Landlord's 'mind-boggling' fight to remove tenant

Thursday, 1 November 2018

Investors resoundingly rejected many of the government's proposed changes.

Auckland property investor Peter Lewis recently spent 11 months battling to remove a tenant who had been in one of his properties for five years.

'One night I had had five text messages from her between midnight and 1am. At one inspection, the house was a tip, and any suggestion that she should tidy up was pretty much ignored,' he said.

By mid-December last year he had enough and issued a 90-day notice for her to leave.

'As March loomed I reminded her that we were about to part ways, but I never really got a lucid answer. Instead, she became quite adamant about her intention to stay.'

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Peter Lewis had to fight to get a tenant out of this house.

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Lewis applied for a possession order. The tenant did not turn up for the Tenancy Tribunal hearing and the order was granted.

But she still would not move. Lewis went to court for an eviction order and called for the help of a bailiff to get her out.

Peter Lewis spent 10 months trying to get a tenant to leave.

'Soon after his departure she then returned to the property, removed the notices, and re-entered.

'Finally, after she barricaded herself into the property, it took the combined efforts of five policemen to gain access by dismantling the living-room ranch slider and then physically dragging her out. Apparently they then took her off to the station and issued her with a trespass order.'

But she then filed a request for a rehearing of the possession order, claiming it was retaliatory.

All her possessions remained in the house in what Lewis describes as a Mexican stand-off.

He could not touch them because she had been reinstated as the legal tenant. But the trespass order meant she could not come to the house.

It was not until mid-October last year that the Tenancy Tribunal reheard the case and Lewis was given legal possession again - 10 months after he initially asked her to move out.

Lewis made a submission as part of consultation on the proposed changes to the Residential Tenancies Act (RTA).

The Government has suggested an end to no-cause terminations, increasing the amount of notice a landlord must give from 42 days to 90 days, limiting rent increases to once a year, encouraging landlords to allow pets and minor alterations to a property and introducing limitations on rent bidding, among other suggestions.

Lewis said his case was an example of how changes to the notice clause would just exacerbate an already time-consuming and difficult process.

'The bulk of New Zealand landlords own one or two properties and that would be a financial killer for them. I was lucky I could survive it but many can't. It was a mind-boggling exercise.'

Another investor, Sian Draper, agreed: 'Currently, the system makes it far too hard to remove problem tenants. By the time that a 14-day notice is served and waited out, a Tenancy Tribunal application is made and a hearing held, months can go by, with the landlord losing money and the house getting more trashed by the day. There needs to be a much quicker system for resolving these cases.'

Another investor said he had not been able to remove a problem tenant until the man was sentenced to prison, and even then he sub-let the property to a family member.

A compilation of 92 complete landlord submissions and 15 partial submissions on the RTA reform found landlords were strongly opposed to most of the proposals.

Ninety-four per cent said the government should not remove no-cause terminations, 98 per cent said a new owner should be able to request vacant possession of a property, 76 per cent said tenants should not have a right to make modifications to a property, 92 per cent said a landlord should have the right to refuse pets without reason and 89 per cent said tenants should have more responsibility for the properties they rent, in long-term situations.

Andrew King says investors don't object to security of tenants' tenure.

Some supported the idea of moving to a European tenants-for-life system but said it should come with requirements such as tenants paying rates, and questioned how it would work when most investors were 'mum and dad' operations, not corporate landlords.

Investors strongly rejected the suggestion that they be tied into fixed-term tenancies but tenants remain able to break them at any point with notice.

One asked: 'This is totally unfair. If the landlord has to make the property available for a certain amount of time, and has to give a reason for giving notice, then surely it is fair and just that the tenant should have to give a very good reason for breaking a fixed term tenancy. Otherwise why have a fixed term if it doesn't mean anything?'

New Zealand Property Investors Federation executive officer Andrew King said removal of no-cause evictions was a particular concern.

'Ontario in Canada is the only place we have found that has removed no cause evictions and we have just received information from a Canadian lawyer saying that all the problems you would expect are occurring.

'The tenancy turnover rate hasn't changed, so it hasn't provided more security for tenants. Landlords get stuck with bad tenants, so they are extremely cautious about who they let into their properties. Good tenants leave properties because of fear of the bad tenants. Tribunal hearings have increased because the Tribunal has to hear everything now. It has made being a landlord less appealing, lowering the creation of new rental supply.'

He said the average length of a New Zealand tenancy has increased from one year and four months in 1995 to two years and three months in 2017.

Lewis said the review process had entirely skipped the issue of rent arrears, which was a major problem for landlords.

For the 2017-18 financial year there were 35,581 applications to the Tenancy Tribunal, with 31,031 lodged by rental property owners or managers, and of these, 25,329 applications were over unpaid rent.

'Unpaid rent, which makes up 72 per cent of total applications to the Tenancy Tribunal, is bad for owners, who must forego income, and bad for tenants, who will have a black mark on their credit history,' he said.

'I would suggest that stronger laws around unpaid rent, which should mean charging interest on unpaid rent, the ability to charge tenants' credit cards, and exemplary damages for refusal to pay rent owing. Rent debt appears to be the only debt on which it is not legally possible to charge interest. If I am late making my mortgage payment I am charged penalty interest. The local council will charge me interest on unpaid rates, the bank will charge me interest on overdue credit card debt, even the IRD will charge me interest on overdue tax payments, yet my tenants can owe me rent and suffer no such penalty.'

Claire Leadbetter, policy manager at the Ministry of Housing and Urban Development (HUD), said a submissions analysis report was likely to be published in the first half of next year.

'There's been a good response to the public consultation on the RTA reforms which closed on October 21, 2018. HUD is now working our way through the feedback and the insights the public has provided, which will help the government decide what proposals to turn into law.'