Tenancy Laws are changing in NZ

Tenancy laws are changing in New Zealand.

If you own or rent, make sure you understand how these changes will impact you.

Below are some of the changes:

Increasing rent – From 12 August 2020, rent increases are limited to once every 12 months. This is a change from once every 180 days (six months).

Required notice periods are changing – If the landlord or a family member is moving in, the notice period is 63 days notice and if the property is being sold, landlords must give 90 days.

Ending periodic tenancies – Under the new law landlords cannot evict a tenant, without specific reasons. The following document by The Ministry of Housing and Urban Development shows a summary of changes: Residential Tenancies Act Reform – Summary of Changes.

Fixed-term tenancy agreements convert to periodic tenancies – when a fixed-term tenancy agreement expires, agreements must become periodic unless justified reasons apply or both parties agree to end the tenancy.

Assignment of tenancies – All requests to assign a tenancy must be considered. Landlords cannot decline unreasonably.

Making minor changes – Tenants can ask to make changes to the property and landlords must not decline if the change is minor.

No rental bidding – Properties must be listed with the rental price and landlords cannot invite or ask for offers to pay more than the advertised rent amount. Although tenants are still allowed to offer to pay more for a property if they want

Find out more on the Ministry of Business, Innovation and Employment’s tenancy services website.

Tax On Residential Property Sales

Changes to the bright-line test

From 29 March 2018, the bright-line test that is used to determine if you have tax to pay on the sale of residential property has changed.

If you entered into an agreement to purchase residential property on or after 29 March 2018 and sell it within 5 years, you’ll need to consider if it is taxable under the bright-line test. If a property was purchased on or after 1 October 2015 through to 28 March 2018, the bright-line test will look at whether the property was sold within 2 years.

The bright-line test doesn’t apply if the property was:

  • your main home
  • transferred as part of an inheritance
  • transferred to you as an executor/ administrator of a deceased estate.

If you are in the process of entering into sale and purchase agreements, call us now to discuss the tax implications.