Since the Residential Tenancies Amendment Act 2020 came into effect on February 11, 2021, there has been a significant shift in the dynamics of tenancy agreements in New Zealand. This change has led to a reassessment of the benefits of periodic tenancies compared to fixed-term agreements.
What is a Periodic Tenancy?
A periodic tenancy is an ongoing agreement without a fixed end date, continuing until either the landlord or the tenant provides notice to end the tenancy. This flexibility is now increasingly preferred, as it provides both parties with certain advantages under the new regulations.
Key Benefits of Periodic Tenancies
Flexibility for Tenants: Tenants can end a periodic tenancy with at least 28 days' written notice, providing greater flexibility compared to fixed-term tenancies. This notice period can be shorter if the landlord agrees.
Landlord's Notice Requirements: Landlords must give 90 days' written notice to end a periodic tenancy, but only for specific reasons such as property sale, renovation, or demolition. If the property owner or a family member plans to move in, a 63-day notice is required. This gives tenants a sense of security and predictability.
Automatic Conversion from Fixed-Term to Periodic: Post-February 11, 2021, any fixed-term tenancy agreement automatically becomes a periodic tenancy at the end of the fixed term, unless otherwise agreed by both parties. This change offers continuity for tenants who prefer to stay in the property beyond the fixed term. Furthermore, with a fixed-term agreement, tenants can assign the tenancy.
Managing Breaches More Effectively: For property owners, periodic tenancies post-2021 allow for easier management of breaches, such as arrears and antisocial behaviour. The law now permits landlords to address these issues more effectively within the structure of a periodic tenancy.
Dissolving Tenancy Upon One Tenant's Departure: Under a periodic tenancy, when one tenant leaves, there is an opportunity to dissolve the entire tenancy, offering more flexibility in managing the rental property.
90 day notice without explicit reason
In light of recent political developments, there's a noteworthy shift for periodic tenancies in New Zealand. The National and ACT parties have signalled a potential return to pre-2021 policies if elected.
This change would reinstate the "no-cause termination," allowing landlords to end periodic tenancies by providing a 90-day notice without specifying a reason. This marks a significant departure from the current legislation established by the Residential Tenancies Amendment Act 2020, which requires landlords to give explicit reasons for terminating a tenancy​
Fixed-Term Tenancies: The Comparison
Fixed-term tenancies have a defined period with specific start and end dates. While they offer certainty over the tenancy duration, they are less flexible in terms of early termination. Both parties must agree to end a fixed-term tenancy early, or it must be ordered by the Tenancy Tribunal. In rare cases, a fixed-term tenancy can be ended early due to severe hardship, but this requires proof of unexpected events causing serious hardship.
The 2021 changes to the Residential Tenancies Act have tipped the balance in favour of periodic tenancies for many in New Zealand. These tenancies offer greater flexibility for tenants, more controlled options for landlords to manage their properties, and an automatic transition from fixed-term agreements. Understanding these benefits is crucial for both landlords and tenants.
