Property briefs | Autumn 2020

Property briefs | Autumn 2020

There have been a number of developments around property investment by overseas investors and also on residential tenancies. 

If you are an overseas investor or a landlord, you should ensure you are up-to-date with the latest changes and/or proposals.

Update on Overseas Investment Act 2005

An overseas investor attempting to circumvent the requirements of the Overseas Investment Act 2005 has received the first criminal conviction under that legislation. In February 2020, Dr Won Joo Hur was fined $100,000 for falsely stating to the Overseas Investment Office (OIO) that a property was not purchased on his behalf and providing a false loan document to support his version of events.

The OIO continues to take civil enforcement action against overseas persons who do not seek consent for relevant land purchases. Since 2015, the OIO has successfully sought financial penalties in the High Court and required the disposal of property in a number of cases where the Act’s requirements were not met by overseas investors. In one such case, the High Court ordered civil penalties totalling $2,970,256[1].

These cases are a reminder that getting things wrong in this area can have serious consequences. It’s essential that you check whether you might need OIO consent for a purchase before entering into any Agreement for Sale and Purchase of Real Estate. Also, if there is any change to your company’s directors during the consent process, you must update the OIO. Otherwise, you risk delaying the consent process or there could be other penalties.

If you or your company have overseas connections, we can help with assessing whether your property purchase requires OIO consent and to work through the consent process with you.

Refresher on privacy rights for tenants

Privacy for residential tenancies continues to be a hot topic.

Recently a tenant was awarded $1,500 due to her tenancy being terminated in a retaliatory move by her landlord following a privacy breach by a tradesman. During bathroom renovations, the tradesman entered the tenant’s bedroom – reportedly to find out why some ducks were quacking outside the property. After the tenant refused to allow the tradesman to return to the property, the landlord terminated her tenancy. The Tenancy Tribunal ordered the landlord to pay compensation to his tenant as he had failed to provide sufficient instructions about which areas of the house the tradesman could/should not enter.

As a landlord, you must take care to avoid infringing your tenants’ privacy rights – either during the tenancy application process or throughout their tenancy. To help you navigate this area, we outlined some guidance around tenants’ privacy in the Spring 2019 edition of Property Speaking

Since we published that article, the Office of the Privacy Commissioner has re-released its privacy guidelines for landlords and property managers. The guidelines address questions such as:

  • When can you ask a tenant for a criminal record check?
  • What types of internet searches can you conduct on your tenants? 
  • What levels of information can you collect during the application process? 

The new guidelines can be found here.

Proposed residential tenancy changes

Following the passing of the Residential Tenancies Amendment Act 2019, further law changes are now proposed for residential tenancies. The government is currently considering introducing more protection
for tenants, including:

  • Prohibiting landlords from inviting tenants to offer to pay more than the advertised rent (a bidding war)
  • Increasing the minimum time between rent increases from 180 days to 12 months
  • Making it easier for tenants to make ‘minor changes’ to a property
  • Introducing a time limit on when landlords must provide Healthy Homes Standards information
  • Requiring landlords to permit fibre installation except in limited circumstances, such as when the installation will compromise the structural integrity of the property, and
  • Limiting the circumstances in which landlords can terminate a tenancy and removing landlords’ ability to terminate a tenancy without reason.

If you would like to put forward your views on the proposed changes in the Residential Tenancies Amendment Bill, public submissions must be made to the Social Services and Community Committee by 25 March 2020.

[1] Chief Executive of Land Information New Zealand v Hong [2019] NZHC 1561.

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