Illegal rental of office space to Wellington family created 'chilling' risks

The nine-storey building at 61 Molesworth St had to be demolished due to earthquake damage. Photo / Mark Mitchell.

The illegal renting of office space to a Wellington family left them without heating, and the possibility of no fire safety system.

The Tenancy Tribunal has just fined Prime Property $7520 for renting out commercial office space at 61 Molesworth St in Thorndon, for the family to live in.

The building was badly damaged in the November 7.8 magnitude Kaikoura quake, leading to the discovery that people had been living there illegally.

The Tenancy Tribunal has now ordered Prime Property Group to pay back $6900 in rent to the family, $600 in exemplary damages, and a $20 filing fee.

Tribunal adjudicator Rex Woodhouse noted in his decision that the tenants had been put in a situation so risky, it was "chilling".

He said documents for fire inspection showed that various fire protection systems had been shut off, as the provider thought the building was vacant.

Prime Property manager Andrew Monahan disputed that, arguing the systems had been turned on when people moved into the various floors.

But Monahan was unable to provide any evidence of that.

Air conditioning and heating had also been turned off, which wasn't disputed.

The maximum damages that could be awarded was $1000. In deciding to award $600, Woodhouse said there were two aggravating factors.

First was how experienced the landlord was, which should have left them well aware of the legal obligations.

But Woodhouse said the most significant factor was the risk to the tenants' health and safety.

At the tribunal hearing Monahan argued the company was being compassionate in providing the building for a low rent.

Two other tenants lived there rent-free due to personal circumstances, with one a distressed bankrupt, and the other a sickness beneficiary.

But Woodhouse also dismissed that argument, saying he wasn't convinced the tenancy was either compassionate or intended to be temporary.

Ministry of Business, Innovation and Employment national manager tenancy compliance and investigations Steve Watson said the case was a prime example of taking advantage of someone in a vulnerable position.

"Regardless of the landlord's intentions, charging $300 a week to live in office space is unlawful.

"The exemplary damages cost reflects the extent of the health and safety risks faced by the tenants, and the fact that the landlord should have known better.

"This decision sends a strong message to landlords that the penalties are high if you are caught renting commercial property to tenants."

But Renters United organiser Anna Mooney said the penalty wasn't strong enough.

"$600 is really not good enough. The property was for commercial use, and it obviously wasn't fit to have people living in it," Mooney said.

"It follows a trend where property managers are given a fee, but no other repercussions.

"It allows them to reoffend, and there isn't any long-term deterrents to stop them doing these sorts of things."

Mooney said the case showed the poor conditions renters were being forced to live in, thanks to a shortage of housing.

"If we could really target the low quality and low availability of rental homes, it would help with issues such as these."

The 61 Molesworth St tenancies were only discovered because the residents evacuated following the 7.8 Kaikoura earthquake, leading to suspicions from others that people were living there.

MBIE's investigation then confirmed Olive and Ernest Mape and their two children had been living there since June 2016.

They used office cubicles as living spaces and bedrooms, and a toilet in the corridor through the fire exit.

A shower was only available on the ground floor, while they were living on the first floor.

The immigrant family lost all their possessions when the building was declared too dangerous to re-enter because of quake damage, and was demolished.