Reforming the Tenancy Tribunal as applications increase

David Faulkner - General Manager | Property Brokers

Proposing Practical Reforms to Streamline Process

It was great to see the recent article in the Property Investor Magazine that I featured in looking at how we can reform and speed up the process of the Tenancy Tribunal.

Recent changes in the Residential Tenancies Amendment Bill have given the Tribunal authority to make decisions on applications without actually holding a hearing and basing their decisions purely on the evidence in front of them.

However, they are only applying this to hearings that do not involve termination of a tenancy and to cases where a landlord may have unlawfully entered the premises.

The issue here is that the vast majority of Tenancy Tribunal cases involve issues around rent arrears, so this change will have limited or no impact on the speed of the Tribunal.

Tenancy Services provides information on the number of applications made to the Tribunal. We get to see whether a landlord or tenant is making the application and categorising the disputes.

We can see that landlord applications are on the rise, predominantly due to rent arrears, which comprise approximately 80% of all landlord applications.

Source: Tenancy Services Data and Statistics. https://www.tenancy.govt.nz/about-tenancy-services/data-and-statistics/

The graph above shows that applications by landlords have increased back to pre-COVID levels. The significant drop from Q1 to Q2 in 2020 was because of the lockdown and emergency changes to the RTA to ensure that tenants could not be evicted due to rent arrears unless they were 60 days or more behind in rent.

As the cost of living and rising rents have affected everyone, this is reflected in the rising number of applications.

Interestingly, tenant applications have not increased.

We are seeing more complex applications by tenants and the involvement of more tenant advocacy groups. Expect this trend to continue, particularly as we surpass the Healthy Homes deadline.

Response times an issue

The rising number of applications strains the Tribunal's ability to hear cases quickly. Rent arrears can soon blow out if a dispute is unresolved within the first four weeks.

This impacts both landlords and tenants in negative ways. Landlords are out of pocket and may struggle to service a mortgage, whilst tenants risk their home and its impact on their credit rating and the prospect of finding a new property.

It is in everyone's interest to speed up this process.

A solution I have previously tabled is to make rent arrears only decisions without needing a hearing. This would exponentially speed up the wait time for hearings.

You have to remember that the Tenancy Tribunal is a form of dispute resolution. In most rent arrears only cases, there is no dispute. If a tenant withholds rent due to a landlord allegedly breaching the contract, then an in-person hearing will occur.

However, if there is no dispute and decisions are based on evidence, then why bother having a hearing when the tenant has already gone and will not turn up in most cases?

All the landlord needs to do is provide evidence, such as a signed Tenancy Agreement to confirm the start date of the tenancy, as well as a rent summary and any 14-day breaches they may have sent.

This would be enough evidence for an adjudicator to seal an order to end the tenancy.

The tenants will be notified of the claim and allowed to put forward their case before making the decision. Once the order is sealed, the tenants can still seek a rehearing if a substantial miscarriage of justice has occurred.

Landlords and tenants have five working days to do so after the Tribunal's decision. The Tribunal order can also reflect this by not granting possession to the landlord until those five working days have expired.

One day, we may see Artificial Intelligence replace adjudicators, and that would really speed up the process.

However, that is unlikely to happen anytime soon, and just thinking about the possibility of that happening is somewhat surreal!

So, with that in mind, let's look at some practical solutions to speed up the process so that it is fairer for both parties. Amend the law to allow termination of tenancies but only in rent arrears only cases.