COVID-19: Rent Increase Freeze and Tenancy Terminations
On Monday 23 March 2020 the Government announced a freeze to residential rent increases and greater protections for tenants against having their tenancies terminated. This has been applied as law through insertion of a new temporary Schedule 5 in the Residential Tenancies Act 1986 via the COVID-19 Response (Urgent Management Measures) Legislation Act 2020.
In the wake of COVID-19, it’s more important than ever to ensure that tenancies are sustained, and tenants do not have to face the prospect of homelessness during a global pandemic.
It’s also critical from a public health perspective that people self-isolate in their own homes by ensuring that they can remain in their rental properties for the duration of this crisis.
- There is now a freeze on rent increases.
- A rent increase notice from a landlord before 26 March 2020 will not have the effect of increasing a tenant’s rent during the period until 26 September. However, a rent increase notice given now can take affect after that date unless the temporary legislation is extended.
- Tenancies can not be terminated for three months from 26 March 2020, unless the parties agree, or in limited circumstances, regardless of when notice was given
- Tenants are still be able to terminate their tenancy as normal, if they wish.
- Tenants have the ability to revoke termination notices that they gave before 26 March 2020, in case they need to stay in the tenancy during the termination freeze.
Period of the measures
- The measures took effect on Thursday, 26 March.
- The rent increase freeze applies for an initial period of six months.
- The protections against terminations apply for an initial period of three months.
- At the end of both initial periods, the Government will evaluate whether they need to be extended.
What it means for landlords and tenants
Landlords and tenants will remain in place.
Protections against terminations
Landlords are unable to terminate existing tenancies unless limited and specific, justified, reasons apply. The Tenancy Tribunal acts as a check to ensure that the limited and specific termination grounds are being used lawfully.
These reasons include where the tenant:
- substantially damages the premises; or
- assaults or threatens to assault the landlord, their family, or the neighbours; or
- abandons the property; or
- engages in significant antisocial behaviour (defined as harassment; or any intentional act, if the act reasonably causes significant alarm, distress, or nuisance); or
- is 60 days behind in rent, which is increased from 21 days (and the Tribunal will need to take into account fairness and whether the tenant is making reasonable efforts to pay the rent)
Tenancies are also able to be terminated upon the death of a sole tenant, or where the premises are uninhabitable.
Tenants are still able to terminate tenancies as usual. If you’re a tenant and you’ve given notice yourself but now need to stay in your current rental property, you can withdraw your notice.
Fixed-term tenancies will convert to periodic tenancies upon the expiry of the fixed term, unless the parties agree otherwise or the tenant gives notice. This means that if your fixed term expires during lockdown, you’ll be able to stay in your tenancy.
Enforcement of the measures
The measures took effect on Thursday, 26 March. However, if a landlord had already given a rent-increase or termination notice that comes into effect after 26 March, this notice is of no effect.
If you are a tenant and you’ve been served a termination notice that comes into effect after 26 March, this notice is of no effect. Landlords can still terminate tenancies under limited grounds as set out in Schedule 5 of the Residential Tenancies Act (which was inserted by the COVID-19 Response (Urgent Management Measures) Legislation Act 2020).
If the Tribunal has made an order terminating the tenancy that will come into effect after 26 March, that order is suspended until the 15th day after the time period that the protections against termination apply (initially three months).
Penalties for breach of the measures
Increasing rent during the rent increase freeze or purporting to terminate a tenancy without grounds are new unlawful acts with the Tenancy Tribunal able to order exemplary damages of up to $6,500 in each case.
Boarding houses are also subject to the rent freeze and similar protections against terminations. However, in most cases a landlord is able to issue a boarding house termination notice in order to manage the safety and security of tenants in a shared boarding house tenancy. A boarding house landlord still needs to go to the Tribunal to terminate a tenancy because of rent arrears or anti-social behaviour.
Service tenancies are also subject to the rent freeze and termination protections. A landlord cannot terminate the tenancy merely because the employment has come to an end.
Role of the Tenancy Tribunal
Temporary Schedule 5 of the Residential Tenancies Act also provides that the Tenancy Tribunal has the power to hear matters on the papers, without attendance from parties, if necessary. The Tribunal is currently holding all hearings by teleconference. This amendment is to give the Tribunal some flexibility in its proceedings during this period. It will be up to the Tribunal how it manages this flexibility.
If you need financial assistance or emergency accommodation, you should talk to Work and Income. In the first instance, you can visit Work and Income's Emergency housing website.
CREATE: Level 2 - COVID-19 Tenants + Landlords Questions and Answers
This document is a series of questions and answers about the COVID-19: Residential Tenancies Act amendments around the rent freeze and tenancy terminations.
Published: May 26, 2020