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Covid-19: Should you continue to issue 14-day notices

Monday, March 30, 2020

Many landlords are understandably worried after stories like this emerged in the media over the last two weeks. On the one hand, landlords, by and large, understand renting is a human business. On the other hand, many landlords are frustrated by being excluded from most of the government's relief packages in light of Covid-19. Not to mention, rent arrear is a risk that is very present on landlords' minds especially in times like this when New Zealanders as a whole are facing unprecedented cash-flow challenges. 

So, what is the best way forward and can landlords continue to issue 14-day notices for arrears? 

While the COVID-19 Response (Urgent Management Measures) Legislation Act 2020 (2020 No 9) lifts the s55(1) termination threshold for arrears from 21 days to 60 days, it has left s56 unchanged. In short, yes landlords can still legally issue 14-day notices for arrears. Now that the issue of legality is dispensed with, it comes down to whether you should or shouldn't issue such notice for the duration of the COVID-19 Act. 

We suggest landlords take a compassionate and common-sense approach and consider the following: 

  • Your insurance policy requirements (especially those vis-à-vis loss-of-rent coverage); 
  • The nature of the tenancy relationship and your long term objectives vis-à-vis that relationship; 
  • Your cash-flow challenges weighed up against your tenant's cash-flow challenges; 
  • Consistency with your standard rent arrear protocol (for example, have you always issued an immediate notice when there is an arrear or have you always taken a more relaxed/personal approach to arrears);
  • The size of your portfolio and your risk appetite;
  • Your expectation of the rental market after L4 and how your property will fare in that market; 
  • Your ability to manage your tenant's emotions should they react badly to the notice. 
If on weighing all the considerations you elect to issue the notice then we suggest using this notice template. We suggest also for all landlords, if you haven't already, to get in touch with your tenant today to check on their well-being. The rental market is going to be facing a lot of unimaginable challenges in the coming months many of which can be managed if landlords and tenants work together as a team. The goodwill from a simple 'Hey, how are you and your family doing? These are tough times, please contact me if there is anything I can do to help.' in the early days of L4 will set the relationship on the right track. 

 

Remember there is no right and wrong answer for many tenancy issues during Covid-19. Be considerate, be thoughtful and think long term. 

 

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