Information for landlords including obligations, bonds, insurance, repairs, mediation, and Covid-19 information.
Landlord Obligations and Responsibilities
There can be a lot to remember being a landlord, with a number of responsibilities falling to you. Getting a good property management team involved can simplify things for you, including finding tenants, handling maintenance and deal with any issues that may arise.
From 11 February 2021, multiple changes to tenancy legislation took effect. The changes covered:
For the most up to date information, visit tenancy.co.nz.
Bonds
A tenancy bond is a payment of up to four weeks rent made to the landlord by tenants when they move into a property. The bond is held to cover any losses the landlord incurs if the tenant breaches any of the conditions in the Tenancy Agreement or general obligations of a tenant.
The landlord will collect the bond from the tenant, but must lodge it with MBIE within 23 working days, with a signed Bond Lodgement form (by both the landlord and tenant).
The bond is held by Tenancy Services until a Bond Refund form is filed (signed by both the landlord and tenant) by either the tenant or landlord. To ensure this part of the process progresses smoothly, it is important for the tenant and landlord to lodge any Change of Tenants or Change of Landlords during the period of the agreement.
If there is any damage to the property at the conclusion of the agreement, and the landlord and tenant agree as to the value of this then the bond is divided between the parties accordingly. However, if the parties are unable to agree on the value, then one of the parties can apply to the Tenancy Tribunal for mediation.
Insurance
We consider it imperative that landlords and tenants understand whose responsibility it is to have insurance to make sure that both parties are protected against loss. Below is a general guideline for landlords and tenants.
The most important factor to remember when selecting insurance is to inform your insurance company that the property is a rental property.
The tenant should ensure they have personal contents insurance for their belongings to ensure they are protected against loss.
The landlord must have insurance for the property, that is the physical buildings, section etc, against fire, storm, flood, Methamphetamine, damage from burglary etc if they want it protected against loss. For these types of policies, it is imperative that you advise the insurance company that the property is tenanted to ensure coverage. These policies often cover chattels, e.g. carpets and curtains, which is preferable however, this should be clearly defined and clarified with your chosen insurer.
It is also often recommended that landlords take some form of Property and Income Protection insurance. This is additional insurance taken out by a landlord to cover for:
Repairs and Maintenance
Both the tenant and landlord have responsibilities and obligations when it comes to repairs and maintenance which both parties should be aware of. After all, it is in both parties interests to have the property repaired promptly to prevent further damage and discomfort of living.
The tenant is not responsible for repairs or damage arising from burglaries, natural events (such as storms, floods and earthquakes) or fair wear and tear.
Tenants need to tell the landlord if they know of any damage or need for repairs. If the tenant does not notify the landlord as soon as possible the landlord may be able to claim some of the costs of repairing the damage from the tenant if it gets worse.
Intentional Damage
If a tenant (or their invited guests) intentionally damages the landlord’s property, the tenant must tell the landlord. The landlord can ask the tenant to repair the damage, or to pay the cost of replacement or repair.
Careless Damage
On 27 August 2019, new legislation took effect which affects tenants liability for damage. If tenants or their guests carelessly damage a rental property, they are liable for the cost of the damage up to four weeks’ rent or the landlord’s insurance excess (if applicable), whichever is lower.
Landlords can’t ask for or accept more than that limit.
Insurance companies can’t chase tenants on the landlord’s behalf for the cost of repairs for careless damage.
If the landlord and tenant can’t agree who should pay, either can apply to the Tenancy Tribunal.
If these obligations are fulfilled it is advantageous to both parties, with the tenant having a safe, comfortable place to live and the landlord having an investment that will continue to give good returns.
Mediation
Mediation is usually the second step of dispute resolution - the first being talking to your tenant/s. If the first step is unsuccessful then either the landlord or tenant can apply to the tenancy tribunal for mediation.
Mediation is where an impartial person helps the two parties come to a solution for their problem.
The mediator will allow each person to explain to the other how they see the problem, help them discuss the possible ways to solve the problem and encourage them to choose the best solution for both of them.
A mediator is not able to make a decision for the parties, they can only help and encourage the parties to come to their own agreement.
The decision is put into a Mediated order which is binding on both parties.
Occasionally, the parties in mediation can not agree upon a decision. If this is the case, then the dispute will go to a Tenancy Tribunal hearing.
The tenancy tribunal is a special court set up to deal with unresolved problems between landlords and tenants which they have been unable to settle themselves.
A Tenancy Tribunal case normally only comes after mediation between the parties has been attempted and the parties have been unsuccessful at coming to a conclusion.
A tenancy adjudicator oversees the case and makes the decision, which is legally binding on both parties.
The adjudicator listens to both parties, any witnesses and evidence that either party feels is important and makes a decision based on this information and any provisions in the Residential Tenancies Act.
For more information visit the Tenancy Services website at www.tenancy.govt.nz.