Tenant Refunded Almost $60,000 After Illegal Tenancy

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Unlawful tenancies have hit the news recently with an Auckland tenant receiving nearly $60,000 in compensation after the property they were living in was proven to be illegal. 

In a decision in July, The Tenancy Tribunal declared the one-bedroom flat to be unlawful, ordering the landlord to pay $59,222 in refunded rent.  

The tenant had rented the flat that was attached to a garage behind the main dwelling for the past nine years. 

What is the Proof of an Unlawful Dwelling?

At the hearing in June, the tenant reported the property was illegal as it did not have its own separate address, letterbox or rubbish bins. The landlord countered that the rental was lawful as the unit was consented and had received a code of compliance certificate (CCC). However, at a follow-up hearing in July a report by a building regulatory consultancy service showed that a cooker and oven had in fact been added to the unit after the CCC was issued. Installing a kitchen in a building turns it into a minor or secondary dwelling, requiring resource and building consent which the dwelling did not have at the time of renting. 

How Can You Spot an Illegal Rental Property?

There is some confusion in the market as to what constitutes a legal rental property.  

Crockers recommends taking the following into account when determining whether premises are legal: 

• Even if a property has its own entrance and looks like a standalone property, the best way to check is via the council GIS viewer or the qv.co.nz website which lists whether multiple dwellings have been consented.  
• A quick giveaway that a property is a granny flat rather than a legal dwelling is that a granny flat often doesn't have a full kitchen (a microwave is acceptable) and so there will be no stove or oven.  
• Under the Housing Improvements Regulations 1947 section 5 & 7 a legal dwelling that can be rented separately requires a stove and oven. 
• As has been shown in this case, you can't just install a hob and oven in an already-consented granny flat. If you do this, the property will be in breach of its CCC and change the dwelling to having a full kitchen which it has no consent for. 

In this recent case the landlords had retrospectively applied for consent for the kitchen once they had received the building regulatory consultancy service report, but the application for the consent was still pending.  

The Tribunal adjudicator reiterated that it was the landlord’s responsibility under the Residential Tenancies Act to be sure that their rental property was legal before undertaking the tenancy. The $59,202 compensation ordered was a third of the rent paid since 2013. 

How Crockers Can Help You 

As seen in this case, The Tenancy Tribunal expects all owners to know the law as owning a rental property is the same as owning a business. Not knowing the law is no excuse and breaches of the law can incur large fines. 

At Crockers, our property managers are well informed of legislative requirements which change frequently. We’ll help ensure your rental property is up to standard, and help to reduce the stress of managing your most valuable asset. 

If you’d like some further advice on renting out your property contact our Property Management team on pm@crockers.co.nz or chat on 09 623 5952.