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New rental rules set during the four-week Covid-19 lockdown are expected to protect tenants facing financial hardship against rogue landlords.
But leaders in business and property investment say landlords are hurting too, with fears many business owners in the hospitality and retail sectors won't survive the next month.
The Government's freeze on rent increases during the nationwide lockdown aims to prevent tenants from sudden homelessness and being unable to self-isolate.
OneRoof editor Owen Vaughan said the new regulations would provide certainty for the rental market in a volatile and uncertain time.
"Renters facing financial hardship can be reassured they aren't going to be penalised as a result of the lockdown and the new rules offer them protection against rogue landlords.
"Landlords have a framework with which to work in. Secure tenancies will protect their investment in the long term."
Tauranga Property Investors Association president Juli Anne Tolley said most landlords agreed with the new rules but many were losing jobs and under financial stress too, "facing normal life traumas like everyone else".
Tolley said most of the changes were sensible but many tenants and landlords were unsure what to do if the tenancy was starting or ending in that period.
"Some clarity is here, but to be frank, not enough. Allowing tenants to terminate during this period is problematic," she said.
Tolley said the issue was that when a tenant vacated a landlord could not re-let the property and there were no tradespeople available for cleaning, meth-testing and repairs, as they were not essential services.
"We also cannot show properties or participate in re-letting activity without health risks," she said.
"That part of the rule changes is imbalanced and not well thought-out."
Tauranga Rentals owner Dan Lusby said he was still getting plenty of applications from people looking for properties even though they could not be shown.
But Lusby said he still had tenants who were moving in and out of homes during the next month, which they were allowed to do on the basis they did not involve anyone else.
"We have had some tenants who have said they can't move and they have to stay, but we have people moving into that house and we have to tell them they can't move in.
"It is like a domino effect, but backwards."
Tauranga Chamber of Commerce chief executive Matt Cowley said the new rules provided some certainty for businesses but there was no blanket rule for rent relief or holidays for tenants.
"Each lease contract can be different, so landlords and tenants need to form a good relationship to determine what is fair," he said.
"Some businesses have been hit hard, such as retailers and hospitality. Other businesses are still trading and it may be fair that there is only partial rent holiday during the lockdown."
Cowley said retailers, cafes and hospitality tenants paid some of the highest per metre-squared rents in the region and their revenue was cut off immediately when the lockdown was enforced.
"They are unlikely to survive four to six weeks without being able to trade while still having to pay normal rents."
He said it was in everyone's best interests to have businesses back trading after the lockdown was finished.
Ray White Commercial managing director Philip Hunt said it was vital for landlords and tenants to have good relationships.
"These are extremely unusual times. But it is a time that will bring out the best in Kiwis," he said.
Holland Beckett Lawyers Tauranga partner Simon Collett, who specialises in commercial property, said landlords were being hit hard.
He said they had borrowing obligations, including rates, insurance and other outgoings, that had significant costs and there was currently no government assistance for them.
"They are just having to wear the costs without a recovery," he said. "That needs to be weighed up in terms of what is a fair proportion."
But Collett said it was in the landlords' best interests to have a tenant who remained solvent and in business as it was not going to be easy to get new tenants after Covid-19.
Most landlords were receptive to the new rules, Collett said, and his advice was that the two parties came to an agreement early.
"They need to work together to share the pain ... It is a matter of getting the dialogue going straight away."
Roz Irwin, manager of Fashion Island in Pāpāmoa, issued all tenants a rent abatement notice on behalf of her landlord on Tuesday. "To assist our tenants in the short term we are abating their net rent for four weeks effective from March 26 – the first official day of lockdown."
Irwin said the Government had done a great job passing timely emergency legislation protecting tenants from landlord-ordered rent rises and unwarranted notices to move.
"Rents still need to be paid, which makes it incredibly difficult for a commercial tenant that is no longer able to operate their business and generate an income."
Irwin said the landlord had immediately agreed to take confusion and stress out of the situation.
"This is no one's fault and we knew that everyone was going to have to share in the sacrifice to get on top of this."
"For the commercial tenant, it highlights the benefit of having a good relationship with your landlord, to allow for an open and frank discussion as to any potential rent relief opportunity or arrangement because of a crisis that has forced a business to shut shop."
New Zealand cases
As of 9am yesterday:
600 total cases
48 new cases yesterday
14 people in hospital
74 people recovered
1777 tests a day on average
1 per cent community transmission
29 percent close contacts of existing cases
53 per cent travel-related
15 cases in the Bay of Plenty DHB area
11 cases in the Lakes DHB area
81 cases in the Waikato DHB area
Source: Ministry of Health
Key changes for landlords and tenants:
- There is now a freeze on rent increases.
- A rent increase notice from a landlord will not have the effect of increasing a tenant's rent, unless the rent increase has already taken effect.
- Tenancies will not be terminated during the lock-down period, unless the parties agree, or in limited circumstances, regardless of when notice was provided.
- Tenants will still be able to terminate their tenancy as normal, if they wish.
- Tenants will have the ability to revoke termination notices that they have already given, in case they need to stay in the tenancy during the lock-down period.
- The measures were to take effect by March 26.
- The rent freeze applies for an initial period of six months.
- The protections against terminations will apply for an initial period of three months.
- At the end of both initial periods, the Government will evaluate whether they need to be extended.
Source: Tenancy Services