Property briefs – Autumn 2021
Is your property fully insured?
There are potential insurance risks for properties that have shared areas, for example multi-storey town houses, semi-detached homes which share a party wall, and cross lease properties which have carports, the Insurance Council of New Zealand has warned.
If your property does not have a body corporate that manages insurance cover for the whole property, and if you and your neighbours have different insurance providers, you may find that any shared property such as carports, party walls and roofs will not be covered by your insurance.
When you obtain finance through a bank or other lender, generally you agree that you will maintain adequate insurance to cover the replacement of your property if it is damaged or destroyed. If your insurance cover is insufficient, or if there are gaps in your cover, this can result in you breaching the conditions of your home loan.
If you are buying a property, it is wise to check that suitable insurance cover is available before you go unconditional on your purchase. If you would like to make your purchase agreement conditional on finding suitable insurance cover before going unconditional – we can guide you on this.
Stage 2 of the Residential Tenancies Act changes now in force
The second stage of the three-phase Residential Tenancies Amendment Act 2020 came into force on 11 February 2021.
We remind landlords that:
- You can no longer end a periodic tenancy by giving your tenant a 90 days’ notice ‘no-cause termination’
- If you are selling your rental property and need to provide vacant possession under your sale agreement, you must provide your tenant with at least 90 days’ notice, up from the previous notice period of 45 days
- At the end of a fixed term tenancy, the tenancy will automatically roll over to a periodic tenancy unless the parties agree, the tenant provides notice or you have grounds to terminate the tenancy
- If you are listing your property for rent, you must specify the rental amount on the listing. This is required even if you are listing via Trade Me, Facebook or your supermarket noticeboard
- If your tenant asks to make minor alterations to the property or if they ask to assign the tenancy, then you must consider your tenant’s request and you cannot unreasonably decline their request, and
- The Tenancy Tribunal can now make awards of up to $100,000; successful landlords and tenants can apply for a suppression order to remove their identifying details from publication.
More information on the changes now in force can be found here.
Due diligence on a prospective tenant vs that person’s right to privacy
The Privacy Commissioner has expressed concern that landlords are compiling and sharing information via Facebook to blacklist unwanted tenants. This is in breach of a tenant’s right to privacy.
As a landlord, you are justified in collecting personal information about tenants or prospective tenants such as proof of their identity, whether they have any pets and information to determine if they can pay the rent. However, you are unlikely to be justified in collecting information about their nationality, marital status, gender or banking history. Do read our article on the ‘KFC test’ in the Spring 2019 edition of Property Speaking here.
Now that it is more difficult to remove an unwanted tenant from your rental property, it is crucial to do your due diligence on a prospective tenant. With that in mind, you must remember that tenants have the right to privacy and, in doing your due diligence on a prospective tenant, you can only collect information which is actually relevant to assess their suitability as a tenant.