Rental property standards
The Residential Tenancies Act 1986
requires landlords to provide and maintain rental properties in a reasonable
state of repair for the tenants. When deciding what is a 'reasonable state of
repair' one must consider the age and character of the property and how long
it's likely to remain habitable and available to be lived in. It should also
be noted that the Act requires landlords to provide properties in a reasonable
state of cleanliness for the tenants - although it does not directly regulate
the standard of rental properties. However, it does reinforce that landlords
'comply with all requirements in respect of buildings, health, and safety
under any enactment so far as they apply to the premises'.
The Housing Improvement Regulations 1947 creates the minimum requirements that
must be met when it comes to housing standards, and that it is local
authorities and councils that are responsible for the enforcement of these
regulations within their districts. The premises must comply with each of
these requirements unless the dwelling complied with what would be considered
an equivalent requirement of the Building Code at the time the dwelling was
built. The purpose of the Housing Improvement Regulations is to ensure that
properties are warm, dry, safe and sanitary for the tenants occupying the
dwelling. The regulations that are found under the Housing Improvement
Regulations 1947 are: room size, function and safety, light, ventilation,
drainage and dampness, overcrowding, sewerage and sanitation, and heating.
It should also be noted that each dwelling, alteration, and additional
ancillary building should have building consent and code of compliance if the
dwelling or alterations were made post 1993. If they were made prior to 1993
then it was common for the dwelling to only have a building permit.
Earlier this year new housing standards came into effect. These standards
require that all rentals have heaters that can warm the main living rooms up
to 18 degrees Celsius. Each home must also have underfloor and ceiling
insulation that meet the 2008 Building Code standards, while existing ceiling
insulation must have a minimum thickness of 120 millimetres.
Inside this edition
Rental property standards
The importance of Wills and Enduring Powers of Attorney
Under what circumstances should you form a Trust
An overview of mortgagee sales
An overview of Domestic Violence Leave
What is the purpose of a LIM report?
When can you access your KiwiSaver?
Private landlords will need to ensure their rental properties comply with the
standards within 90 days of any new tenancy commencement date from mid-2021,
while Housing New Zealand and registered Community Housing Providers will have
until July 2023 to comply with the new standard of housing requirements. If
the dwelling does not comply with the above Act and the Housing Improvement
Regulations 1947, it should be noted that a tenant can apply to the Tenancy
Tribunal for a work order or other type of order if a landlord will not meet
their responsibilities for providing a safe and healthy home.
Where the rental cannot lawfully be used for residential purposes a tenant may
apply to the Tenancy Tribunal for rent to be repaid to them, because the
landlord has received rent that is not lawfully recoverable under the Act.
Rentals that cannot be lawfully used for residential purposes could include
illegally converted garages, unconsented dwellings and commercial properties
used for residential use.
If you have any questions or concerns regarding whether or not the dwelling
you are renting meets the required standards and regulations, we advise you to
seek professional legal advice to assist you with these queries.
powers of attorney (EPAs) and a will in place is important for every adult
whatever their age. A will is a legal document that lets you decide how you
want your property, care for your dependants (partner, children etc.) and your
body to be dealt with after you die. EPAs allow you to appoint a trusted
person(s) to make decisions on your behalf regarding your property and health
when you are unable to do so yourself, during your lifetime.
A well drafted will can reduce emotional and financial strain for your loved
ones after you pass away. It also reduces the likelihood of family members
disputing over your estate and challenging your will. Accordingly, we suggest
seeking legal advice when creating a will to ensure your intentions are
accurately recorded with no room for ambiguity. If your circumstances or
wishes change, you can redraft your entire will or create a codicil, which is
a separate binding document read together with your will.
Regardless of how much property you have, you should have a will. For example,
you may have jewellery that you would like to give to a specific family member
due to its sentimental value rather than monetary value.
Dying without a will is known as dying 'intestate'. This means that the
Administration Act 1969 determines how your property is distributed (provided
that the value of your estate is above $15,000), which may not align with your
wishes and may result in disputes over your estate. Generally, the property is
distributed to a surviving spouse and family members in specified proportions.
This process can be more time consuming, costly and complicated than having a
There are two types of EPAs. One in relation to your property (including but
not limited to any houses, vehicles, bank accounts, investments and household
effects) and one in relation to your personal care and welfare. Under an EPA
you appoint an attorney to 'step into your shoes' and make decisions on your
behalf that are in your best interests.
Having an EPA in place for property allows your attorney to make decisions
regarding your property, for example, if you are out the country. An EPA for
personal care and welfare allows your attorney to ensure you and your property
are looked after if you become mentally incapacitated.
Mental incapacity does not always arise due to old age. It can be caused by a
car crash or other accident or medical event, and accordingly, it is important
to have EPAs in place as soon as you turn 18. Your partner or spouse may be
able to manage any jointly-owned assets but they cannot sign on your behalf if
you are mentally incapable. If an incident like a car crash or stroke does
happen and you do not have EPAs in place, your loved ones would have to apply
to the Family Court to make decisions on your behalf. This is a very lengthy
and costly process that may not align with your wishes, and is easily
avoidable by creating EPAs.
We strongly recommend to seek legal advice for further information and to
create a will and EPAs, sooner rather than later. It is also important to
review your will and EPAs if your circumstances change.
There are a number of circumstances
under which you should consider forming a trust. Some of the common purposes
of a trust, and the structures utilised, will be discussed in this article.
A trust is managed by trustees who are appointed by the creator of the trust
(called the settlor(s)). Trustees manage the assets and debts of the trust for
the beneficiaries specified by the settlor(s).
There are several different types of trust structures that can be used. Your
circumstances will determine which structure is most appropriate for you. Some
types of trusts include:
* Single/Umbrella Trust - all assets are transferred to one trust
* Parallel/Mirror Trust - each settlor (for example a husband and wife or de
facto partners) transfers assets to separate trusts for which they each hold
* Fixed Purpose Trust - provides for a specific purpose, such as the welfare
of a child with special needs, for education, or for charitable purposes
Given that a trust may continue after your death (up to a maximum of 80
years), it is often seen as having certain advantages over holding only wills
to deal with your assets and debts.
One purpose of a trust can be to provide for future generations. You may have
a family that you wish to provide for into the future and following your
death. A trust allows you to ensure any children, grandchildren or any other
person you so wish, can be provided with some benefit from the assets
transferred to the trust on the basis, for example, of reaching a certain age,
or attending a certain academic institute.
The distribution of assets held on trust may not be contested in the same way
that gifts under a Will may be under the Family Protection Act 1955.
may also be protected from being caught up in any relationship property
disputes with your spouse or de facto partner, depending on the timing of the
creation of the trust and the relationship specifics. This can make trusts a
good way of ensuring any children you may have receive any assets you intend
Another purpose of a trust can be to protect your assets from any liability
you may have as a Director of a company, in providing a guarantee or security
for the company. If you are considering forming or purchasing a company, then
transferring your personal assets to a trust can guard them from any possible
future problems with creditors.
By separating yourself from the legal ownership of your assets, they may no
longer be taken into account when it comes to calculating your entitlements to
certain benefits and subsidies that require asset testing, such as the
Residential Care Subsidy. There is no guarantee of this however.
It is important to keep in mind that your primary purpose for establishing a
trust must not be to transfer assets in order to defeat creditors or
spouse's/partner's claims, avoid asset or means testing or to avoid or reduce
your tax liabilities. Certain legislations prevent this, labelling the trust
as a "sham" trust. However, as noted above, there are benefits that flow from
having your assets held under a trust, but they must only be incidental to the
main purpose for setting up your trust.
If you buy a property at a mortgagee
sale, be aware that you are entering a contract that is quite different in its
nature to an agreement entered into in other circumstances.
The agreement is likely to be weighed heavily in the mortgagee's favour
because mortgagee sales involve factors outside of the mortgagee's control,
which it will want to protect itself from. This may include a very unwilling
and impecunious owner occupier who is being forced to leave their home by the
mortgagee that assisted them to get there in the first place. In such
circumstances the mortgagee is usually unwilling to negotiate terms with the
purchaser and adopts a take-it-or-leave-it stance.
It is not uncommon for purchasers to face difficulties after settlement, such
as having to evict a previous owner occupier or having to deal with damage
caused to the house by the disgruntled owner. In one instance the occupier
took all the chattels from the property and sold them to pay other sundry
debts, leaving the purchaser out of pocket.
Other common issues for purchasers at mortgagee sales can include:
* There is less protection for purchasers, as the agreement usually does not
include standard provisions. For example, the mortgagee will have removed the
section in the agreement relating to the vendor's warranties and will have
removed the right for the purchaser to approve title. Often purchasers will
not be able to view the property beforehand as the owner does not allow an
inspection, so it will not be clear whether work has been carried out that
should have required a permit.
* Purchasers may not be able to claim against the mortgagee for late
settlement/possession, as there may be situations where the mortgagee is
unable to evict the owner. The mortgagee does not guarantee that it will give
vacant possession on the day of settlement.
* The contract signed is an
unconditional contract and requires thorough due diligence prior to signing.
Even though a contract is unconditional, the terms may allow the bank to
cancel the agreement prior to settlement if the owner pays the debt. This
means the purchaser is unable to know whether settlement will actually occur
until the day of settlement.
* The mortgagee may require the purchaser to insure the property from the
moment the agreement is signed, because the mortgagee ceases to accept
responsibility for loss from the moment the hammer falls.
Buying a vacant property at a mortgagee sale reduces the chance of the house
and chattels being interfered with prior to, or after, settlement.
Mortgagee sales offer a chance to buy a cheaper property. To lessen the
chances of problems occurring you must understand the agreement well and
undertake a thorough due diligence investigation prior to entering into the
You should seek legal advice before the auction, as well as checking the
title, council records and the property in advance, if possible. There may
still be some issues that arise that are out of your control as purchaser.
The above is by no means an extensive list of the issues that a purchaser
could face, but it is a reminder to put your ducks in a row before putting pen
As of 1 April 2019, the Domestic
Violence - Victims' Protection Act 2018 ("the Act") came into force and is
applicable for employers and employees all around New Zealand.
Similar to an employee's rights to take bereavement/sick leave in a 12-month
working period, the Act allows employees who are victims of domestic violence
to take up to 10 days leave a year in order to deal with and attend to the
effects of domestic violence abuse that they have faced ("the Leave").
The victims will also be entitled to request short-term changes or variations
to their working situations, which may include a decrease in their working
hours, change of location or the types of duties undertaken. Any request for
short-term changes to their employment situation can only be requested for a
maximum period of up to two months. The employer must respond to any request
for short-term change(s) made by an employee within 10 working days of receipt
of the request.
The Leave can be taken for prior domestic violence happenings that occurred,
prior to the employee's current employment or within a specified period of
time prior to the request. On this basis, it can be used to deal with domestic
violence effects, no matter how long ago the abuse had occurred.
Leave may be taken on various occasions during any 12-month period, in
relation to recent or previous domestic violence incidents, and does not have
to be concentrated into one use per year. This allows victims to spread the
Leave out to deal with effects of one or multiple acts of domestic violence.
Should an employer deny an application for the Leave or short-term employment
changes, and the employee believes this denial is on unreasonable grounds,
then under the Act, the employee can make a complaint within 6 months of their
request to the Ministry of Business, Innovation and Employment (MBIE) or the
Human Rights Commission (if there are no internal processes).
The Act further protects domestic violence victims from suffering
discrimination in the workplace on the basis that they have or are assumed to
be domestic violence victims. This provision is further solidified in law by
its integration into the Human Rights Act 1993, as a form of discrimination
under the heading "adverse treatment in employment of people affected by
It is important to note that similar to many standard employment contracts in
New Zealand, the Leave can only be claimed if the employee has been employed
for at least six months (unless by mutual employer/employee agreement).
Furthermore, if the Leave is not taken during one year, the unused days are
not able to be 'rolled over' into the next working year.
Proving the domestic violence in order to gain the Leave is not yet specified
in the Act or in any case law. In the interim, it is likely that the Leave
would be treated in a similar tact as sick/bereavement leave, but this will
likely be clarified as the Act goes through its initial phases and issues
Employees and employers should equally be aware of these new laws to ensure
that they know their rights and obligations moving forward.
What is the purpose of a LIM report?
When purchasing a property, obtaining a Land Information Memorandum ("LIM")
report from the relevant council is strongly recommended.
A LIM report provides all the documents that a council has on records for a
property. Each LIM report contains different information, as some properties
may be new builds, while others are just sections or older homes etc.
Some examples of what could be found in a LIM report are:
* soil reports;
* whether resource consent and certificate code of compliance ("CCC")
have been obtained and issued;
* if there are any building works in the area currently being completed or
will be in the near future;
* when and how much your rates are;
* engineers report;
* if the property is located on or near a known archaeological site;
* if the property is in a flood zone or high wind zone; and/ or
* if the property is a known leaky home or has tested positive.
When can you access your KiwiSaver?
KiwiSaver was initially created to help people save for their retirement,
so the obvious answer for accessing your KiwiSaver funds is at age 65. But
under the correct circumstances, funds can be accessed earlier.
There are four circumstances under which you can access your KiwiSaver early,
1. purchasing your first home;
2. moving overseas permanently;
3. significant financial hardship; or
4. serious illness.
Remember that if you have received the $1,000.00 kickstart from the
government, these funds are required to remain in your KiwiSaver until you
reach retirement age.
For more information regarding the criteria which must be met to enable your
KiwiSaver funds to be released early, visit the
If you have any questions about the newsletter items,
please contact me, I am here to help.
Scannell & Co - 122
Queen Street East, Hastings
(06) 876 6699 or (021) 439 567 Fax: (06) 876 4114 Email:
information in this newsletter is to the best of the authors' knowledge true
and accurate. No
liability is assumed by the authors, or publishers, for any losses suffered
by any person relying directly or indirectly upon this newsletter. It
is recommended that clients should consult S J Scannell & Co before
acting upon this information.
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