In New Zealand, a tenancy assignment means the transfer of a tenancy agreement from one tenant to another before the original rental term has expired.
The assignment process means the original tenant transfers their rights and obligations under the tenancy agreement to a new tenant, who then takes over the tenancy and existing rights and obligations for the remaining duration. Here are two examples of when a tenancy assignment may be requested:
This is not a straightforward answer. In some situations, a property owner (landlord), might be comfortable with you assigning your tenancy to someone else and give you the go-ahead to find a new tenant. In other circumstances, it can be a more involved process, for example, if your tenancy is managed by a property manager they have a duty of care to their client, the property owner, to ensure a new tenant is suitable. They may be required to select tenants as part of their agreement with the property owner.
Start with a conversation
It is always preferable to speak with the property manager in the first instance to find out if there are any reasons that assigning a tenancy is not the preferred option. In some cases, the property owner is self-managing, and in others a property manager is acting for the property owner. A property manager may have criteria and/or conditions that need to be met before they give the go-ahead to find a new tenant to take over the lease or for a new tenant to be added/removed from the tenancy agreement. It could be useful to know this before trying to find a new tenant.
Complete an application form
In instances where the property manager is happy for a tenant to progress assigning a tenancy, there is an application form that needs to be completed. This application form requests permission from the property manager to assign a tenancy and provides information about the proposed new tenant.
Have an application assessed by the property manager
Once an application form has been submitted, a property manager will review the application and assess the proposed tenant’s suitability for the property. This should be completed in a reasonable time.
Unless the tenancy agreement prohibits assignment, requests from tenants to assign the tenancy must be considered and must not be declined unreasonably, for example, discriminating against a potential new tenant. Property managers may include reasonable conditions when giving consent for assignment. A property manager’s consent must be in writing.
Complete the paperwork
If a tenancy assignment is agreed, tenant names can only be changed if the property manager and all tenants (everyone named on the bond record) agree.
If any of the tenants change during a tenancy, for example in a group flat, everyone else has to agree.
If the tenancy is periodic, one tenant requesting assignment will terminate the whole tenancy if consent is declined by the landlord and that tenant chooses to give 28 days' notice. If a bond is held by Tenancy Services, a Change of Tenant form must be completed to update the tenant details at the Bond Centre to match the agreed tenant changes in the tenancy agreement.
If a new tenant will not have an interest in the bond, they do not need to be added to the bond record, but you may still need to complete a form to remove the tenant/s who have moved out.
Continuing the tenancy
Once a tenancy assignment is complete, the new tenant assumes all rights, responsibilities and conditions of the original tenancy agreement for the remaining duration of the rental term. A rental term is not extended by a tenancy assignment.
Every request is different and there are often circumstances that mean a different approach or outcome, but generally, when a tenant wants to leave a periodic tenancy, they simply need to give us 28 days’ notice to end the tenancy. We would generally recommend not going through the assignment process in this situation as it is a relatively straight forward process to end a periodic tenancy.
If a tenant wants to break a fixed term tenancy, we prefer a ‘Breaking Fixed Term’ arrangement so that we can find and approve a replacement tenant or tenants. Tenant selection is a big part of what we do, and we have the skill to do this effectively and in a timely manner while ensuring we fulfil our commitment to our property owners. The tenant/s breaking the tenancy would be required to reimburse the costs associated with breaking the tenancy (in the same way that the costs for an assignment can be recorded and invoiced to the tenant). At Quinovic, we provide an invoice with a breakdown of these costs.
Property managers like Quinovic can navigate the differences between periodic and fixed assignments. For example, we know the implications related to compliance of tenancy agreements depending on their commencement dates. There is a lot of information and ever-changing legislation, and we can help property owners and tenants keep up to date and informed about these changes.
Ever-changing legislation and requirements related to the rental industry mean that there can be confusion about tenancy agreements. Here are some common facts and misconceptions about tenancy assignments:
“A tenant has the automatic right to find and provide a replacement tenant.”
INCORRECT – property managers can assess the proposed replacement tenant as they normally would any new tenant. They can decline an application from a prospective tenant that they do not consider a suitable replacement.
“Rent cannot be increased for another 12 months after the replacement tenant has moved in.”
INCORRECT - If the tenancy is assigned, then the tenancy is a continuation of the current agreement, with a change of named tenant only. No other conditions change, and the rent may be increased after 12 months from the date the initial tenancy agreement was signed or from the latest rent increase.
“The incoming tenant inherits the history of the tenancy so should be provided the outgoing tenants' condition report, rent record and any evidence of damage.”
CORRECT - The incoming tenant becomes responsible for the tenancy in its entirety from the date it originally started and could be held responsible for any wrongdoing of the outgoing tenant. If a house is vacated and emptied by the outgoing tenant, a full condition report is completed for the incoming tenant. If the remaining occupants are not vacating, the incoming assignee should check the condition of the property as they will be taking on responsibility of any damage caused since the start of the tenancy.
“Previous fixed term renewals or extensions were not agreed and/or signed in writing so the tenancy is a periodic tenancy.”
CORRECT- If not signed and agreed in writing, the current tenancy is a periodic tenancy.
“If a tenant assigns a tenancy without the prior written consent of the property manager it’s not really a big deal.”
INCORRECT – This action would be an unlawful act.
“A property manager can take as long as they want to respond to a tenancy assignment application.”
INCORRECT – If a tenant has included the details of a person/s they propose to take over the tenancy, the property manager must respond to the request in writing within a reasonable time. Failing to do so is an unlawful act.
“When giving consent, a property manager can include reasonable conditions for the assignment of the tenancy.”
CORRECT – Reasonable conditions can be included in the assignment of the tenancy. Or instead of consenting, the property manager may ask the tenant to return the property to them on reasonable terms. This would end the tenancy.
Getting a tenancy assignment approved is not necessarily straightforward. It is important for everyone involved in a tenancy assignment to understand their rights and obligations under the Residential Tenancies Act 1986, which governs residential tenancies in New Zealand. Consulting with a property manager can help ensure that the assignment process is carried out correctly and legally. You may also wish to seek advice from a legal professional who has specific knowledge and expertise in the area.
Note: This information is not intended as a definitive outline of tenancy assignments. Rather, it is a high-level overview of tenancy assignments and a general overview of the process. Tenants should conduct their own research and/or seek legal advice as required in relation to their own situation.
