This Supplementary Order Paper (SOP) proposes amendments to the Residential Tenancies Amendment Bill (No 2) (the Bill), which amends the Residential Tenancies Act 1986 (the principal Act).

Amendments to clause 2 mean that—

• many provisions will now come into force 28 days after Royal assent, including—

  • most of Part 1:

  • the provisions in Part 2 that give the landlord a right of entry into premises and boarding rooms to test for the presence of contaminants and require the landlord to provide the tenant with testing results (including where boarding house shared facilities are tested):

• the provision for most of Part 2 to come into force by Order in Council is continued, but the long-stop date (on which any provision that is not brought into force earlier automatically comes into force) is extended to 18 months after Royal assent. This reflects changes to the regulation-making powers relating to contaminants and the anticipated time needed to make regulations:

• a few provisions will come into force on the day after Royal assent, including—

  • clause 4A(1AAA) and (1AAB), which relates to clarifying the number of times that the landlord needs to sign the tenancy agreement:

  • clause 37, which inserts regulation-making powers relating to contaminants and a provision relating to the power to set healthy homes standards (which will be inserted into the principal Act by the Healthy Homes Guarantee Act 2017 on 1 July 2019):

  • the transitional provisions in the Schedule.

Amendments in this SOP to Part 1 of the Bill—

• relate to the landlord’s obligation to provide the tenant with information about the insurance of the premises that is relevant to the tenant’s liability for destruction of, or damage to, the premises; and

• relate to the tenant’s liability for destruction of, or damage to, the premises; and

• make other small and technical amendments.

The main changes relating to the landlord’s obligation to provide insurance information to the tenant are in clauses 4A, 6, and 14.

This SOP does not change the general proposal that, if the premises are not insured, the landlord will be required to state that in the tenancy agreement (except for a change for some social housing provider tenancies on a transitional basis—see notes below on new clause 19 of Schedule 1AA, inserted by the Schedule). However, if premises are insured, amendments to clause 4A, new section 13A(2) require the landlord’s statement in the tenancy agreement to set out the amount of the relevant excesses under each relevant insurance policy, and (unless the landlord has already provided the tenant with a copy of the policy) the statement in the tenancy agreement must also inform the tenant that a copy of the policy is available on request. If anything changes so that the insurance information provided is no longer correct, the landlord must provide the correct information in writing to the tenant within a reasonable time of the landlord becoming aware of the change, and failure to do so will be an unlawful act.

New clauses 6 and 14 follow on from new section 13A(2), amending sections 45 and 66J to require the landlord to provide the tenant with a copy of the insurance policy if requested and to correct the information provided if anything changes (within a reasonable time of becoming aware of the change). Again, failure to do so will be an unlawful act.

Clause 23(1) is amended to provide for the new unlawful acts under sections 45 and 66J referred to above.

The main change relating to the tenant liability provisions of the Bill is in clause 7, where new section 49B(1)(c) is deleted. New section 49B(1)(c) provided that a tenant was not excused from liability for damage to, or destruction of, the premises in situations where any insurance moneys that would have been payable were irrecoverable because of an act or omission of the tenant or a person for whom the tenant was responsible. Its deletion means that the tenant’s liability for damage or destruction caused carelessly by the tenant or a person for whom the tenant is responsible will generally be limited to a maximum of 4 weeks’ rent (or 4 weeks’ market rent, if the tenant pays an income-related rent). However, there will still be some situations where that limitation will not apply, such as where the careless act or omission is also an act or omission that constitutes an imprisonable offence and occurs on or about the premises.

Related amendments are made in new section 49B(3A)(a) and to new section 49B(7)(a)(iii).

Also in clause 7, new section 49B(3A)(b) is inserted to cross-refer to new clause 19 of Schedule 1AA (which will be inserted by the Schedule of the Bill). See notes below on the effect of that new clause.

In clauses 5 and 15, small changes have been made to more clearly point to the tenant liability provisions relevant to contraventions of section 40(2)(a) or 66K(2)(a).

Technical amendments are made that relate to the timing of the Bill and the fact that provisions of the Healthy Homes Guarantee Act 2017 will come into force on 1 July 2019 amending some of the same provisions of the principal Act as are amended by this Bill. These technical amendments are found in clauses 4(3), 4A(1), and 23(1AA), and clauses 23A and 39 are consequentially deleted.

Technical changes are made to section and clause numbering in clause 22 and the Schedule, consequential on provisions now added to the principal Act by the Residential Tenancies (Prohibiting Letting Fees) Amendment Act 2018.

The change made in clause 4A(1AAB) clarifies the number of times a landlord needs to sign the tenancy agreement, and clause 4A(1AAA) is related.

Part 2 of the Bill enables, among other things, the prescribing of levels at which premises became contaminated and different testing methods and decontamination processes for different levels of contamination. Amendments in this SOP to Part 2 of the Bill include amendments that—

• enable levels of contamination to be prescribed relevant to determining whether damage by contamination is so serious as to cause premises to become uninhabitable for the purposes of new section 59B. See clause 37, new section 138C(1)(aa), and clauses 29A to 30:

• require a landlord to comply with all requirements in respect of contaminants imposed by regulations made under new section 138C(1)(ab). The requirements that can be imposed relate to the circumstances where premises must be tested, testing methods, and decontamination processes. See clause 26(1AA), new section 45(1)(bd), and clause 32A(1), new section 66I(1)(bc) for boarding house tenancies:

• protect a landlord who complies with those prescribed requirements from liability to the tenant, for example, for not having provided the tenant with clean or habitable premises, if it is later discovered that a contaminant is, in fact, present at the premises (whether at contamination level or lower). See clause 26A, new section 45A and clause 32B, new section 66IA:

• extend the obligation formerly proposed by new section 45(1AA) (now new section 45(1AAB)(a)), which requires a landlord not to provide the tenant with premises the landlord knows to be contaminated. Former new section 45(1AA) would have applied only at the start of the tenancy; the amendments extend the obligation to a situation where a landlord discovers, during a tenancy, that the premises are contaminated. If the tenancy is to continue, the landlord will be required to decontaminate the premises (unless, in the case of tenancies other than boarding house tenancies, and as is the case for other damage, the contamination results from a breach by the tenant). Decontamination would need to be in accordance with a prescribed process. See clause 26(1) and (3), new section 45(1AAB)(b) and amendments to section 45(3) and (4) (and see clause 32A(2), new section 66I(1B)(b) for boarding house tenancies).

Clause 27 amends section 48 of the principal Act, which relates to the rights of entry of a landlord (other than the landlord of a boarding house). The amendments to clause 27 provide the landlord with a specific right of entry for the purpose of decontaminating premises and ensure that, if a decontamination process is prescribed, 1 notice period would apply for all aspects of that process (including any pre-decontamination assessment and testing prescribed as part of that process). The notice period of at least 24 hours before the intended entry is consistent with the existing notice period under section 48 for carrying out necessary repairs.

In clause 34, technical amendments ensure that, if a landlord gives notice to enter a boarding room to test for contaminants, the tenant is told which contaminants are being tested for, regardless of whether the testing is being done because regulations require the landlord to test or because the landlord has chosen to test.

Clause 30 inserts new section 59B into the principal Act. New section 59B will apply in respect of contaminants, in place of existing sections 59 and 59A (which relate to premises that become uninhabitable due to damage or destruction), if regulations prescribe the level of contamination above which premises become uninhabitable and testing by a prescribed method establishes contamination above that level. New section 59B will generally treat premises that test above that maximum habitable level as wholly uninhabitable except where the contamination is not caused by landlord or tenant breach and is only established, above that level, in a physically separate or closed part of the premises (so as to be likely to prevent spread) that is inconsequential to the tenant’s use of the premises as a residential tenancy. New section 59B, which is to some extent modelled on existing sections 59 and 59A, sets out, for example, who can give notice terminating a tenancy, the period of notice, and when the rent abates.

Clauses 28, 29, 29B, 31, and the amendment in clause 29A are consequential and related to clause 30, new section 59B.

Clauses 30A and 33 contain minor drafting clarifications.

Clause 36B amends section 78 of the principal Act, which sets out orders that the Tenancy Tribunal may make in relation to disputes between landlords and tenants. These orders include work orders. A work order is an order requiring work (for example, repairs) to be carried out at premises. If the Tenancy Tribunal makes a work order, section 78(2) requires or permits (depending on whether the work order is made by consent) the Tribunal to make an alternative order requiring a party to pay money to the other. The amendment disapplies section 78(2) in cases where the work order relates to decontamination.

Clause 37 is now expressed as replacing section 138C of the principal Act (which will be inserted into the principal Act by the Healthy Homes Guarantee Act 2017 on 1 July 2019). The replaced provision is replicated (with changes referred to below), as new section 138D, at the end of clause 37. New section 138C to be inserted by this Bill contains regulation-making powers relating to contaminants. Some of the amendments in this SOP to new section 138C are discussed above under the heading “Part 2—Contamination and new landlord obligations”. Other amendments include amendments that—

• reflect that decontamination processes may be needed for various purposes under the Act (for example, for premises or parts of premises, or for dealing with goods left on abandoned premises):

• allow rules to be made about how premises are to be decontaminated around a sitting tenant (for example, time frames for beginning and completing a decontamination process):

• remove the formal requirement for the Minister to have regard to the relevant New Zealand Standard before recommending the making of regulations under new section 138C(1):

• make plain that different regulations may be made to respond to different ways in which premises, or different aspects of premises (such as surfaces), may have or may become contaminated (for example, in the case of methamphetamine, through use or manufacture):

• define premises for the purpose of the section. A reference to premises in relation to a boarding house tenancy already includes the facilities of the boarding house; however, new section 138C(4) makes it clear that premises, as used in new section 138C in respect of tenancies other than boarding house tenancies, also includes facilities. This is consistent with various obligations of the landlord (for example, under section 45).

The amendments in new section 138D relate to the power to set healthy homes standards that will be inserted into the principal Act by the Healthy Homes Guarantee Act 2017 on 1 July 2019, and allow the healthy homes standards to provide that regulations in force under section 120C of the Health Act 1956 (in particular, the Housing Improvement Regulations 1947) do not apply in relation to premises that are subject to residential tenancies. (Note that the reference in new section 138D(2) to section 138B(7) is a reference to new section 138B(7) that will be inserted, on 1 July 2019, into the principal Act by section 6 of the Healthy Homes Guarantee Act 2017.)

Clause 38(2) reflects the fact that the landlord failing to comply with prescribed requirements in respect of contaminants will be an unlawful act. The maximum amount that a landlord may be ordered to pay as a sum in the nature of exemplary damages for a breach of any of these contamination obligations is $4,000. This is the same maximum amount that a landlord may be ordered to pay for an unlawful act that is a breach of the landlord’s other obligations under section 45(1) (or boarding house equivalent sections), for example, obligations in relation to cleanliness or maintenance. Clause 38(1) is amended, consequential to other changes made to clause 26 and by the insertion of clause 32A.

In the Schedule of the Bill, which inserts new Part 4 into Schedule 1AA of the principal Act,—

• technical changes are made to the Part and clause numbering, given the passage of the Residential Tenancies (Prohibiting Letting Fees) Amendment Act 2018:

• new clause 16(2) is a consequential insertion relating to new clause 19.

The main change to the Schedule is the insertion of new clause 19. New clause 19 applies in circumstances where—

• Housing New Zealand Corporation or a registered community housing provider (the housing provider) is the landlord of residential premises that the housing provider itself leases from someone else under a Property Law Act 2007 lease that was entered into before the coming into force of clause 4A of the Bill, including under a renewal of that lease; and

• the housing provider does not have a right to require its landlord to provide it with the necessary insurance information.

If new clause 19 applies,—

• new sections 13A(2) to (4), 45(2B) to (2D), and 66J(5) to (7) (which relate to the provision of insurance information) are disapplied; and

• the tenant’s liability limit under new section 49B(2) (which relates to the tenant’s liability for careless acts or omissions) will be an amount of 4 weeks’ market rent (if the tenant pays an income-related rent) or otherwise 4 weeks’ rent under the tenancy agreement.

New clause 20, inserted by this SOP in the Schedule, provides a short transitional provision needed for where new clause 19 ceases to apply and the tenancy agreement is continuing.