New Rental Property Laws

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Landlords – are you up to date with the new rental property laws? New laws came into effect on 1 July 2016 affecting minimum standards for rental properties.

In particular, properties are required to have minimum standards of insulation and smoke alarms. The requirements relating to smoke alarms apply from 1 July 2016. The requirements regarding insulation are phased in and apply initially to subsidised rental housing. In due course all rental housing will be required to comply by 2019.

Do the laws apply to rental properties sold or purchased?

To a degree, these changes will have no effect on house sales. It will not be an offence to sell a house without insulation or smoke alarms, and the sale can simply proceed. However, sensible purchasers will be wise to ensure that any house purchased for the purpose of renting meets these requirements.

What if a rental property doesn’t comply with the new laws?

While it is correct to say there is no technical effect on a house purchase, the regulations will have a significant impact and they cannot be ignored. Leaving aside the simple truth that an insulated house with working smoke alarms is a better, more desirable and safer house, it will be an offence to rent out a house without these in place. Tenants will have remedies under the Residential Tenancies Act, fines can be imposed and a smart tenant can use breaches to avoid their obligations.

The effects of non-compliance on insurance and lending

What this means is that a failure to have a working smoke alarm in a rental property may well invalidate an insurance policy. If a landowner makes a claim for fire damage, an insurance company will rightly ask if smoke alarms were installed. If they weren’t then claims might be denied. More generally, if there aren’t smoke alarms installed then an insurance company might simply refuse to insure a property or will restrict the cover available. If the house can’t be insured then banks won’t lend.

Thinking of buying a rental property?

A prudent purchaser buying a property to rent will need to check for themselves and their bank that the property complies with the rules. To do this, a specific clause could be inserted in the agreement for sale and purchase requiring compliance, or the purchaser could rely on their own investigation and checking, or on a building inspection clause.

If you’re considering purchasing a property to rent, talk to us today. We can offer specific advice about the best way to protect your interests.

Thomas Biss is a director of Henderson Reeves, and oversees Smart Move Conveyancing, as well as leading Henderson Reeves’s commercial law team.

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