When a landlord decides to sell a rental property, they must tell the tenant in writing. Harcourts also recommends that this news should be given to the tenant either in person or on the telephone so that the tenant feels respected and involved in the sales process and has the opportunity to ask any questions they may have.

Selling a property can be stressful, and perhaps even more so when there is little benefit for the tenant due to the uncertainty that a potential sale provides. Communication and negotiation with the tenants are important factors to facilitate a successful sale and reasonable access to the property. Once everyone has agreed to a schedule of access and what type of access is agreed to, it is recommended that this is put in writing and signed by everyone involved.

There are three different scenarios that could apply when a landlord sells a tenanted property.

Scenario 1: Selling a tenanted property and the purchaser takes over as landlord.

The landlord sells the property to a purchaser who continues to rent the property to the existing tenants. The purchaser then takes over the tenancy as the new landlord. The conditions of the tenancy are not affected in this scenario. Note that without vacant possession being part of the unconditional agreement, the purchaser may not be entitled to a pre-settlement inspection.

Scenario 2: Selling a tenanted property where the purchaser wants vacant possession.

The landlord sells the property to a purchaser who wants vacant possession on settlement. This must be a requirement of their unconditional agreement for the sale of the property.

If the current tenants are on a periodic tenancy, the landlord must give at least 90 days’ written notice to end the tenancy so that the property will be vacant on settlement. This may affect the settlement date for the property sale. It is highly recommended that there is a period of vacancy between the tenant vacating and settlement so that a final bond inspection can be carried out and any repairs or cleaning attended to.

If the current tenants are on a fixed-term tenancy that was granted on or after 11 February 2021, the landlord can end the tenancy on the expiry of the fixed term (or later) with 90 days’ written notice if the sale of the property has a requirement that the landlord gives the purchaser vacant possession.

If the fixed-term tenancy was granted before 11 February 2021, the landlord can end the tenancy on the expiry in accordance with the rules that were in place before the February 2021 law changes.

A fixed-term tenancy cannot be ended early by the landlord or tenant unless the tenant agrees in writing to end it. If the tenant doesn’t agree, the property must be sold with the tenant and tenancy in place (see Scenario 1).

Scenario 3: Selling a property once the tenant has vacated:

If a landlord wants to put a rental property on the market without the tenant residing at the property, the landlord must give the appropriate notice to the tenant depending upon what type of tenancy they have, and they are required to put the property on the market within 90 days of the tenancy termination date.

If the current tenants are on a periodic tenancy, the landlord must give at least 90 days’ written notice to end the periodic tenancy.

If the current tenants are on a fixed-term tenancy that was granted on or after 11 February 2021, the landlord can end the tenancy on expiry (or later) with 90 days’ written notice.

If the fixed-term tenancy was granted before 11 February 2021, the landlord can end the tenancy on expiry in accordance with the rules that were in place before the February 2021 law changes.

Marketing of the property must not commence until the tenancy has terminated, if the reason to terminate the tenancy was so that the property could be marketed for sale without the tenant residing at the property.

It is important to note that for any of the above scenarios, a tenant on a periodic tenancy can give the landlord 28 notice to terminate their tenancy if they receive a notice of termination from their landlord.

Access to the property

Landlords must get the tenant’s permission before entering the property to take photos. The tenant can refuse to allow photographs of their personal possessions. Landlords must also get the tenant’s permission to show potential purchasers through the property, as well as professionals like a registered valuer, real estate agent or building expert.

Tenants can’t unreasonably refuse access, but they can set reasonable conditions. They may:

limit access to certain days and times of the week
refuse open homes and auctions at the property.
Tenants can insist that the property be shown to potential purchasers by appointment only. They can also ask for a temporary rent reduction in return for permitting open homes (the landlord does not have to grant this). Tenants have the right to be always present at the home, including during open homes.

Harcourts recommends that landlords consider a temporary rent reduction when selling their property with a current tenant, as an act of goodwill designed to appease the tenants during the sale process, resulting in a higher level of cooperation.

If you still aren’t too sure what is required from you as a landlord when selling a tenanted property, please don’t hesitate to get in touch with one of our knowledgeable investment specialists.

Harcourts Property Management Activate 2022

The Harcourts Annual Property Management Activate events scheduled for the beginning of the year were finally held in June in four locations around the country. The events were attended by over 200 Harcourts property managers, business development managers, business owners, managers and administrators.

Allison Mooney spoke at each event with her presentation ‘Pressing the Right Buttons’ which was well received as the team learned about different personality types and how we can relate to each other and our clients in the best possible way.

Representatives from MBIE/Tenancy Services spoke at the events about how we can work together for the betterment of the property management industry, as well as internal speakers/panelists and support from our valued
business partners. Harcourts property managers are enthusiastic learners. We are proud of the high attendance at our
Activate events.

Landlord’s Claim for Compensation – Denied

In a recent Tenancy Tribunal, a landlord claimed compensation from the tenant for kitchen vinyl and carpet stains, which was denied by the Tribunal.

The landlord claimed that the tenant had damaged the kitchen vinyl and stained the carpet during the tenancy and the Tribunal agreed that the damage was more than fair we

ar and tear and was likely caused by the careless actions of the tenant.

However, the claim for $500 in compensation was dismissed, because neither the carpet or vinyl was repaired before the property was sold at the end 

of the tenancy, and therefore, the landlord could not establish that they had suffered any loss as a result of the damage.

If tenants or their guests carelessly damage a rental property, they are liable for the cost of the damage – up to four weeks’ rent or the landlord’s insurance excess (if applicable), w

hichever is lower. Therefore, d

epending on the scenario, the landlord may have been able to claim the cost of the repairs against their insurance, with the tenant required to pay the excess. The repairs however, would need to be carried out in order for the landlord to claim for compensation.

Healthy Homes Standards: What Defines a Living Room?

The Housing Improvement Regulations 1947 set out the minimum requirements for housing, with the local authorities responsible for enforcing the minimum requirements under the Act. Effectively, a property must meet all these requirements unless it complies with the equivalent Building Code Requirements at the time it was built.

These regulations define a habitable room as any room which is used or intended to be used, or, in the opinion of the local authority, is capable of being used, as a living room, dining room, sitting room, or bedroom; and includes a kitchen having a floor area of 80 square feet or more, but does not include a room constructed and used as a garage. Therefore, a living room can be the lounge, dining, kitchen, or a combination of these spaces depending on the property’s layout according to the Healthy Homes Standards.

The Healthy Home regulations require that the largest room used for general everyday living be used as the living room in terms of measuring heating capacity. Properties that only have heating in the smallest living area are likely to fail the heating standard, as the heating is required in the larger living area. An example of this could be that the kitchen/dining area is the largest living area and not the lounge/living room, so heating will be required in the kitchen/dining area.

The Healthy Homes Standards set specific and minimum requirements, and landlords can choose to provide heating over and above the minimum standards, heating other parts of the property and not only the main living room. This will ensure a dryer, warmer, healthier home, and one that is likely to be more attractive to tenants.

Selling a Rental Property

When a landlord decides to sell a rental property, they must tell the tenant in writing. Harcourts also recommends that this news should be given to the tenant either in person or on the telephone so that the tenant feels respected and involved in the sales process and has the opportunity to ask any questions they may have.

Selling a property can be stressful, and perhaps even more so when there is little benefit for the tenant due to the uncertainty that a potential sale provides. Communication and negotiation with the tenants are important factors to facilitate a successful sale and reasonable access to the property. Once everyone has agreed to a schedule of access and what type of access is agreed to, it is recommended that this is put in writing and signed by everyone involved.

There are three different scenarios that could apply when a landlord sells a tenanted property.

Scenario 1: Selling a tenanted property and the purchaser takes over as landlord.

The landlord sells the property to a purchaser who continues to rent the property to the existing tenants. The purchaser then takes over the tenancy as the new landlord. The conditions of the tenancy are not affected in this scenario. Note that without vacant possession being part of the unconditional agreement, the purchaser may not be entitled to a pre-settlement inspection.

Scenario 2: Selling a tenanted property where the purchaser wants vacant possession.

The landlord sells the property to a purchaser who wants vacant possession on settlement. This must be a requirement of their unconditional agreement for the sale of the property.

If the current tenants are on a periodic tenancy, the landlord must give at least 90 days written notice to end the tenancy so that the property will be vacant on settlement. This may affect the settlement date for the property sale. It is highly recommended that there is a period of vacancy between the tenant vacating and settlement so that a final bond inspection can be carried out and any repairs or cleaning attended to.

If the current tenants are on a fixed-term tenancy that was granted on or after 11 February 2021, the landlord can end the tenancy on the expiry of the fixed term (or later) with 90 days’ written notice if the sale of the property has a requirement that the landlord gives the purchaser vacant possession.

If the fixed-term tenancy was granted before 11 February 2021, the landlord can end the tenancy on the expiry in accordance with the rules that were in place before the February 2021 law changes.

A fixed-term tenancy cannot be ended early by the landlord or tenant unless the tenant agrees in writing to end it. If the tenant doesn’t agree, the property must be sold with the tenant and tenancy in place (see Scenario 1).

Scenario 3: Selling a property once the tenant has vacated:

If a landlord wants to put a rental property on the market without the tenant residing at the property, the landlord must give the appropriate notice to the tenant depending upon what type of tenancy they have, and they are required to put the property on the market within 90 days of the tenancy termination date.

If the current tenants are on a periodic tenancy, the landlord must give at least 90 days’ written notice to end the periodic tenancy.

If the current tenants are on a fixed-term tenancy that was granted on or after 11 February 2021, the landlord can end the tenancy on expiry (or later) with 90 days’ written notice.

If the fixed-term tenancy was granted before 11 February 2021, the landlord can end the tenancy on expiry in accordance with the rules that were in place before the February 2021 law changes.

Marketing of the property must not commence until the tenancy has terminated, if the reason to terminate the tenancy was so that the property could be marketed for sale without the tenant residing at the property.

It is important to note that for any of the above scenarios, a tenant on a periodic tenancy can give the landlord 28 notice to terminate their tenancy if they receive a notice of termination from their landlord.

Access to the property

Landlords must get the tenant’s permission before entering the property to take photos. The tenant can refuse to allow photographs of their personal possessions. Landlords must also get the tenant’s permission to show potential purchasers through the property, as well as professionals like a registered valuer, real estate agent or building expert.

Tenants can’t unreasonably refuse access, but they can set reasonable conditions. They may:

– limit access to certain days and times of the week

– refuse open homes and auctions at the property

Tenants can insist that the property be shown to potential purchasers by appointment only. They can also ask for a temporary rent reduction in return for permitting open homes (the landlord does not have to grant this). Tenants have the right to be always present at the home, including during open homes.

Harcourts recommends that landlords consider a temporary rent reduction when selling their property with a current tenant, as an act of goodwill designed to appease the tenants during the sale process, resulting in a higher level of cooperation.

If you are considering selling, remember to speak to your local Harcourts property manager. They will be able to assist you with the sales process from the beginning and enable you to achieve the best possible result.

Advice and information for tenants

Minor changes

From February 2021, tenants can ask to make minor changes to a rental property. This change was introduced so tenants can feel more at home in the property they are renting. Landlords can, however, set reasonable conditions.

What meets the definition of a minor change?

A minor change is defined as any fixture, renovation, alteration, or addition to the property that:
• has a low risk of damage to the property • can be easily reversed (property can be returned to substantially the same condition)
• doesn’t pose a risk to health and safety
• doesn’t compromise the structural integrity, weathertightness or character of the property
• doesn’t affect anyone’s enjoyment or use of the property
• doesn’t require regulatory consent
• doesn’t breach any regulatory rules.

What are examples of minor changes?

Depending on the circumstances, examples of minor changes could include: From February 2021, tenants can ask to make minor changes to a rental property. This change was introduced so tenants can feel more at home in the property they are renting. Landlords can, however, set reasonable conditions.
• securing furniture or appliances to protect against earthquake risk or to make a property child safe
• installing dishwashers and washing machines
• installing a baby gate
• affixing child safe latches to cupboards
• installing shelving
• installing television aerials
• installing gardens when these can be returned to the original state at the conclusion of the tenancy
• installing curtains and window coverings
• installing internal locks provided they are compliant with relevant fire safety laws; and
• installing picture hooks.

What is the process?

A tenant must make a request for a minor change in writing and the landlord must respond to this request within 21 days. If the change is considered by the landlord to be more than minor, a landlord can decline if the request does not meet the definition of a minor change. Harcourts property managers can provide you with a form for requesting a minor change on request.

Do tenants need to remove any changes installed during the tenancy?

Yes, tenants must return the premises to substantially the same condition as before the changes were made, including removing the changes, unless the tenant and landlord agree otherwise. Landlords can seek remedy at the Tenancy Tribunal if the tenant does not reverse the change.
As well as the cost of remediation, the tenant may be liable for an additional penalty if they fail to reverse a minor change that the landlord didn’t agree to keep.

What about a tiny house or caravan?

If you are considering having a moveable structure such as a cabin or caravan at the property, you must first seek consent to do so. It may not be as straight forward as it first appears, safety and compliance must be considered. In addition, when the structure is removed, it could be difficult and costly to return the premises to substantially the same as before, particularly if the structure is situated on a grassed area. Talk through any plans with your property manager first as this may not fit the definition of ‘minor change’.

If you want to make a minor change to the property you are renting, ensure that you follow the correct process and contact your Harcourts property manager in the first instance. It is always best to reach an agreement before any work commences so that no one is in breach of their obligations and everyone understands what the expectation is, at the end of the tenancy. leave the fan running until the moisture clears.

Winter ready

Tackling dampness and ventilation creates a dry, healthy home that holds in the heat, reduces emissions and keeps money in your pocket. During a tenancy, tenants need to keep the house well-aired and remove any mould straight away

Easy Ways to Ventilate and Reduce Damp

• Air your home regularly. Open doors and windows for 10-15 minutes each morning. Airing out a room when you turn off the heater also helps to avoid condensation. Keep the curtains open during the day.
• Use energy efficient, low emissions heaters. Heat every room being used by someone to at least 18°C. Don’t use unflued or portable gas heaters.
• Dry washing outside. Use a washing line or rack under a covered verandah, garage or carport. Use a clothes dryer only to finish them off, or if it’s raining.
• Use extractor fans and rangehoods when fitted. Make sure they’re regularly cleaned for maximum extraction.
• Turn on the bathroom fan before a shower or bath. Shut the door and open the window. Afterwards, leave the fan running until the moisture clears.
• Use lids on pots when you cook. This helps to stop the steam escaping.
• Move furniture away from walls in winter. A 10cm gap will discourage mould (especially on external walls).
• Leave wardrobes slightly open. A little air circulation discourages mould growing on fabric.
• Use a dehumidifier on damp days. This will help to reduce condensation, but it won’t solve a dampness problem. It’s better to tackle the sources of damp and heat as detailed above, and ventilate your home daily.

Heat Pumps – how to run your heat pump efficiently

• Use the timer to warm the room just before you get home and switch off when you don’t need it.
• Set the thermostat to above 18ºC (to combat damp and mould) but below 21ºC (to save power).
• Set it to ‘heating’ mode – ‘auto’ can make the heat pump waste energy by constantly changing between hot and cold.
• When it’s really cold, set the fan to ‘auto’. ‘Low’ and ‘quiet’ won’t give you full blast.
• Heat pumps sometimes blow cold air during very cold weather, to defrost the outdoor unit. This is normal, and it should be back to heating in a few minutes.
• Clean the filter with a vacuum cleaner or warm water every couple of weeks. It’s easy and makes all the difference.

Other things to do to prevent mould and damp:

• Wipe condensation off walls and windows daily.
• Keep the shower curtain hanging inside the shower or bath so water doesn’t drip on the floor, and wash the curtain every few weeks.
• Keep only a few plants inside.
• If you have a mattress on the floor, air the mattress every day by removing the covers and lifting the mattress onto its side. Consider getting a bed base that allows air to circulate.

If you’re doing all the right things, and the house is still damp and mouldy, talk to your property manager.
Source: https://genless.govt.nz/for-everyone/

Fix your credit score in 5 simple steps

How credit scores work

In New Zealand, there are four credit reporting bureaus that track both positive and negative credit history. Any time you apply for credit – a personal loan, car loan or credit card, even your electricity or home phone account – that information is stored in your credit report. Missed or late repayments lower your credit score, whereas paying on time and in full improves your credit score.

Step 1: Know your credit score

The logical first step is knowing what your credit score is so you have a clear idea of what’s helping improve it and what’s hurting it. It’s a good idea to check your credit score at least once a year and before you apply for any major credit. You can request a free copy of your credit report at any time by visiting one of the following websites:
Equifax
Illion
Centrix
Credit Simple

Step 2: Report any errors

For any errors you find on your credit report – such as a default you didn’t incur or a credit purchase you didn’t make – contact the credit reporting bureau or the lender that reported it. They will then investigate the error, come back to you with an outcome, and remove the negative incident if it’s found to be an error.

Step 3: Get back on track

Your credit report helps lenders decide whether or not to lend to you again. It provides a big picture look at your spending and repayment habits, and helps them predict how you will likely manage repayments in the future. Your credit score can also influence what interest rate you’re offered, and that could mean you miss out on the most attractive interest rates if your credit score isn’t what it should be. So, if you have missed repayments or made late repayments in the past, it’s essential you get back on track again, right way. Schedule your repayments on time, pay more than the minimum balance if you can, and consider a debt consolidation loan if you need help consolidating all of your debt into one manageable loan repayment.

Step 4: Pay on time and in full

Once you’ve cleared up any errors and taken further steps to get back on track again and minimize any more damage to your credit score, you can start building your credit score back up again. The best way to do that, is to pay your bills on time and to clear your debt in full. Set up direct debits and automatic payments to ensure you don’t miss a repayment by mistake.
Step 5: Apply for credit
Another way to help build your credit history -and prove to lenders that you are responsible and able to manage your repayments – is to only apply for credit you need and consistently manage a healthy level of debt. That means avoiding debt that could lower your score – like quick cash loans, pay day loans or high interest credit cards – and applying for credit that actually boosts your credit score – such as home loans, personal loans or car loans.

Start today

There’s no better time than right now to start fixing your credit score. For more information about credit scores and how they impact your ability to borrow, take a look at the Consumer Protection website. Contact a Mortgage Express branded mortgage adviser if you need help accessing home loan finance, but you’re concerned about your level of debt and credit score. Our team of advisers can work with you to help you plan your financial future.
Source: https://www.mortgage-express.co.nz/blog/fix-your-credit-score

Changes to the Healthy Homes Standards Finalised

The Government has amended some of the Healthy Homes Standards for rental properties through the Residential Tenancies (Healthy Homes Standards) Amendment Regulations 2022.

Amendments include changes to the heating requirements to reflect the higher thermal performance of new homes built to the 2008 building code requirements for insulation and glazing and certain apartments, as well as other minor changes to the ventilation and moisture ingress and drainage standards.

Changes to the Heating Standard

The changes to the heating standard will generally allow smaller heaters to be installed in homes built to the 2008 building code requirements for insulation and glazing and apartments. Landlords of new homes built to the 2008 building code requirements for insulation and glazing and certain apartments now have until 12 February 2023 to comply with the heating standard.
The original heating formula remains suitable for most of the rental properties in New Zealand. Buildings which are not apartments and are not built to the 2008 building code requirements for insulation and glazing still need to comply with the original Healthy Homes Standards heating requirements.

Heaters installed prior to 1 July 2019

The Government is allowing electrical heaters to boost the heating capacity to what is required when qualifying heaters installed prior to 1 July 2019 are short of capacity by 2.4kW or less, rather than 1.5kW or less. The trigger point to top up or replace existing heating installed before 1 July 2019 has been revised to existing heaters that are at 80% of the required heating capacity, instead of 90%. Over time, as heaters need to be replaced due to wear and tear, they will need to meet the full requirement of the heating standard.

Clarification to the heating standard if the landlord is not the owner of the whole tenancy building

A minor change to the heating standard has been made to clarify situations where the landlord is not the owner of the whole building and cannot meet the heating standard. If the required heating capacity is over 2.4 Kw, a landlord must install at least one qualifying heater that has a heating capacity of at least 2 Kw. A fixed electric heater with a thermostat is an acceptable heater for this situation.

Changes to the Ventilation Standard

Amendments now support the use of continuous mechanical ventilation which extracts moisture to the outdoors from kitchens and bathrooms.

Clarification to the Moisture Ingress and Drainage Standard

Landlords are not required to install alternative moisture barriers where installation of a polythene barrier isn’t reasonably practical.

Key Healthy Homes Compliance Dates

• Rental properties must comply with the healthy homes standards within 90 days of any new or renewed tenancy.
• All boarding houses must already comply with the healthy homes standards.
• From 1 July 2024 – All rental homes must comply with the healthy homes standards.

If you are concerned about your rental property not meeting the healthy homes standards, reach out to your Harcourts Property Manager who can advise you of the compliance date for your property, and if anything can be done in the interim to make the property drier and healthier.

Source: https://www.hud.govt.nz/about-us/news/changes-to-the-healthy-homesstandards-finalised/