Landlord information

Risks / Consequences

Many New Zealand landlords choose to self-manage their investment properties without necessarily understanding the risks that can be associated with any tenancy. Tenants now have access to more information and are better informed than ever before when it comes to the tenancy process, meaning that managing your property isn’t quite the easy or simple process that many investors believe. Independent landlords may leave themselves exposed to risk through tenancy issues due to a lack of knowledge and/or time, resulting potentially in a loss of rental income or more major consequences. No matter how stringent initial checks may be, a tenant can still damage a property, abandon a property or they can simply stop paying rent- the risks are ever present. Although this type of occurrence will always be a possible risk when owning a rental property the use of a Ray White Property Manager can greatly help in reducing the chances of this happening.

Landlord Insurance is different to your everyday home and contents insurance as it covers specific tenancy-related issues that can arise when owning a rental property.  These include but are not limited to:  loss of rent due to arrears, tenancy abandonment, intentional/malicious damage, damage caused by drug use or manufacture and many more.  Investors who choose Landlord insurance cover can rest assured that these unfortunate occurrences will be covered.

The threat of fire damage to an investment property is a real danger to your asset and the welfare of your tenant. Currently the Residential Tenancies Act (1986) requires a landlord to “comply with all requirements in respect of buildings, health, and safety under any enactment so far as they apply to the premises”. In effect, this means that all properties must comply with the Building Act (2004), which states all new houses and consented alterations must provide a “means of detection and warning” in the event of fire. When it comes to existing properties, the requirement for smoke alarms is triggered if the owner is carrying out any building works that require an application for building consent from the local council.
Once fire alarms are installed, educating tenants in utilising the effectiveness of the alarms is also important. This includes alerting to the potential outcomes if alarms are obstructed, or are not regularly checked. Alarms are also ineffective if they are not installed in the correct locations throughout the home. Even if you, a property owner, are not required by law to have smoke detectors installed, we recommend it is done as part of your landlord responsibilities. Politically, indications are that smoke detectors will become mandatory for rental properties in the not-too-distant future.

Methamphetamine or “P” has become a country wide issue throughout New Zealand. Clandestine laboratories (Clan Labs or P-Labs) are easily set up to cook “P” and can quickly and easily be removed from a property, potentially leaving your investment and future tenants at risk from exposure to dangerous chemicals. This can lead to tens of thousands of dollars of costs to decontaminate a home used as a P-lab, and if the police have been involved, the law states that they must report your property’s contamination to the local council, resulting in a permanent public record on your property’s LIM report. This is extremely damaging to the resale value of your investment. Ray White Property Managers adhere to a four step Methamphetamine Risk Mitigation Policy aimed at educating our staff and our clients around how to recognize such activity and how to ensure the safety of our tenants and your investment. This includes biannual methamphetamine detection training via webinar, assisting in protecting your property throughout the entire tenancy process. In providing this extra level of protection you can feel confident all steps are being taken to safeguard the value of your investment.

In 2010, the Residential Tenancies Amendment Act was released which included increased landlord responsibilities. This also included a number of ‘unlawful acts’ which could result in exemplary damages being awarded to tenants for landlords who breach the Residential Tenancies Act (1986). Some examples to highlight are (but are not limited to):

  • Interference with the tenant’s privacy, $2,000;
  • Landlord’s failure to meet obligations in respect of cleanliness, maintenance, or building, or health and safety requirements, $3,000;
  • Unlawful entry by a landlord, $1,000.

Legislation can be confusing and very time consuming to learn, and private landlords may find themselves being brought to the tenancy tribunal simply by mistake or due to a lack of knowledge, and this can negatively affect an investor’s bottom line. By using a Ray White Property Manager who understands the Residential Tenancies Act and it’s possible consequences, you can help prevent this from ever happening.