Why landlords hate not being able to issue ‘no cause’ terminations

Wednesday, 3 May 2023

Residential property managers and treatment of houses contaminated by meth will be regulated and the healthy home standards deadline has been extended in new rental sector measures. Video first published November 22 2022.

When Auckland landlord Andrew Bruce wanted to end a tenancy due to the anti-social behaviour of his tenant, he found it was a struggle to do so.

The tenant rented an apartment Bruce owned in a central city building that also had a hotel in it.

She was disruptive and abusive, regularly hosted intimidating friends, and was prone to loud music and public nudity.

After regular complaints from the hotel owners, Bruce started trying to end the tenancy.

Once, he would have given his tenant a no-cause termination notice, but the Government’s tenancy law reforms had just come into force, and it was no longer possible.

Instead he had to issue her with three notices for separate anti-social acts within a 90-day period before he could apply to the Tenancy Tribunal to end the tenancy.

Bruce did that, and when it was time to attend the tribunal he had five documented examples of the tenant’s anti-social behaviour ready for the adjudicator.

He did everything to the letter, and had emails from the hotel manager about the situation, he said.

Landlords say it is difficult to end the tenancies of problem tenants.

“But the adjudicator said the emails were not enough, and the manager had to show up and talk to his complaints in person, and he did not want to because he felt threatened.

“My tenant showed up at the hearing, dressed like a different person, and in tears, and the adjudicator said she was clearly going through tough times, and found in her favour.”

Following the hearing, his tenant’s behaviour got even worse, and eventually Bruce went back to the tribunal, and a mediated resolution that ended the tenancy, was reached.

But the experience left him disillusioned about the system, and very picky about who he rents to now.

“Most tenants are fine, and I’ve only ever had a couple of really bad tenants,” he said.

“It is just that now if you do get a bad tenant, and it all goes wrong, it is a nightmare to get rid of them. They can do a lot of damage, and you have no recourse.”

Landlords’ ability to get rid of tenants has come under the spotlight after National’s housing spokesperson Chris Bishop announced the party would reintroduce no-cause terminations, and reverse provisions which see fixed-term tenancies roll into periodic tenancies, if elected later this year.

The Labour-NZ First coalition government got rid of no-cause terminations as part of a suite of policies intended to provide greater security for, and better protect, tenants.

But Bishop said the reforms discouraged landlords from renting out properties because it was difficult to end a tenancy if there were problems, and that decreased supply and put upward pressure on rents.

National’s Chris Bishop says ‘‘no-cause’’ terminations will be reintroduced if the party is elected.

“Our proposed changes are pro-tenant as it will make it easier to be a landlord, and lead to an increased supply of rental properties.”

Renter advocates said National’s policy impacted negatively on tenants rights, and would not help them, but many landlords, and property managers, supported it.

Industry groups, such as the Property Investors Federation and the Real Estate Institute, had opposed the removal of 'no cause' terminations when the law was changed.

That was despite a 2019 survey by the federation which found only 3% of tenants were issued with a no cause termination each year.

For landlord advocates, Bruce’s experience was an example of why not being able to issue no cause terminations was a problem.

Property Investors Federation president Sue Harrison said no landlord terminated a tenancy without reason, as it was in their interest to have their property continuously tenanted,

But reports of difficult tenants trashing rentals, or causing neighbourhood disturbances, meant landlords who could not issue no-cause terminations now had very careful tenant selection processes, she said.

“They are reluctant to take on a vulnerable tenant who, perhaps through no fault of their own, may have a less than perfect rental record.

“Landlords don’t now ‘take a chance’ due to difficulty in terminating the tenancy if it doesn’t work out.”

Landlords need to be able to deal with problem tenants quickly, Auckland Property Investors Association general manager Sarina Gibbon says.

Auckland Property Investor Association general manager Sarina Gibbon said the ability to issue no-cause terminations was like an insurance policy for landlords in case something went wrong in a tenancy.

The problem was current termination provisions were too prescriptive, and if it was too hard or risky to rent out a home, people would choose not to, she said.

“Supporting landlords' ability to deal with problematic tenants expediently is as important as supporting tenants' sense of security in their homes.

“Appropriate no-fault terminations have a place in the rental sector, but reinstatement has to be done carefully with input from all sides to ensure that it is functional and productive.”

It was not about unwinding Labour's well-intentioned laws, it was about moving forward to create a rental sector that was fair, accessible and reflected modern sensibilities, she said.

“A process involving landlord and tenant representatives, similar to one the Office of the Privacy Commissioner undertook when producing its latest guidelines for the rental sector, would be a good way to go.”

Under the current law, landlords could apply to the tribunal to end tenancies if the rent was unpaid for over 21 days, or in cases of repeated antisocial behaviour from the tenant.

Landlords could also give a tenant notice if either they or a family member needed to move in to the property, or if they were selling it, or embarking on extensive alterations or redevelopment of it.