Tribunal refund decision anti-landlord

Monday 4 September 2017

A recent Tenancy Tribunal decision which made a Dunedin landlord refund $10,000 to a former tenant on a legal technicality has been described as landlord bashing and unfair.

By Miriam Bell

Vic Inglis rented a property that he used to live in to Natalie Parry for nine months until February but she sublet the downstairs area of the property to others.

This contravened the tenancy agreement and when Inglis found out he told Parry she would have to move out.

But Parry told him the downstairs areas was not included in the property’s original plans and was not consented and so she was applying to the Tribunal to get her rent refunded.

The lack of consent was news to Inglis, who bought the property as it is, but he then got a certificate of acceptance for the work which deviated from the original plans.

The certificate was issued in March and stated that the work was excellent.

However, this was too late for the Tribunal which dismissed Inglis’ application and ordered him to pay $10,960.44 to refund the rent Parry had paid.

The adjudicator based their decision on a High Court decision, Anderson v FM Custodians Ltd, which found that unconsented premises don’t meet the definition of “residential premises” under the Residential Tenancies Act.

In Inglis’ case, the adjudicator determined that the unconsented work meant the premises were unlawful and that meant the Tribunal did not have jurisdiction to consider any of the landlords' claims.

As a result, it determined that Parry’s claim was successful and she was entitled to the rent refund.

While Inglis has appealed the decision to the District Court, he has been forced to sell the rental property in order to pay Parry.

Property law specialist Joanna Pidgeon said that not all adjudicators agree with the position set out in the Anderson decision.

A more expansive interpretation of “residential premises” would enable the Tribunal to consider both the landlord and the tenant’s claims, she said.

This would mean that Ingils’ damages issue could have been heard.

“While the Tribunal’s decision may comply with the letter of the law applying Anderson, (although there are divergent views as to its application) the outcome is harsh.”

Pidgeon said many New Zealand properties have unconsented works, carried out by previous owners, which may meet Council standards for accommodation while not all Council consent records are complete. 

Certificates of acceptance from Council have generally been accepted as resolving matters as it is impossible to obtain a building consent retrospectively after work has been carried out, she said.

“In a time of housing shortages, this rent refund decision could see landlords withdrawing rental properties from the market - even though they are suitable for accommodation - due to past owners carrying out alterations without consent.”

NZ Property Investors Federation executive officer Andrew King said the decision showed that landlord bashing is going too far as it made a mockery of tenant lobbyists claims that tenants are powerless.

"Many people would criticise this poor couple for providing someone with a home. They would call them speculators and demand that they be treated even harsher. This landlord bashing is completely one sided and has to stop.

"Some politicians say that their policies are aimed at speculators but they aren't. Extending the Bright line test, disallowing tax deductions and a capital gains tax all apply to rental property owners like the Inglis family.”

King said these policies are driving landlords out of the rental market and tenants will be the next to suffer.

Read more:

Labour plans could force out landlords 

Dark clouds on landlords horizons 

Comments from our readers

On 7 September 2017 at 1:09 am michaeljakob said:
As an offshore investor this decision is one of the most blatant attacks on landlords I have ever seen. The New Zealand government appears to be complicit in a court decision which defies belief and which anybody with single digit IQ could not arrive at. There seems to be a pattern of landlord harassment of late with landlords being pursued to now have contractors check their smoke alarms (press a button), insulation updated (tenant comfort) and now refunding rent on a total load of BS. I question what will happen if investors are squeezed out of the market when the next GFC arrives. Then the government will fall on its sword because investors will not be coming back to prop up a market where they are invited in and then cannibalised. Anybody want a house in Dunedin with a valid LIM?
On 7 September 2017 at 10:19 pm jpaynter said:
I have owned one property containing three flats for 30 years. Despite many attempts I have never been able to trace any plans for this property on the Council (with amalgamation, this is now the third TLA) or associated body (e.g. Metrowater, Watercare) files. So should I be prosecuted for not having a property with a CoC or am I immune from prosecution as it would be impossible to prove that the property was not inpected and passed by the relevant council at the time it was built? Commonsense "should" prevail but sadly this seems lacking in many of the decisions made by the Tenancy Tribunal.
On 8 September 2017 at 9:15 pm haocna said:
The tenancy tribunal should NOT empower the former tenant to punish the landlord in lost rent due to unconsented work. The order would encourage more tenants to search and live in building on purpose, so they can claim rent refund after few years in order to live for free. Council should be the one ordering the landlord to pay penalty for unconsented work NOT the tenancy tribunal, also Council should be the one receiving the penalty payment NOT the former tenant receiving rent refund.

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