A tightly held rental market and Government now able to restrict tenancy terminations as needed...
With just 61 days left in 2021 we are racing towards Christmas, New Year and summer holidays. The office is normally pretty busy from now to Christmas, with the warmer weather spurring activity across the market. Interesting times remain across the country as different districts battle with COVID restrictions. We hope that you and your whanau are safe and well wherever they are in New Zealand.
Government now able to restrict tenancy terminations as needed
Another piece of legislation was passed by stealth on 28 October allowing restriction of tenancy terminations when people are required to stay home due to public health measures. The restrictions on tenancy terminations will be able to be switched on and off by Ministerial Order (a ‘COVID-19 tenancies order’) in response to public health measures which generally restrict people from moving house (for example, Alert Level 4 restrictions).
Thankfully, I feel the days for Alert Level 4 restrictions are numbered but this could come into play if someone was isolating due to a COVID infection - their tenancy may not terminate as per usual over that period. With all new legislation it is a “wait and see” as to how it will be interpreted and applied to real life scenarios.
Details on the new termination restrictions are
- Landlords will not be able to end tenancies, except in limited circumstances.
- Most terminations will be postponed until at least 28 days after the restrictions lift.
- Tenants will still be able to give notice to end their tenancy as usual, but must consider if doing so would affect their ability to comply with COVID-19 public health requirements to stay at home.
- If a tenant had previously served a notice to end the tenancy before the restrictions period, or agreed with the landlord that the tenancy would end, but now wants to stay, they will be able to withdraw the notice or agreement by notifying the landlord in writing.
- Tenants can terminate a tenancy by giving two days’ notice if they are unable to move in due to COVID-19 public health order restrictions. Any bond or rent in advance (relating to the period after the termination) that was paid must be returned to the prospective tenants.
- If a new tenancy was due to begin, but new tenants are not able to move in as the property is not vacant, then any agreement between prospective tenants and the landlord will be cancelled. Tenants and landlords should work together to make a plan for when restrictions lift. Any bond or rent in advance that was paid must be returned to the prospective tenants.
- If fixed-term tenancies become periodic due to the restrictions, the landlord may end the tenancy by giving 28 days’ notice within 28 days of the restrictions lifting.
As with the majority of legislation passed recently there appears little benefit for the landlord but plenty for the tenants.
The local market remains tightly held
There are 790 properties currently available, down 27 from this time last month. Now 27 may not seem like a lot but take a look down your street and see just how many properties that is in real life. The tenants for those properties need to live somewhere and as this displacement continues, the pressure in the market builds as we have seen over the last few months.
We are still seeing the odd sale go through which will continue to add to the supply and demand curve. As I’ve always said, a long term buy and hold strategy is hard to beat. We’ve seen rents and property values increase, I personally can’t see too many reasons to be exiting the market right now unless divesting was part of the long-term plan.
With local COVID there has been a small drop in demand and enquiry but we expect that to bounce back when the nerves settle. Going forward Canterbury is still an attractive place to live, the city is going from strength to strength on many levels and that translates to population growth and the requirement for housing.
As always, we do truly appreciate your business and the team and I are always just a phone call away. We are always available for a free chat and are happy to share our experience and knowledge wherever we can be helpful.
An active investor for over 25 years & qualified builder, property has always been a part of life. Hamish has sat on the committee of the Canterbury Property Investors Association including two years as President.