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Employment

Big changes coming to holiday pay

Business, Employment, Employment Law, Holidays Act, Legislation, Workplace Regulation
0

Employment Leave Act 2026 comes into force in 2028

The Employment Leave Act 2026 became law on 6 August 2026. It heralds the biggest changes to the administration of employee leave since the Holidays Act was passed in 2003, more than 20 years ago. The legislation, however, is not due to take effect until 6 August 2028, so there is plenty of time for employers to prepare.

 

Why is it changing?

The current system has proved to be complex and especially challenging to apply to employees who have variable working hours or variable pay through commissions. This has led to a number of well-publicised instances of large public sector organisations having incorrectly paid a large number of their employees for their leave over a substantial period. It is likely that this has happened in the private sector as well.

The situations which have occurred in the public sector have garnered more publicity, given the transparency that applies to public sector organisations.

For example, Health New Zealand, that took over from the 24 former district health boards, is currently going through a complex process of identifying and correcting errors with holiday pay dating back to 2010. Health New Zealand has budgeted $1.8 billion to make up previous short payments to its staff for leave. It is also spending tens of millions of dollars on the investigative and administrative work associated with identifying and correcting these errors.

 

What is changing?

The fundamental change to be introduced is a switch to calculating leave on an hourly basis. The Act also distinguishes between ‘standard hours,’ ‘additional hours’ and ‘casual hours.’ Broadly, ‘standard hours’ are an employee’s ordinary hours, while ‘additional hours’ are hours worked beyond those standard hours. ‘Casual hours’ are hours worked by a casual employee. The legislation retains the ability for an employment agreement to state that an employee’s salary covers all hours worked.

The general rule will be that annual leave will accrue at the rate of 0.0769 hours for each hour worked. Sick leave will accrue at the rate of 0.0385 hours.

Other significant changes include:

  • Employees will accrue both annual and sick leave as soon as they begin working. They will no longer have to work for a year before being entitled to annual leave and six months before being entitled to sick leave
  • Employees will only accrue annual leave for their normal working hours. They will not accrue leave for any additional hours worked. Instead, they will receive an immediate payment of 12.5% of their normal hourly rate for all qualifying hours worked in excess of their normal working hours
  • Employees will be able to take both annual and sick leave on an hourly basis. They may take one or two hours off work for a medical appointment. Under the current law, technically, they may be required to take a full day’s leave for this
  • Both annual and sick leave will accrue when an employee is on paid leave or any unpaid leave authorised by any legislation, including parental leave. Leave will not accrue, however, when an employee is receiving accident compensation support
  • An employee will accrue additional leave for each hour that they work on a public holiday if that day is a normal working day for them, and
  • Employers and employees will be able to agree for employees to ‘cash out’ up to 25% of the value of the annual leave. At present, the limit is one week’s leave.

 

What do you need to do now?

As an employer, there is nothing that you need to do immediately. The legislation does not come into effect for two years. In the meantime, however, you need to ensure that your payroll system can handle the changes when they come into effect.

Payroll software providers are aware that they must update their software to enable it to implement the new system when it comes into effect.

Watch out for communications from your payroll software provider. You should also bear the upcoming changes in mind if you are considering changing your payroll system.

You must also update the leave provisions in your employment agreements. The Act allows employers a further year after the legislation comes into force on 6 August 2028 to ensure that all employment agreements are updated.

Employers must continue to comply with any provisions in their employment agreements that are more favourable to employees than the Act during this first year. The minimum statutory terms will override any employment agreement that remains unchanged at the end of this period.

If you need guidance on updating your staff’s employment agreements, or any other aspects of this new legislation, please don’t hesitate to contact us.

 

 

DISCLAIMER: All the information published in Commercial eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Commercial eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Content Copyright © NZ LAW Limited, 2026.    Editor: Adrienne Olsen.       E-mail: [email protected]      Ph: 029 286 3650

Disputes arising out of a first job

Dispute Resolution, Employment, Employment Law, Legal Guidance, Personal Grievances, Workplace Rights, Youth Law & Guidance
0

Sally met up with her sister Samantha and her niece Sarah for coffee at a local café. Sally was excited to see Sarah, as she had recently landed herself her first weekend job working as a waitress in another café in town. Sarah, normally bright and chatty, barely looked up when Sally arrived.

Sally gently asked Sarah how things are going and whether she is enjoying her new job. Sarah quietly answered that she no longer worked at the café. She explained that even though she really enjoyed working at the café, her boss didn’t give her a written employment agreement recording the terms of employment that they agreed on, he never paid her, and he didn’t give her copies of her timesheets when she asked for them. Sarah was too embarrassed to keep asking her boss to give her the documents and to pay her, because he made her feel like she was annoying him and wasting his time. She started feeling really uncomfortable at her job and eventually just stopped going in and she hadn’t heard from her boss since.

Clearly annoyed by Sarah’s work situation, Samantha said that she was going to post about the café and their poor treatment on the local grapevine page.

Sally recalled an article written by Edmonds Judd dealing with defamation and recommended that Samanatha and Sarah rather set up a meeting with her lawyer at Edmonds Judd to get advice on how to resolve the issue.

The team at Edmonds Judd confirmed that Sarah is entitled to all of the basic rights that protect employees, regardless of her age and that this was her first job. Sarah’s boss breached the terms of her employment agreement.

Sarah’s boss was required to:

  • provide her with a written employment agreement;
  • pay her according to the agreement which should provide her hourly wage, frequency of pay and method of pay;
  • keep records in a written form showing for example: time records (including days and hours worked), wage records (including wages paid and how the wages were calculated), and holiday and leave records;
  • record Sarah’s age in his usual wage and time records; and
  • provide Sarah with copies of her employment records if requested.

The team at Edmonds Judd explained to Sarah that given her age and limited time working for her employer, she is entitled to the starting-out minimum wage, but that the parties should have recorded her hourly rate and terms of payment in her employment agreement.

Even though a couple of weeks had passed since she left her employment, she had the right to approach her boss about her dispute. Employees must raise their personal grievance with their employer within 90 days of the issue arising or coming to their attention. If she can’t resolve her dispute with him directly, she is entitled to apply to the Employment Relations Authority for assistance to resolve the dispute.

Her lawyer explained that the first step is to give her boss a written letter setting out what her personal grievance is and how she suggests that the parties resolve it. If communicating with her boss directly does not resolve the matter, then she can apply to the Employment Relations Authority.

Kristin O’Toole

GST and land transactions

Business & Investment, Commercial, Employment, Estate, Fair Trading, Financial Services Regulation, First Job
0

Understanding your tax obligations

 

If you are buying or selling land (with or without a home on the section), it is important to have an accurate understanding about your tax obligations and whether GST will be applicable to your transaction.

GST is not typically applicable in residential sale and purchase transactions but, if you are GST-registered and the sale is part of your taxable activity, GST may apply.

Potential GST outcomes

If the buyer and seller are both GST-registered, the transfer of land is part of a taxable activity (for example: farming, or a commercial building), and the property is not used as a private residence, the transfers are typically zero-rated for GST (meaning GST is charged on the transaction at a rate of 0%).

If the buyer is GST-registered and the seller is not GST-registered, and the buyer intends to use the land as part of a taxable activity, the buyer may be able to claim GST.

If the seller is GST-registered (and claimed GST) and sells the land to a buyer who is not GST-registered, or does not intend to use the land as part of a taxable activity, the seller may need to return GST to Inland Revenue following the sale.

There can be additional complications where some part of the property is used for private purposes, and some part is used for a taxable activity. In this instance, some of the purchase price may be subject to GST, but some part of it may not.

Warranty as to GST status

The standard sale and purchase of real estate agreement contains a statement on the front page – ‘the vendor is registered under the GST Act in respect of this transaction and/or will be so registered at settlement.’

If you are GST-registered and the sale is a taxable supply, you will need to complete schedule one in the agreement. As a seller, you will need to tick either ‘yes’ or ‘no’ to this statement. You must provide a warranty that the answer you provide is correct and will remain correct as at settlement. If it later transpires that your answer was incorrect, you have breached a warranty and could be liable to the buyer for any losses they have suffered because of this breach. For example, if you provided a warranty that you were not GST-registered in relation to the transaction, the buyer may presume that they may claim GST from Inland Revenue following settlement if they will be GST-registered and intend to use the property for taxable supply. If you were, in fact, GST-registered, the buyer will not be able to do that, therefore you may be required to reimburse 15% of the purchase price to the buyer due to your breach of warranty.

If you are the buyer, the agreement contemplates your GST status potentially changing throughout the transaction. For example, you may initially sign the agreement in your personal name (and you are not GST-registered) and later you nominate a GST-registered company to complete the purchase.

The purchase price will be expressed as either ‘plus GST (if any)’ or ‘inclusive of GST (if any),’ which dictates how much you need to pay on settlement, depending on your GST status. It should be clear to all parties whether the buyer will be GST-registered on settlement date, as this can have GST implications for both parties.

Purchase price allocation

If GST is applicable to the transaction, you should consider whether you should agree with the other party on a purchase price allocation; completing a purchase price allocation is highly recommended in some situations since GST may be claimable on some items, but not others.

If the buyer and seller agree on a purchase price allocation in the agreement, this allocation must be used by both the seller and buyer when completing their respective tax returns. This provides certainty to both parties. The purchase price allocation can therefore have tax consequences for both buyer and seller, so it is important to get accounting advice on this allocation before signing the agreement.

Where to from here?

If GST is (or may be) applicable to your transaction, it is important that you get legal and accounting advice before signing the agreement. A mistake in the agreement cannot always be fixed by your professional advisers after signing; it could result in an unexpected GST bill, which can be very costly. We and your accountant will work together to ensure that the sale and purchase agreement accurately reflects your GST position and that you fully understand any potential tax consequences before signing the agreement.

 

 

 

 

[1] Purchase price allocation is where the price is allocated between the land and any buildings, and other fixtures, fittings, chattels or improvements.

DISCLAIMER: All the information published in Property Speaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Property Speaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

 

Life Stage – First Home

Economy & Finance, Employment, Estate, House, Media, News, Online, Uncategorized
0

It felt like Bob’s life had been turned upside down. Not only had his father, Steve, passed away recently leaving him upset and overwhelmed, but his burger bar business was also struggling. Bob had put all his life savings into his burger bar, which he opened 6 months prior. Further adding to the stress, Bob currently did not have a home. He had been couch-surfing at friends places while he saved up enough to rent a place of his own.

 

After a few difficult months, Steve’s estate was finally settled. As one of the beneficiaries, Bob received a substantial inheritance. Though the money offered some relief, Bob knew he needed to use it wisely. His first step: finding a home. He realised that in order to take care of his business and himself, he needed a stable place to live and rest, putting him in a better frame of mind to make smart business decisions.

 

As Bob now had more funds than he had expected to receive from years of working, he decided this was the right time to buy a property rather than rent. He browsed listings on local real estate websites and soon found a small, tidy place in a quiet neighbourhood—within his budget and close to his burger bar.

 

He decided to call his lawyer and ask for the things he should consider before making an offer. His lawyer guided him through several key considerations:

 

  1. Conditions in the Sale and Purchase Agreement: He needed to decide whether he wanted to include conditions in the agreement. He already had the funds available for the purchase so he did not need to make it conditional on finance. Bob did not realise that he could also include other conditions such as a LIM report, builders report, and toxicology report. Bob decided to include each of these as it was better to make sure there were no big issues before being locked in a deal.

 

  1. KiwiSaver: If Bob has KiwiSaver funds, he would need to fill out an application to withdraw the funds from his provider. He would need a solicitor to witness him signing this as it could not be left until the last minute.

 

  1. Insurance: The lawyer stressed to Bob the importance of checking he could obtain insurance cover for the property prior to going unconditional. Also, if there were any issues under the builders report / LIM report / toxicology report, he would need to disclose said issues with his insurer.

–

  1. Relationship Property: Bob had not had the time to date with everything going on but was made aware to obtain advice in this regard once he had a partner in the future.

 

Bob took all the advice into consideration and obtained all recommended reports. Within weeks, his purchase when unconditional, and weeks after, settled.

 

Bob was beyond happy, he now felt as though he had the stability he had been searching for. This feeling lasted only a few minutes though as Bob was about to receive a call in relation to his business that would change everything…

 

 

Macayla Brdanovic 

 

 

Estate Planning and the Unexpected: A Family Law Story

Employment, Estate, Health Issues, House, Latest news, Social Media, Trusts
0

A tear trickled down Luke’s face as the hearse carrying his late father, Steve, drove away from the funeral home and down the road. It had been a beautiful service and his brother Bob, who owned a burger bar, provided some excellent catering. Steve had been a wonderful father, and had prepared for this moment by getting his Will and Enduring Power of Attorney sorted out nice and early.

As Steve’s executor, Luke immediately set about administering his father’s estate. It was an immense job, so he enlisted the assistance of Edmonds Judd. They met with him and explained the administration process and gathered from him an idea of Steve’s assets and liabilities. They applied to the High Court for Probate and contacted the banks, insurers and real estate agent on Luke’s behalf. They found the odd liability, such as a small credit card debt, and closed any outstanding accounts.

Luke was relieved. This was starting to look easy!

He put down the phone after talking to his helpful solicitor and poured himself a nice cup of tea. Then, just as he was sitting down, he heard a knock on the door.

“Who could that be?” he wondered aloud. He wasn’t too surprised, as he had had many callers recently offering their condolences. He was surprised however, to open the door to see himself staring back at him. Luke blinked in surprise.

“Luke”, the doppelganger said. “I am your brother. Your long-lost twin brother, as a matter of fact. I was adopted when we were just babies. I’m guessing from the look on your face that Steve never told you?”

Luke was shocked. The stranger was indeed identical to him, right down to the freckles on his nose and the way he turned up the cuff on his jeans. The stranger continued.

“My name is Han, and it’s nice to meet you. Listen, I know this is awkward timing, but my understanding is that Steve left behind a sizable estate. I’m going to need to some of that money, as I have significant gambling debts I need to pay off. That won’t be a problem, right? After all, it’s only right that I get a slice of the pie”.

Luke invited Han in for a drink, and pondered what to do next. Once Han had taken a few old photos of Steve and left, Luke picked up the phone and called his solicitor back, explaining the whole thing. His solicitor was very helpful.

“You see Luke, sometimes children who are left out of their parent’s Will can make a claim under the Family Protection Act 1955. The law says that parents have a moral duty to provide for their children. However, because Han was adopted out as a child, he won’t be able to successfully make a claim. The Adoption Act 1955 changes the legal relationship between adopted child and birth parent. Steve did not have to provide for Han in his Will”.

“I don’t know,” said Luke. “Is it really fair that Han not get anything out of the Estate?”

“Well, if you and the other beneficiaries of the Estate feel that way, you can enter what’s called a Deed of Family Arrangement”. It would record that the beneficiaries have come to an agreement to do something different to what’s in the Will, and that would allow us to make a distribution to Han. You would need to get all of the beneficiaries to agree, though”.

Luke thanked his solicitor and hung up the phone. He had a lot to think about. He decided to give his brother Bob a call, to see what he thought. But Bob was having his own problems at his burger bar…

 

Jamie Graham

Firearms reform 2025

Commercial, Employment, Health Issues, Latest news, Media, News
0

Government considers current legislation to be outdated and overly complicated

The government is currently undertaking a comprehensive reform of our firearms laws; it aims to modernise the Arms Act 1983 which it considers to be outdated and overly complicated. The overhaul is the fourth phase of a commitment to reform the firearms regulatory system following on from three previous phases implemented after the 2019 Christchurch mosque shooting.

Public consultation on the proposed changes took place earlier this year.

 

Proposed changes

Key proposals include:

  • Rewriting the Arms Act 1983 entirely to create a more coherent and effective legislative framework that balances public safety with the rights of lawful firearms users
  • Strengthening Firearms Prohibition Orders, expanding the criteria and allowing the courts to impose Orders on gang members and associates convicted of drug, firearms or violent offences
  • Reviewing the Firearms Registry to assess its effectiveness and identify areas for improvement. The government aims to ensure it is promoting public safety without imposing unnecessary burdens on lawful firearms owners
  • Transferring the Firearms Safety Authority (to be renamed the Firearms Licensing Authority) from the responsibility of New Zealand Police to the oversight of another government entity. The government believes this will enhance independence and effectiveness of firearms administration, and
  • Amending the regulations of shooting clubs and ranges to ensure their facilities are operating safely and compliantly while supporting legitimate activities of firearms enthusiasts.

 

Potential benefits

The proposed reforms have several potential benefits, including:

  • Improved public safety with stricter controls and strengthened Firearms Prohibition Orders
  • Better regulation and oversight to modernise outdated laws
  • More effective firearms licensing through an independent Firearms Licensing Authority, allowing police to focus their resources more on illegal firearms and gang-related gun violence rather than administrative licensing work
  • Enhanced gun owner responsibilities through increased requirements for safe storage, record-keeping and reporting, and
  • Stronger measures against gun trafficking through stricter background checks, licensing and a well-regulated system.

With each benefit, however, shortcomings follow. Potential drawbacks include:

  • Possible overreach and bureaucracy leading to inefficiencies, delays and higher administrative costs
  • Limited impact on criminals and gangs given most gun crimes involve illegally obtained firearms, unaffected by strict laws. Police unions have expressed concerns that moving licensing away from the police could weaken police ability to monitor gun-related crime
  • Compliance challenges, with some gun owners struggling to comply with new laws due to lack of awareness or financial barriers, such as affording secure storage or meeting new licensing requirements
  • Potential for unintended consequences, such as over-regulation leading to more non-compliance or a larger black market, and
  • Farmers and pest controllers who rely on firearms for work may face unnecessary restrictions affecting their business operations.

Federated Farmers has been particularly vocal about the rewrite, noting that the changes over the previous government’s term were ‘a whole lot of really silly, impractical amendments’ that have made it harder for people to access firearms.

Farmers have noticed how those changes have made it harder but cannot identify anything that has made it easier. Farmers have a genuine need for firearms and gun laws need to be more straightforward for those who need reasonable access to firearms.

The government has now completed public consultation; it aims to pass the new firearms legislation before the end of its current term in 2026.

Emissions Trading Scheme

Commercial, Employment, Estate, First Job, Health Issues, Online, Property
0

A change in approach?

The Emissions Trading Scheme (ETS) will turn 17 years old in September. An integral part of the Climate Change Response (Emissions Trading) Amendment Act 2008, the ETS has undergone significant change throughout its existence.

 

What is the ETS?

The ETS is New Zealand’s main tool for reducing greenhouse gas emissions. It essentially works by requiring participating businesses to measure and report on their greenhouse gas emissions. Businesses that participate in the scheme must surrender what is known as an ‘emissions unit’ for each tonne of carbon dioxide that they emit. One tonne of CO2 will cost you one emissions unit.

Over time, the government will reduce the number of units that are supplied into the ETS. The effect of this is that emissions units increase in demand as participating businesses buy and sell emissions units from each other. The price of emissions units in the ETS will (in theory) trend upwards, helping New Zealand to steadily move towards the goal of being a net zero emitter of greenhouse gas by 2050.

 

Recent developments in the ETS

There has been some concern regarding the conversion of productive farmland into forestry in order to gain emissions units. The government has announced changes to the ETS; its aim is to strike a balance between achieving New Zealand’s climate goals, and protecting the longevity of our most profitable farmland.

The government has signalled that the proposed changes to the ETS will be formally introduced to the House this year, with the new rules expected to come into force by October 2025.

 

All trees created equal?

The most significant proposed change to the ETS is the temporary prohibition of the registration of exotic forestry (non-native) for emissions units on Land Use Capability (LUC) 1–5 farmland. LUC separates land into eight categories based on an assessment of the land’s capability for use. LUC Class 1 land is the most versatile, with LUC Class 8 land being the least versatile.

At present, any tree can be planted on any farmland to earn emissions units (provided the tree species planted can reach at least five metres in height). This means there is no incentive to prioritise the planting of native trees over the planting of exotic species, such as the Radiata pine.

The proposed changes will also require ETS participants to exercise greater discretion in choosing which areas of farmland to plant on; should you wish to plant an exotic species, you must do so on your less productive land.

 

A flexible approach

The proposed rules are not entirely hard and fast as there is some wriggle room for ETS participants. Up to 25% of LUC Class 1–6 land on a farm can be used to plant exotic forestry for the purpose of registering it under the ETS.

The proposed new rules have also scrapped plans to include agricultural processors (meat processors, dairy processors, nitrogen fertiliser manufacturers and importers, live animal exporters) in the ETS. Agricultural processors had been due to enter the ETS from 1 January 2025, but the passing of the Climate Change Response (Emissions Trading Scheme Agricultural Obligations) Amendment Bill on 26 November 2024 has stopped this.

 

Why the changes?

The proposed changes clearly signal the government’s desire to promote the planting of native species. It appears, however, that consideration has been given to the idea that ETS participants have benefitted from the planting of exotic species that can be planted en masse and grow quickly. This practice will remain, with the caveat being that it will need to take place on less productive farmland.

Updates to the residential tenancies legislation

Animals, Commercial, Employment, House, Latest news, Media, News, Property, Rural
0

Tenancy terminations and pets

The Residential Tenancies Amendment Act 2024 has significantly updated the Residential Tenancies Act 1986 and the laws governing the relationship between landlords and tenants.

Some of these updates took effect on 30 January and others are expected to  roll out in the remainder of 2025. These updates transform the rights and obligations of landlords and tenants – for better or for worse. We summarise the key updates below.

Termination of tenancies

No reason needed to terminate tenancy: Since 30 January 2025, landlords are no longer required to provide a reason to their tenants for terminating a periodic tenancy; they simply have to state they are giving 90 days’ notice of termination. For clarity, a ‘periodic tenancy’ is a standard tenancy with no end date, unlike a ‘fixed term’ tenancy which lasts for a set amount of time, say 12 months. Before 30 January 2025, landlords had to give grounds for terminating a tenancy, such as for demolition or extensive renovations.

Terminating on ‘special grounds’: Landlords now only need to give 42 days’ notice when they are terminating the tenancy on special grounds, including if a family member needs to live in the property as their main residence, or the property has been sold and needs to be vacated for the new owners to take over. Until 30 January,  landlords had to give 63 days’ notice.

More rights for tenants: The legal rights and abilities of tenants have also increased. Tenants now have up to 12 months to apply to the Tenancy Tribunal for an order declaring a termination notice to be unlawful and that the landlord has retaliated against the tenant for enforcing their legal rights, or in response to legal actions taken against the landlord by another person or body. If a tenant applies within 28 days of receiving the termination notice, they can request that the notice be cancelled.

Before 30 January 2025, tenants only had 28 days to apply to the Tenancy Tribunal in respect of a notice in general.

Tenants also now only need to give 21 days’ notice for ending a periodic tenancy. Previously, they had to give at least 28 days’ notice.

The Amendment Act also confirms that tenants may leave their tenancy at shorter notice if they, or one of their dependents, are experiencing family violence.

It will be interesting to see how these amendments play out, especially when reviewing future decisions of the Tenancy Tribunal, including where tenants dispute termination notices. We touch upon other changes and updates to the powers of the Tenancy Tribunal below.

As an aside, the ways in which landlords and tenants can give notice to one another has changed. The Amendment Act confirms that landlords and tenants can give notices in more modern ways, such as over text or messenger, rather than a physical written notice.

Pets

In the second half of 2025, we expect to see major law changes relating to pets kept in rental premises. Landlords will be able to require their tenant to pay a ‘pet bond,’ on top of their original bond, which can  be an additional two weeks’ rent on top of the original bond. A tenant must obtain their landlord’s written consent to keep a pet on the premises. A landlord may refuse the request only on reasonable grounds, including the premises not being suitable for the type of pet or vice versa. It could be that the breed of dog is too large, and/or the nature of the breed is considered destructive or aggressive and/or could be disruptive to neighbouring properties.

If a tenant’s pet dies during the tenancy, the tenant is entitled to ask for the return of the pet bond from the landlord less any compensation for any damage, and reasonable wear and tear attributable to the pet.

We look forward to seeing how these new rules relating to pets play out.

Tenancy Tribunal

Since 20 March 2025, the Tenancy Tribunal should become quicker and more efficient in its day-to-day operations. The Tribunal now has, for example, the ability to determine matters ‘on the papers’ (considering an application and response, then making a decision) without the need for a hearing.

In more complex and technical cases, and where there are major factual disputes, however, it is likely that the Tribunal will still require a proper hearing.

Issues affecting finance and settlement

Employment, Media, News, Online, Property, Retirement, Rural
0

 

Natural disaster risk and insurance

When you have lending secured by a mortgage on your home, it will be a condition of that lending that you have full replacement insurance for your house. This is a requirement for any new lending (and your lender won’t allow you to draw down the loan without seeing evidence that this in place), and an ongoing requirement with existing lending.

Insurers are now commonly asking whether the local council has recorded that a property could be impacted by any natural hazards (for example, whether it is in a flood zone). If it is noted that the property is potentially impacted by a natural hazard, the insurer may have some follow up questions before deciding on whether it will offer insurance. It may ask whether the local council has completed any remedial work to address the hazard, or whether any specific work has been completed with the property to reduce the impact of the hazard, such as the property being built on piles to elevate it above the anticipated flooding level.

Insurers are also asking questions about whether the property has previously been affected by natural hazard events, such as flooding, earthquakes or landslides/slips.  As above, if it has, an insurer is likely to have follow up questions regarding any remedial work that may have been completed.

Depending on the potential hazards, some insurers may be reluctant to offer insurance cover. If you are considering buying a property that could potentially be impacted by natural hazards, we recommend you confirm you can obtain full replacement insurance before submitting an offer or within the period of your finance condition.

Unconsented works: what can go wrong when selling?

Completing work on your property without obtaining a building consent may seem like a good way to renovate your property without the time delays or cost of your local council involvement. It is, however, likely to lead to significant headaches during your ownership or when you sell your property.

Should you suffer a loss to your property that is caused by non-compliant work, such as installing a wet-area shower without a building consent and the shower room then floods and causes water damage to your property, you may find that your insurer declines your claim. Not only can this mean you will need to fund the cost of repairs yourself, but it can also have implications in obtaining other insurance policies in the future as you will need to disclose that you have previously had a claim denied.

When selling your property, you have an obligation to disclose to buyers any work you have completed but for which you have not obtained the required consent. Additionally, buyers will often review either a Land Information Memorandum or the Property File as part of their due diligence. If the buyer (or their lawyer) notices that there are renovations to the property which required a building consent and it was not obtained, the buyer may not be able to obtain insurance or finance.

Any unconsented works will need to be disclosed to both the insurer and the lender.  Depending on the nature of the work (and the insurer), insurers may decline to cover the property with the unconsented work.

If the buyer can’t obtain full replacement insurance, they will not be able to confirm satisfaction of a finance condition. Even if the buyer can obtain insurance, their lender may not accept the property as security; this means the buyer will be unable to confirm satisfaction of the finance condition.

We recommend you always obtain the required building consent before beginning any building work.

If you have already completed work without a building consent, talk to us about the best way to approach your local council to rectify the issue.

If you aren’t sure whether your next project requires consent, Can I Build It is a good tool which can be used as a guideline; the website can be found here.

New deed of lease documentation

Commercial, Employment, House, Media, News, Property
0

Landlords and tenants should be up to date

 

In November 2024, The Law Association of New Zealand (TLANZ), formerly the Auckland District Law Society, released an updated version of the standard form deed of lease document, its 7th edition.

This new edition of the deed of lease (DoL) includes a number of new or varied provisions that TLANZ has included in response to the evolving commercial leasing landscape; in some cases these provisions address pitfalls in earlier DoL editions that sought to deal with issues that arose during Covid. The result is that there are a number of new default provisions for both landlords and tenants to consider when entering into a lease, and new procedures to be aware of that didn’t form part of previous leases.

Rent

Numerous provisions affecting rent, rent adjustment and rent abatement have been included in this new DoL. Where previous DoL editions referred only to CPI or market rent adjustments, the 7th edition includes an option in Schedule 1 to include a fixed rate adjustment for rent. That means that on the rent adjustment date recorded in your lease, the rent will be adjusted by a fixed percentage, rather than an adjustment being based on market rent or a CPI calculation.

There are benefits in this approach for both landlords and tenants. It provides a greater level of certainty for anticipating rent increases for tenants and income for landlords.

In addition to adding this option, the 7th edition has added to Schedule 1 an option to include upper and/or lower limits on rent adjustments. This sets out at the forefront of the DoL limits on any ratchet-type provisions which previously would have been buried in the standard/further terms of the lease.

Again, these provisions can give greater clarity to both parties around the extent of any rent adjustment, where the adjustment is not a fixed rate, and would advise tenants whether an adjustment could result in a lower rent payable (although it is rare that this would be the case).

Outgoings

The outgoings are other expenses under the lease that the landlord passes on to their tenant. The 7th edition requires, as the default position, that the landlord provides an annual budget of outgoings to the tenant.[1]

This is a helpful inclusion for tenants as it provides certainty for budgeting and greater transparency around the costs additional to rent that the tenant must pay. This is invaluable information for anyone looking to enter into a lease and should be reviewed by any prospective tenant prior to entering into a new lease.

Reinstatement

Reinstatement is not a new concept under the lease, although provisions have been added to better define the rights and obligations relating to signage, tenant’s chattels, alterations and the premises overall.

An important aspect of this relates to the tenant’s chattels; this is a new inclusion in Schedule 6. Items listed here will inform the obligations around the removal of tenants’ chattels under the new reinstatement provisions.[2]

Knowing what tenants need to remove, put back and who bears the cost is crucial to understand before entering into a new lease, especially if you plan on modifying the premises in any way before or during the term. A tenant will always need the landlord’s permission to make any changes or alterations, and it is best to get this in writing.

Rent abatement

If at any time a tenant cannot access the premises (or part thereof), they should receive a discount on the rent at the rate that is set out in Schedule 1. This has been included to set a starting point for rent to be discounted during no access periods rather than tenants having to endure a long determination process to agree the discounted rate during the term of the lease.

The rate recorded in Schedule 1 can be reviewed under the terms of the lease and the process for this is clearly set out.[3]

These are just some of the changes that have been included in the Deed of Lease 7th edition. Whether you’re a tenant entering into a new lease for your business or you’re looking to get a lease prepared for a commercial property you own, talk with us so you understand and use these changes to ensure the terms are best suited for you.

 

 

 

[1] Clauses 3.7–3.10 in 7th edition.

[2] Clauses 23.1–23.5.

[3] Clauses 29.3-29.5.

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