So what does this mean for me the owner?
Wise Property Management will now require you, the landlord to produce the relevant documentation to prove the lawfulness of your rental properties. We are happy to discuss and formulate a plan with you.
One very large change of significance which provides new power to the Tenancy Tribunal is a new Section of the Residential Tenancies Act; Section 78A Orders of Tribunal relating to unlawful residential premises*
What is and what is not an “unlawful tenancy” remains a matter for evidence before the Tribunal. Property Managers are entitled to expect owners to know the status of the property they have purchased and can demonstrate in writing, that the tenancy premises are lawful.
This law is still evolving in the Tribunal with many varied court cases still to be heard. In simple terms, a dwelling which had a building consent or permit, and was built in accordance with that consent or permit is likely to be regarded as lawful. If there have been any subsequent unlawful changes to the dwelling after it was finished, then it is likely that this infraction will be viewed as a breach of S45 and give rise only to exemplary damages. On the other hand, if the dwelling never had a building consent nor a permit or in fact any cloak of legality, then it may be regarded as illegal.
If the Tribunal finds that the dwelling is illegal, such as a converted garage, then the Tribunal can make several orders;
Where the landlord has failed to comply with the landlord’s obligations under section 36 (Legal impediments to occupation) or 45(1)(c) (landlord’s responsibilities to comply with all requirements in respect of buildings, health, and safety under any enactment so far as they apply to the premises) of the RTA, or has caused or contributed to the unlawful nature of the dwelling then the Tribunal must; not order the tenant to pay any rent arrears and must not order any damages or compensation. If the Landlord has applied for termination, then the Tribunal may but need not order termination of the tenancy.
In addition to not making the above orders, the Tribunal has had its power clarified. The Tribunal may order the Landlord to repay the tenant all the rent paid or make a work order under section 78A for the landlord to remove or rectify any impediment to the tenant lawfully occupying the premises. If it’s fair to do so deduct the cost from the order for rent arrears or deduct the cost of complying with buildings, healthy and safety and during any hearing for any matter between the parties. Even if the tenant has not made any application for an order then the Tribunal can make orders on its own initiative. The Tribunal can make an order for a rent refund or an order for a work order or any other order authorised by this Act namely to comply with all requirements in respect of buildings, health and safety so far as they relate to the premises for both residential tenancies and boarding houses.
* 78A Orders of Tribunal relating to unlawful residential premises
(1) This section applies in any matter where the Tribunal, on application by a party or otherwise on the evidence before the Tribunal in respect of any claim within its jurisdiction, determines or declares that the premises are, or were at any material time, unlawful residential premises.
(2) For the purposes of this Act, unlawful residential premises means residential premises that are used for occupation for a person as a place of residence but—
(a) that cannot lawfully be occupied for residential purposes by that person (whether generally or whether for the particular residential purposes for which that person is granted occupation); and
(b) where the landlord’s failure to comply with the landlord’s obligations under section 36 or 45(1)(c), or section 66H(2)(c) or 66I(1)(c), as relevant, has caused the occupation by that person to be unlawful or has contributed to that unlawful occupation.
(3) Despite anything to the contrary elsewhere in this Act,—
(a) unless the Tribunal is satisfied that, having regard to the special circumstances of the matter, including the nature of the premises, it would be unjust not to make the order, the Tribunal must not order the tenant to pay to the landlord—
(i) any sum found to be owing by way of rent in arrear; or
(ii) any other sum by way of damages or compensation:
(b) if the landlord has applied for termination on the ground of rent in arrear, the Tribunal may, but is not required to, make the order terminating the tenancy.
(4) Without limiting the generality of section 77 or the nature or extent of orders that the Tribunal may make in accordance with this Act in relation to the matter,—
(a) the Tribunal may order the landlord to pay to the tenant—
(i) the whole of the sum found to have been paid by way of rent for the period for which the Tribunal is satisfied that the premises are or were unlawful residential premises; or
(ii) an amount that is the sum referred to in subparagraph (i) less any amount that the Tribunal is satisfied, having regard to the special circumstances of the matter, including the nature of the premises, it is fair to deduct:
(b) a section 78A work order may comprise or include an order that the landlord take the steps available to the landlord, as specified in the order, to (or to endeavour to)—
(i) remove or rectify any impediment to the tenant lawfully occupying the premises for residential purposes; or
(ii) comply with all requirements in respect of buildings, health, or safety under any enactment so far as they apply to the premises.
(5) Even if the tenant does not apply for a particular order, the Tribunal may make any of the following orders on its own initiative:
(a) any order under subsection (4)(a); and
(b) any section 78A work order; and
(c) any other order, authorised by this Act, that is in favour of the tenant (including, without limitation, an order under section 109 for an amount in the nature of exemplary damages for failure to comply with section 45(1)(c) or 66I(1)(c)).
Please note; Wise has copied this page of the RTA for you in good faith. Wise takes no responsibility for its accuracy.