‘Landmark’ tenancy goes before House

Press, 20 September 1985, Page 4

‘Landmark’ tenancy goes before House

By

PATRICIA HERBERT

in Wellington Legislation to completely overhaul New Zealand’s complex mass of tenancy law was yesterday introduced in Parliament by the

Minister of Housing, Mr Goff. Titled the Residential Tenancies Bill, it runs to 88 pages and is the culmination of sustained work by Mr Goff both before and after the election. Given this, it was perhaps surprising that so few of his colleagues were in the House to hear his introductory speech. Only nine were there, creating an opportunity for the Opposition which was duly exploited. They began drifting out until Mr Goff was denied a quorum — 15 members — and was forced to stop in mid-flight. He had to sit down, but only briefly. The Chief Government Whip, Dr Michael Cullen, rescued him by coming back into the Chamber as No. 15 to make up the shortfall. Mr Goff described the bill as a landmark, long overdue and designed to introduce firm, fair, and readily enforceable rules into tenancy relations.

He said it gave protection to the reasonable against the irresponsible on both sides without leaning in favour of either party. For this reason, it would find full favour neither with the more militant landlord nor with the more radical tenant but with the vast majority who fell between those extremes, he said. It addresses many generally acknowledged weaknesses in the present system. First, it integrates tenancy law into a single document. It is at present scattered over several acts and not easily accessible, and ridden with inconsistencies and ambiguities. Second, it provides a specialised structure for resolving disputes. Recourse at present is to the District Court, which Mr Goff considers too slow and expensive to be appropriate, or to Small Claims, which has patchy coverage. The bill provides for a mediation service to be set up which would in the first

instance attempt to supervise a settlement between the disputants. Should this prove impossible or should the matter be serious and urgent, the case will be referred to a Tenancy Tribunal administered by the Justice Department. The tribunal will have the power to order the parties to undertake their responsibilities or to pay compensation one to the other. It will also take over the functions of the Rent Appeal Board, protecting the tenant’s right to apply for a review, but will revise rents only when they are clearly excessive. Its rulings on what is a fair rate will apply for only six months compared with 12 at present — a recognition, according to Mr Goff, of the volatility of the property market. On the same principle, the bill provides that rents may be increased at sixmonthly intervals, but only after 60 days notice has been given. Perhaps the most controversial and far-reaching reforms, however, are in the payment of bonds. The bill provides that a Tenancy Bonds Division be set up within the Housing Corporation. This will hold all moneys paid over in residential tenancies and will credit them to a fund so that they may earn interest. The earnings will be used in part to finance the services of the division but Mr Goff expects that there will be a surplus after 18 months.

He has not yet decided how the profit should be spent but indicated that it might be returned to the tenant or used to compensate landlords for damage or arrears greater than the amount owing them. The maximum landlords may charge as a bond is limited under the bill to the equivalent of four weeks rental although they may also demand two weeks’ rent in advance. This will tend to lift upfront payments — an eventuality Mr Goff has provided for by authorising the corporation to give loans in cases of hardship. The advantage to tenants is that, unless they forfeit their bond through careless treatment of a flat, they will be able to move it from

tenancy to tenancy with only minor adjustments.

Mr Goff said the four weeks provision was intended to recognise the risk landlords took in letting their properties and the frequency with which they had to subsidise vandalism. He also said it acknowledged the fact that bonds did not often provide a sufficient incentive for tenants to take good care so that they were prepared to forego the refund rather than ensure they left the property in a reasonable condition. Procedures to end tenancies are also laid down. Mr Goff said they had a dual aim: to enhance the security of the good tenant and to protect the investment of the landlord. Common practice now is

to give one or two weeks notice but this is extended where there is no bad behaviour to 90 days — a recognition, according to Mr Goff, of the upheaval involved in moving. When vacant possession is required for a sale or so that a landlord or a member of his famly can move in, the period is reduced to 42 days. Tenants are required, however, to give only 21 days notice. If both parties want to terminate the agreement, they can negotiate a date independent of these restrictions. Mr Goff said the bill had been drafted after wide consultation with interested groups. He circulated a letter from the former president of the CanterburyWestland branch of the Real

Estate Institute, Mr Nobby Grant. In it, Mr Grant congratulated him on the distance he had covered and said the proposals were not only fair and just but also sound, common-sense business. He said he was personally 100 per cent behind them. The Democratic Party also declared yesterday its support for the legislation, but National opposed it. Its spokesman on housing, Mr Roger McClay, said the Government did not have the right to create “bureaucratic monsters” or to poke its nose into what was after all a matter of small importance to a small number of people. A guide to the bill has been prepared by the Housing Corporation for the public.