Building and Construction Minister Nick Smith has introduced the Residential Tenancies Amendment Bill (No 2) to Parliament.
The bill would amend the Residential Tenancies Act 1986 with the objective of making three changes: to better manage methamphetamine contamination in rental premises, liability for careless damage to rental property caused by a tenant, and tenancies over rental premises that are unlawful for residential use.
Damage or destruction
The provisions relating to the rights and obligations of tenants and landlords for damage or destruction to rental premises follow the Court of Appeal's decision in Holler v Osaki  NZCA 130, where the Court ruled that residential tenants are immune from a claim by the landlord where the rental premises suffer loss or damage caused carelessly or negligently by the tenant or tenant’s guest to the extent provided in sections 268 and 269 of the Property Law Act 2007.
Dr Smith says the ruling means landlords cannot recover the costs of damage, including the excess charge on any insurance policy.
"The changes are needed to ensure tenants have an incentive to take good care of a property, and for the landlord to have appropriate insurance," he says.
The bill provides that in relation to each careless act or omission of a tenant (or someone for whom the tenant is responsible) that causes destruction or damage to the premises, the limit of liability for residential and boarding house tenants (including tenants who are paying an income-related rent) is the level of a landlord’s insurance excess (if applicable) but not more than 4 weeks’ rent applicable to the tenancy.
Tenants will remain liable for intentional damage, damage caused by an act or omission that constitutes an imprisonable offence, or if insurance money that would have been payable in respect of the damage is irrecoverable because of the tenant’s act or omission.
Dr Smith says landlords will have easier access to test for meth and tenants will be able to terminate their tenancy if it presents at unsafe levels after testing has been carried out in accordance with regulations. He says Standards New Zealand is working on appropriate contamination thresholds and the bill will enable these to be legally recognised and enforceable before the Tenancy Tribunal.
“Under the Bill, tenants will be liable for the cost of their landlord’s insurance excess up to a maximum of four weeks’ rent for each incident of damage caused by carelessness. A tenant remains fully liable where the damage is deliberate or a criminal act, and the landlord liable for fair wear and tear and damage beyond the control of the tenant, like a natural disaster."
Proposed measures in the bill would also allow a landlord to enter premises, on notice and between specified hours of the day, to test for methamphetamine or take samples for testing. A landlord who tests in accordance with regulations (which may, for example, set standards for testing) must notify the tenant of the results. In the case of testing carried out in the common facilities of a boarding house, the landlord must notify all tenants of the results of the testing.
Premises unfit for residential purposes
The third group of amendments made by the Bill addresses the application of the principal Act to premises that are not lawfully able to be used for residential purposes following the High Court decision in Anderson v FM Custodians Ltd  NZHC 2423. The High Court found that where a property is not lawfully able to be used for residential purposes it is not a "residential premises" as defined in the principal Act, and therefore tenancies over such premises are not covered by the principal Act and the Tenancy Tribunal does not have jurisdiction.
Since Anderson, premises that are used for residential purposes that are not lawfully permitted to be used for residential purposes are not fully covered by the principal Act. The remedies open to the Tribunal in these cases are often limited to those under section 137 of the principal Act (which relates to prohibited transactions).
The amendments in the Bill ensure that the Tribunal has full jurisdiction for premises occupied or intended to be occupied for residential purposes, regardless of whether the occupation would be unlawful. The amendments will enable the Ministry of Business, Innovation, and Employment to take enforcement action against landlords in breach of any of their obligations under the principal Act.