Impacts on property dealings during Covid
The country is now out of its second lockdown with Auckland and parts of the Waikato in Level 3 with the rest of the country sitting at Level 2. Given the current uncertainty with how we can get on top of the Delta strain outbreak, let’s have a look at where this leaves us and our property dealings across differing alert levels.
The following information is correct at the time of publication. However, the government could change the rules at any time and we strongly suggest you seek up-to-date and tailored legal advice for your circumstances.
Moving, buying and selling
Under the current Level 3 restrictions you are allowed to change addresses. This means that you can settle your property transactions and move in to and out of your homes. If you are relocating from a region in a different alert level to the region you are moving to that move must be on a permanent basis, such as starting new employment, attending tertiary education, or purchasing or renting a new principal home. It also means that you can’t travel for a holiday.
You will need to take evidence that you are crossing the border for a permitted purpose. You may need to take a copy of your sale and purchase agreement or tenancy agreement for your new home, and even a copy of your employment agreement or letter of acceptance, if applicable.
Under Level 3 you can have a moving company assist you with packing and the heavy lifting, although the movers will need to socially distance from you. Your family and friends who are not a part of your bubble can’t assist you with the move.
At level 2 you are able to have your friends and family help you in your move. Your moving company will still need to comply with social distancing rules and contact tracing.
Under Level 3 you may complete your pre-settlement purchase inspection. You can also arrange to view a prospective property, to rent or buy, provided that the viewing is on a one-on-one basis. It is recommended that you do these viewings via video from the property’s online listing. If that is not an option, you will need to socially distance, wear a mask and sign in using your tracer app.
At level 2 your open homes will be restricted to 100 people, your real estate agent may decide to limit numbers further. You need to make sure you are contact tracing and maintaining a 2-metre distance.
Landlords can inspect their rental properties during the revised Level 3 restrictions, but only with their tenant’s consent. As a tenant you should only withhold your consent if you have genuine concerns about your safety.
Under level 2 you still need your tenants’ consent before carrying out inspections or maintenance. Masks must be worn, and you should contact trace.
Rent relief for commercial tenancies
The government is also proposing an amendment to the Property Law Act 2007 which will make it compulsory for parties to negotiate and agree on a fair rent reduction where a tenant doesn’t have access to their business premises. The amendment is currently going through its second reading, you can read the Bill here.
The proposed amendment is similar to clause 27.5 of the ADLS lease which we discussed during the first lockdown in the Winter 2020 edition of Property Speaking.
Landlords and tenants, buyers and sellers are encouraged to talk to each other to reach an agreement on any issues that arise. Where this is not possible, your commercial lease is likely to detail a dispute resolution procedure which you will be able to do so online via Skype, Zoom or by teleconference. For your residential tenancies, the Tenancy Tribunal and the courts are still operating via teleconference.
More information on the Covid restrictions can be found here.
Using your property as an Airbnb
Coming into summer you may be thinking about letting out your holiday home or bach through Airbnb. This can be a great way to cover your property expenses over the summer months or to fund your own holiday — if you know what you’re getting into.
Before you go down the Airbnb route, you need to make sure that you understand the differences between a residential tenancy and an Airbnb arrangement. Otherwise, you may need to comply with the Residential Tenancies Act 1986.
This legislation applies to all tenancies for a person’s occupation, except in the limited circumstances set out at section 5 of the Act. These include where the property is used for temporary or transient accommodation of up to 28 days, or where the property is let for the tenant’s holiday purposes.
If the arrangement between you and your tenant falls outside the exception at section 5 then it will be a residential tenancy and you must comply with the legislative requirements. These include the healthy homes standards, having a valid tenancy agreement and restrictions on terminating the tenancy.
Come and talk to us before you fly into it to ensure that you don’t get any nasty surprises.