Rental Property Compliance

The residential rental market has become very tight over recent years, and we have heard of families living in converted garages and other premises that were never built to be residential accommodation. The plight of families who cannot find an affordable home has become a major issue as the demand for housing exceeds supply in many areas.

A High Court decision in 2013 has had repercussions in the residential rental market. The Court decided in Anderson v FM Custodians Ltd that “residential premises” could be called residential only if they can lawfully be used for that purpose. Any tenancy for non-compliant premises was therefore a prohibited transaction (which left the tenants generally without the protection of the Residential Tenancies Act). In these circumstances the Tenancy Tribunal has limited jurisdiction, such as exemplary damages (where appropriate) and return of rents to the tenant. The Tenancy Tribunal has dealt with this in several cases over the past year, and a number of landlords of properties that have no code of compliance for residential dwelling have found that they were liable for return of rents to the tenant. It depends on the circumstances, however, whether the Tribunal will see the need to exercise these two powers, and there have been rulings where these remedies have been declined.

The Residential Tenancies Amendment Bill (No 2) is before Parliament. It would allow the Tenancy Tribunal full jurisdiction over properties which are used for residential purposes, regardless whether that use is unlawful. The Tribunal will then be able to make work orders requiring a landlord to fix a property or make it compliant, rather than simply to terminate the tenancy and take one more rental property out of the market. We look forward to this sensible change.