District Court Judge Kevin Phillips overturned a Tenancy Tribunal ruling this month, giving landlords reason to hope for fairer rulings in the future, and even a change in legislation in the landlord’s favour.
Details of the Case
In April, the Tenancy Tribunal ordered Vic Inglis to repay $10,960 in rent to tenant Natalie Parry, who discovered the premises had alterations completed without a council permit – unknown to Vic who purchased the property as is and did not request a LIM report.
At the time, Vic also applied for $3,519 compensation for the damaged chattels, property, and removal of smoke alarms during the tenancy when the tenant was also unlawfully subletting the premises as a boarding house.
Reason for the Tenancy Tribunal’s Ruling
The Tribunal Adjudicator declared the tenancy unlawful under Section 137 of the Residential Tenancies Act and 2013 High Court ruling, stating that a premise with unconsented alterations cannot lawfully be used as a residential premise.
The landlord was then ordered to repay the 29 weeks of rent, bond, and court costs to the tenant. Vic had to to sell his property to pay her back.
What the District Court Declared
Judge Phillips found the tribunal's interpretation of that decision was incorrect, stating “the tenant did not suffer any detriment of any kind as a result of what was a technical breach” as photos showed the alterations were done at a very high standard.
He also stated the Tribunal was wrong to interpret a technical illegality as changing the status of the term “residential premises”, as the landlord obtained a Certificate of Acceptance for non-consented work at the tenancy premises at short notice before the Tribunal proceedings took place.
Judge Phillips ordered the money paid back to the landlord, and order Adjudicator Wilson to rehear Vic’s claim for compensation of $3,519 and bond of $760.
Will This Ruling Change Things for Landlords?
Yes in two ways.
Firstly, Judge Phillips’ decision could be used as a precedent for the Tenancy Tribunal, allowing for fairer future rulings.
The ruling has also ignited government action, with the New Zealand Property Investors Federation and Housing Minister Phil Twyford agreeing to meet next week to discuss legislation which could reinforce the judge's decision.
Our Advice? When purchasing a property, always add a conditional clause making the sale subject to receiving and accepting the LIM report before the Settlement date.