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Resolutions & Responsibilities

Resolutions & Responsibilities

Ann Easthope discusses two of the main changes from phase two of the amended Residential Tenancies Act.

By: Ann Easthope

1 January 2021

As we welcome in the new year, most of us are looking forward to a more positive 2021. The start of the year is always a time when people sit down, write lists and plan their resolutions for the 12 months ahead. If you’re a residential property investor, it’s essential that this hyper-organised frame of mind is extended to the Residential Tenancies

Amendment Act 2020. It might feel too early in the year to start talking property legislation. However, the second phase of the RTA reforms is just around the corner with the next changes rolling out on February 11. It’s important that property owners gain a thorough understanding of how the new laws will impact their investment and get prepared accordingly. One of the main changes in phase two is enforcement measures being strengthened against those who are not meeting their obligations, so failure to comply can be costly. To help you get started, I take a look at two of the key changes taking effect next month and how you can prepare for them.

Terminating Tenancy Agreements

One of the most talked-about changes to come out of the RTA reforms is limiting the reasons why a property owner can end a tenancy agreement. From February 11, rental property owners will not be able to end a periodic tenancy without cause and will only be able to terminate if the situation aligns with specific termination grounds. Fixed-term tenancies will also automatically convert to periodic tenancies at the end of their term unless both parties agree otherwise.

How does this impact property investors? This law change can seem daunting for rental property owners. Without the security of a fixed-term tenancy, rental customers can provide notice at times when it is difficult to fill a vacant property, such as over the Christmas holidays.

How can investors prepare for this change?
There are three fundamental steps that property investors can take to prepare for this law change:

1. Be thorough in the screening process, ensuring the rental customer and the property are a good match;

2. Build strong, honest relationships with the people living in your property; and

3. When it comes to the end of a fixed term, simply ask your rental customers if they would prefer to extend their fixed-term tenancy. When given the option, we find that rental customers often choose the security of a fixed term.

At the end of the day, long-term rental customers mean less vacant time for your property and less time spent on marketing and administration. If you put in the work at the start of a tenancy, this can be a win-win situation.

Making Minor Changes

Another of the key changes to come out of the RTA reforms is the ability for rental customers to request making changes to the property they live in. The property owner must respond to the request within 21 days and if the requested changes are minor, the owner may not decline.

How does this impact property investors? Essentially, this law provides rental customers with the opportunity to make minor changes to the rental property so it better suits their personal needs. These changes could include baby-proofing the property; securing furniture to walls to protect against earthquake risk; installing curtains; hanging pictures and more. When rental customers move out at the end of their tenancy, they need to remediate the property to a satisfactory standard (if the property owner doesn’t agree to the minor changes remaining).

The main impact of this amendment is the requirement for property owners to respond to the rental customer within 21 days. How can investors prepare for this change? I recommend all property owners:

1. Research what is considered “minor changes” and be ready to accept these if requested. Remember, it is best to put everything in writing, so any changes made to the property should be documented;

2. Try suggesting a compromise If you feel uncomfortable with a specific change; and

3. Respond promptly to any requests and communication from your rental customers.

Talk To Professionals

These are just two of the many changes that are rolling out. If you feel uncertain about any of the changes or what they mean for you, get in touch with a professional. At Quinovic, we have an expert understanding of all rental property legislation and can provide practical advice to ensure you keep compliant in 2021.