Homeowners renting illegally face tribunal issues over tenancy laws

By Susan Edmunds of RNZ

• People renting out parts of their homes mistakenly think they’re not covered by tenancy laws.
• Auckland landlords were ordered to pay more than $3000 for breaches, including Healthy Homes standards.
• The issue is widespread, with many unaware that partial rentals can still fall under the Residential Tenancies Act.

People renting out part of their homes under the mistaken impression they are not covered by tenancy laws are falling foul of the Tenancy Tribunal – and one investor group says the issue is widespread.

In one recent case, a woman renting out a granny flat told the tribunal she did not realise it was a tenancy under the Residential Tenancies Act.

In another case, landlords were told to pay more than $3000 to their tenant, including a 17.5% refund of rent paid, because of breaches of tenancy rules.

Oleg Nikitin rented the Sunnynook, Auckland, property from Rima Russell.

But after the tenancy ended badly, he went to the Tenancy Tribunal, arguing it did not meet Healthy Homes standards, there were no receipts for rent, no smoke alarms and the tenanted premises were unlawful.

Nikitin and his wife are Russian-speaking migrants who arrived in New Zealand in 2023.

Rima Russell and her husband, who died last year, also spoke Russian but had lived in New Zealand for decades.

The tenancy began on October 5, 2023. The Russells had been having financial difficulties and decided to rent the downstairs part of their house to help their income.

They advertised on a Russian Facebook group, including eight images of the premises.

The Tenancy Tribunal adjudicator said the tenancy was without incident until March 2024 when Nikitin’s adult son and dog moved in.

He said the Russells gave him one or two days' notice to move out but Russell said she told him he would need to move if there were no other arrangements he could make for his son and dog.

The tribunal noted that the tenancy ended this way because there was no agreement in place.

“The tenant and his family did not know that the landlords had to give written notice and could only end the tenancy with good reason.”

The tenant had exclusive use of the house’s downstairs, with only the laundry and an outside area shared.

The tribunal ruled the premises were a “household unit” under the Building Act because the space was the occupied home of one household.

Russell said the council had not given her written notice permitting her to change her house from one household unit to two.

Because she had not taken the steps needed to ensure there was no legal impediment to the occupation of the premises as a rental property and failed to comply with all the requirements, the premises were unlawful, the tribunal ruled.

That meant a rent repayment could be ordered.

The tribunal adjudicator said the bedrooms and the bathroom of the rented property were good and it was a clean, modern and tidy unit overall.

“However, the living/kitchen/dining area was fundamentally deficient. One wall it was mainly made up of metal garage roller doors and there were no windows. The tenant and his family lived there in relative comfort much of the time. However, the living area got too hot and got too cold because of the lack of windows, the metal garage doors, and lack of a heater or heat pump.”

The adjudicator noted that Russell said she and her husband had never formally rented out the downstairs area before and gave no thought to residential tenancy laws.

“The tenant says he was initially motivated to bring a claim because he felt that the landlords had treated him and his family badly at the end of the tenancy by requiring them to leave at short notice. It was only after he was given information and explored the legal principles that he realised the extent of the landlords' breaches. He seeks vindication for being the victim of the landlord’s non-compliance.”

The adjudicator said the landlord should repay 17.5% of the rent received, with expenses of $85 a week deducted.

Compensation was also ordered for breaches of the Healthy Homes rules, the requirement for smoke alarms and breaches of the tenancy agreement.

Auckland Property Investors Association general manager Sarina Gibbon said the issue of people not realising they were renting a property in a way that would be covered by the act was “super widespread”.

More were still to come to light, she said.

She said New Zealanders were too casual in saying that flatmates weren’t covered by the act, and thinking that applied to all situations where the landlord lived in the home.

“Just because the tenant only occupies part of the premises or the landlord is living in close proximity or occupy another part of the premises doesn’t mean it is a flatmate arrangement that sits outside of the RTA.

“This is where landlords and property managers who deal with multiple tenancies and the intricacies of RTA really have an advantage over homeowners who don’t think of themselves as part of the rental sector.

“What this fleshes out is how important it is for anyone to have good foundation knowledge of the RTA any time they accept payments or benefits in exchange for another person occupying their property, even just in part.”

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