if they would like to challenge the landlord’s decision.
If a tenant wants to make a change to their rental property, then they will have to pay for it. The tenant will also be liable for the cost of any remedial work required to return the property to "substantially the same" condition at the end of the tenancy unless the landlord agrees the change can remain in place.
The maximum penalty which can be ordered for failing to comply with these requirements is $1,500.
Previously, landlords had no obligations relating to fibre broadband. The Ultra-Fast Fibre Broadband Scheme offered fibre installation for free but relied on mutual agreement.
Under the new law, tenants can request to install fibre broadband and landlords must facilitate installation if this can be done at no cost to the landlord.
The Ultra-Fast Fibre Broadband Scheme offers fibre installation for free.
Landlords can decline a request for fibre installation where:
- It will materially compromise the building’s weathertightness or character.
- It will compromise the building’s structural integrity.
- It will breach an obligation relevant to the premises.
- The landlord is going to carry out extensive renovations.
Landlord must state amount of rent when advertising:
Previously, landlords would usually advertise a property including the rent amount on most forms of advertising however with ‘for rent’ signs this is usually impractical.
Under the new law, landlords must state the amount of rent on all advertising including for rent signs and any social media posts. This means that rental bidding – a practice we have never engaged in – is banned.
The requirement for all advertising to state the rental price is likely to lead to the phasing out of ‘for rent’ signs. Ordinarily, these signs are re-used several times; however, under the new rules, each sign would need to be created for each individual property, and be physically updated if rent was reduced after advertising begins. Given the costs and logistics of this exercise, ‘for rent’ signs will become untenable.
Tenancy Tribunal jurisdiction:
Previously, the Tenancy Tribunal could hear cases and make awards up to $50,000, after which the parties would need to go to the District Court.
Under the new law, the Tenancy Tribunal can hear cases and make awards up to $100,000.
The Regulator (MBIE) can take a single application to the Tribunal to cover multiple breaches across multiple properties.
Civil pecuniary penalties and higher infringement fees are available to the Regulator in respect of landlords with six or more tenancies, including boarding house landlords.
Privacy and access to justice:
Previously, name suppression provisions were unclear.
Under the new law, the Tribunal, on the application of any party or on its own initiative, can order that names and identifying details of any party be suppressed. This will most likely be applied to tenants who take a landlord to Tribunal and substantially win their case.
Enforcement of the RTA:
Previously, the Regulator (MBIE) entered into voluntary agreements for parties to comply with RTA obligations. There was no ability for the Regulator to issue improvement notices.
Under the new law, there is a new infringement offence regime for straightforward breaches of the RTA. Existing penalties have been increased between 50 and 80 percent.
The Regulator can enter into Enforceable Undertakings – voluntary agreements for parties to comply with RTA obligations, with a penalty if not complied with. The regulator can also issue Improvement Notices to correct a breach of the RTA. Such Improvement Notices will carry a penalty if not complied with.
Should you wish to view the official RTA Amendments website, you can do so at this link.