"Slumlords Bill" May Create Refunds For Illegal Tenants

"Slumlords Bill" May Create Refunds For Illegal Tenants

A crackdown aimed at weeding out slumlords could see "good guy" property owners forced to refund rents to tenants who have covertly sub-let illegal spaces, says New Zealand’s biggest group of landlords.

Members of the Auckland Property Investors Association say they are concerned the planned change to the residential tenancy act that gives the Tenancy Tribunal power over all spaces occupied for residential purposes

will order money be returned to people who paid for spaces that aren’t.

Under the law change, the tribunal is expected to be able to order the landlord pays back all rent received for the entire period during which the premises is deemed to be unlawful and for tenants to have the ability to

terminate on two day’s notice.

“We want to make sure that this amendment does not capture occupations that are carried out without the landlord’s knowledge.” says APIA president Andrew Bruce. “For instance, if a tenant uses or sublets a garage as a bedroom without the landlord knowing, would the bill then give the tenant the ability to bring about a claim against the landlord for unlawful premises? That does not seem equitable to me."

The issue of subletting was raised this week after it was discovered that an Auckland tenant was subletting a minivan as a third bedroom.

Mr Bruce says while subletting is common practise in New Zealand, using vans in back yards and sheds as extra bedrooms is very disturbing.

“The days of laissez-faire landlording is over,” says Mr Bruce. “Not only are tenants putting sub-tenants into unhealthy and unsafe living environment, the legal ramification on landlords could be severe.”

“Landlords can no longer neglect their properties for a long period of time. We recommend all landlords inspect their properties regularly (RTA allows inspections once every four weeks). By maintaining a regular presence landlords will have a better handle as to their tenant’s activities and address potential issues early on.

The current law for subletting is that it is only permissible if the tenancy agreement allows subletting and the tenant has obtained the landlord’s consent.

A landlord cannot unreasonably withhold his consent nor can he attach unreasonable conditions to the sublet. The tenant then signs a tenancy agreement with the sub-tenant and, in essence, becomes the ‘landlord’ of

that sub-tenancy.

Mr Bruce says the price of accommodation should not put anyone under undue stress and APIA is, in general, supportive of tenants using subletting as a way to supplement their rental payments.

“Auckland rent is high by national standards but low by international standards,” he says. “We do not believe landlords are responsible for the perceived high price of renting. Market rent is regulated in New Zealand by

the Residential Tenancies Act and under the purview of the Tenancy Tribunal, it is not charged by landlords on a whim nor is it driven by perceived greed.

“We are concerned that wage inflation and student accommodation supplements are not keeping up with living (accommodation) costs which would otherwise alleviate a lot of existing stress on tenants.”

APIA's recommendation is for landlords to only consent to sublets on the following conditions:

- That there is an ability for the landlords to maintain reasonable oversight to ensure health and safety of all tenants

- That the landlord is satisfied that the sub-tenant will be occupying a bedroom inside the house rather than live out of a shed

APIA also acknowledges that it is tough to be a tenant and that rent price can be seen as too high. Here's some tips to help tenants make rent more affordable:

- commit to a longer term tenancy (which is what landlords want anyway) and negotiate for a lower rent

- use fixed term tenancies to give yourself certainty of rental expenses

- regularly check your current rent against market rate (Trade Me, Tenancy Services) to make sure you are not paying too much

- look at rental selection from a different perspective (would it be better to rent in a cheaper suburb with good transport hubs than to rent right in the middle of the city)

- for student renters, check accommodation supplement entitlement

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