Source:Ministry of Business, Innovation and Employment MBIE
1. Introduction and Overview
2. This section has information about the law the Government is reforming, the reasons for doing so and what it is hoping to achieve. There is also information about some of the other changes proposed outside of this reform which will affect landlords and tenants, and the next steps after we have received your feedback.
1.1. The Residential Tenancies Act
3. The Residential Tenancies Act 1986 (RTA) is the main piece of legislation governing the contractual relationship and interactions between residential landlords and tenants in New Zealand. The RTA:
- states the law relating to residential tenancies;
- defines the rights and obligations of landlords and tenants of residential properties;
- establishes a tribunal to determine tenancy disputes; and
- provides for a fund to hold tenants’ bonds.
1.2. Why we’re reforming the RTA
The rental market in New Zealand is expanding
4. A third of New Zealand households are renting (589,000 households). The private rental sector in New Zealand is growing relative to the number of owner occupier households because purchasing a first home is becoming increasingly difficult. In 1991, fewer than a quarter of households were renting, and fewer people were renting long-term.
The profile of both landlords and tenants is changing
5. More children now live in rental homes. Between the 1986 and 2013 censuses, the proportion of children living in rented homes increased from 26% of children to 43%. At the same time the population overall got older and the proportion of children fell from around a quarter to just over a fifth of the population. With more children and families living in rented housing, more people may be looking for a place they can rent longer term and where they can feel at home.
6. Based on rental bond data, most tenancies in New Zealand are around 12 months. This is the median tenancy length from data which covers many different rental situations – from students renting during term-time to families who have rented the same property for many years. As this data only includes tenancies where a new bond is lodged, it does not take into account all rental situations. Housing New Zealand tenancies tend to be much longer – an average of nine years and five months.
7. The majority of tenant households rent from private landlords. Around 11 percent (66,000)3 are in public housing and a small proportion live in other types of housing like defence force accommodation. Most of the private landlords own one or two rental properties, and a quarter of them use a property manager to manage their properties.
The RTA is over 30 years’ old and needs to be kept up to date
8. The changing nature of the rental market makes it timely to assess whether current laws are still suitable for the current renting environment. There have been lot of small changes to the RTA over the past 30 years, but it’s been a while since broader questions about the law were asked. With new technologies like rental bidding apps entering into the market, we need to make sure the law is modern and fit for purpose.