Twyford PhilRESIDENTIAL TENANCIES AMENDMENT BILL (NO 2)Second ReadingHon PHIL TWYFORD (Minister of Housing and Urban Development): I move That the Residential Tenancies Amendment Bill (No 2) be now read a second time.This bill was originally introduced to Parliament by the former Minister the Hon Dr Nick Smith in April 2017 and it was referred to the Governance and Administration Committee for consideration when Parliament resumed after the general election last year. Labour supported this bill at first reading because we believed that it had enough in it to make it worthy of consideration. But as I said at that time so much more needed to be done in the housing and rental market to address the housing crisis. The current Government has a comprehensive reform programme to address the rental crisis. We've set up the new Ministry of Housing and Urban Development to give Government in one ministry an end-to-end grip on the complexities and the full extent of the housing market.We're on track to deliver 100000 homes for first-home buyers over the next decade under the multibillion-dollar KiwiBuild programme by supporting developers to build more quality and affordable homes and connecting them with eligible KiwiBuild buyers. We're reforming the Residential Tenancies Act to modernise tenancy laws so that tenants can feel secure and at home in rental properties while protecting the rights and interests of landlords and we're consulting on the healthy homes standards to ensure that all rental properties are warm and dry. The coalition Government is focused on ensuring that residential tenancy rules are fair and clear and flexible. They need to allow landlords to protect their assets and tenants to live in safe environments and it's in this context that I turn now to the Residential Tenancies Amendment Bill (No 2).The main aims of the bill are first to clarify the law in respect of tenant liability for damage. Secondly it's to make sure that the Act applies to all premises that are intended for residential use even if they are unlawful for residential purposes. Third the bill sets out the rights and responsibilities that parties—both landlords and tenants—have in relation to contaminants and contamination. And this has special resonance at the moment because of all of the public interest in methamphetamine contamination.The bill was reported back in April this year and I want to thank the Governance and Administration Committee for its consideration of the bill. I think they've set a great example of what can be achieved through a collaborative and consensus-based approach and I thank them for this. I also want to thank those who have made oral and written submissions on the bill. Those submitters represented a very good cross-section of groups and individuals with an interest in the tenancy sector including tenants' rights groups landlords property investors property managers students' associations charities community groups and many individuals and the committee's report includes a number of very sensible recommendations that improve the bill.The biggest changes to the bill are in the contamination provisions. The bill's been amended to remove most references to methamphetamine and instead refers generically to contaminants. Broadening out the bill in this way I believe will still achieve the original intentions of the bill—to address the harm caused by methamphetamine as a contaminant—but it provides for a more practical and future-focused regime which contemplates the possibility of other toxic substances posing a problem for landlords and tenants.Any contaminant which is identified as a risk to health will be able to be dealt with by regulations made under the bill. Regulations will be able to set maximum acceptable levels for those contaminants and provide consistent and reliable testing and decontamination practices and they will ensure that testers and decontaminators are competent.The bill recognises that methamphetamine is a contaminant of particular seriousness. This means that once the bill is passed and the relevant provisions are commenced landlords will be able to exercise a right of entry for the purposes of testing for methamphetamine and specific methamphetamine regulations can be made.I've made no secret of my concerns about the unregulated nature of the meth testing and decontamination industry. Proper regulation is desperately needed to ensure that the cost and energy spent on testing and remediation in rental housing is proportionate to the actual risks. I do not condone methamphetamine use. It is an illegal and highly addictive drug it's causing massive social economic and health harm for individuals and communities and if a landlord suspects that there is a meth lab in a property they own she or he should approach the police. But for people living in rental houses in which methamphetamine has previously been used it's imperative that the regulations take into account actual health risks based on scientific analysis and ensure that testing and decontamination is only taking place where necessary and appropriate. Methamphetamine regulations will be made that will be legally binding and officials are working on this issue right now. I applaud the bill changes. They are practical and fair and allow for dealing with other harmful substances in rental properties which may be a concern in the future.I want to turn now to the tenant liability provisions. Under the bill a tenant is liable for damage caused by a careless act or omission up to the lesser of the insurance excess in relation to the rental property if the property is insured or four weeks' rent. For a tenant receiving an income-related rent subsidy—so that's 60000-odd Housing New Zealand tenants and several thousand other tenants in properties that are owned or managed by community housing providers—he or she will be liable for damage caused by a careless act or omission up to the lesser of the insurance excess in relation to the rental property if it is insured or four weeks' market rent applicable to the tenancy.During the select committee process some changes were recommended by the committee in response to submissions. Firstly submitters pointed out that tenants have a right to know the level of their liability for careless damage. They should not have to request this information. The bill will make it a requirement that if the property is insured new tenancy agreements must state this—the obligation of landlords to make transparent and inform the tenants about the insurance policy—and that must include insurance information such as the amount of the excess. If the property is not insured the landlord must include a statement to that effect. For tenancies existing at the time the bill comes into force landlords must disclose insurance information to tenants who request it. Where there are changes to an insurance policy which affects a tenant's liability a landlord must then inform the tenant of such changes. Failure to comply with these requirements will be an unlawful act with a maximum penalty of $500 and that is aligned with the penalty for non-compliance with the requirement to include an insulation statement in a rental agreement.So I think these changes have improved the bill. Knowledge about the liability will empower tenants to make appropriate decisions regarding their own circumstances and insurance and it will hopefully encourage them to exercise a high degree of care of their rental homes. Landlords should as a result of this provision be put in a cost-neutral position claiming the insurance excess from the tenant and the remainder of the costs of repair from the insurer. Tenants will remain fully liable for intentional damage or damage caused by an act or omission which is an impressionable offense or if their actions have made insurance money irrecoverable. These exceptions have not changed.Lastly the words for each incident" have been removed from new section 49B(3). These words were superfluous and confusing. The fact of the matter is that a tenant will be liable for each lot of damage caused by a careless act or omission or that of their guests and that is already clear in new section 49B(2).The final set of amendments relate to unlawful residential premises. No changes have been made through the committee process to these provisions which the submitters generally supported. The bill however amends the definition of residential premises to ensure that all premises which are used or intended to be used for residential occupation are covered by the Residential Tenancies Amendment Act regardless of whether they can be lawfully occupied for residential purposes. This confirms once and for all that the Tenancy Tribunal has full jurisdiction over all rental premises lawful or otherwise.The bill then sets out the orders the tribunal may make if premises are found to be unlawful for residential use. These are important amendments. They will ensure that the tenants are accorded the full suite of rights and protections of the Residential Tenancies Act and that the Ministry of Business Innovation and Employment can take appropriate compliance action against landlords who rent out unlawful rental properties.In conclusion I want to reiterate my thanks to members of the committee and submitters for their contribution to the Residential Tenancies Amendment Bill (No 2). The bill is stronger for their work. I commend this bill as reported back by the Governance and Administration Committee to the House."