Amateur landlords make costly errors

Tenancy Tribunal rulings reveal ignorance of law, writes Rob Stock.

Learning landlording skills is tough in a fragmented ‘‘industry’’ dominated by part-timers. There are in the region of 130,000 landlords in New Zealand, the majority of whom have only one rental.

Figures obtained in 2015 from the Ministry of Business, Innovation and Employment showed just over 104,000 landlords had just one rental, and just under 23,000 had between two and five.

A mere 4100 or so owned more than five, indicating that for every skilled fulltime landlord such as current landlord of the year Kathryn Seque (see sidebar), there are dozens of part-timers with varying degrees of professionalism.

Orders published by the Tenancy Tribunal show landlords run the risk of ending up seriously out of pocket if they behave unprofessionally.

In most cases disputes are taken to the tribunal by landlords, often for unpaid rent, or damage to a property.

But some reveal instances of landlords – who, unlike teachers, doctors or real estate agents, do not require a licence – who possess little knowledge about their own properties, and are unaware of their legal responsibilities under legislation such as the Residential Tenancies Act and the Building Act.

One dispute arose when a tenant found out his power supply was driving a bore pump that provided water to other houses on the rural property where he rented a ‘‘cottage’’.

The landlord re-routed the power to the bore pump to another property, but sought to increase the rent. The tenant became concerned the extra rent was ‘‘designed to make him pay for a landlord cost’’, and served notice on the landlord to rectify certain problems with the property, which was damp.

He also asked the local authority to investigate whether the cottage had appropriate consents and was safe to live in.

The council inspected and told the landlord it would be classed as an ‘‘insanitary building’’ under section 123 of the Building Act 2004.

It turned out the building was also not fully consented, which came as a ‘‘shock’’ to the landlord as this was not noted on the LIM.

The tribunal found the unconsented property could not be used lawfully as a residence, and ordered the landlord to repay the tenant $12,600 in rent.

The behaviour of landlords during a tenancy can also undermine their ability to profit from their property, as can failing to check out prospective tenants, and failing to prepare for a tribunal hearing.

Unprofessional behaviour can also cause cases taken by landlords to the tribunal to backfire spectacularly.

In one case a landlord asked the tribunal to award him more than $2000 in rent he believed was owed to him by a tenant who left three months before the end of a fixed-term tenancy.

But the tenant told the tribunal he’d left because of the behaviour of the landlord, who was constantly visiting and entering the property without consent.

He feared the landlord, who visited the property because of rent arrears by another tenant, might even enter the property while he was asleep.

The tribunal accepted the landlord had breached the tenant’s right to reasonable peace and privacy, and that his behaviour amounted to ‘‘harassment’’.

The tenant had left the place in a mess, and agreed he should share the cost of rubbish removal with the other four extenants.

But the tenant claimed the place was a mess when he arrived, and the tribunal wouldn’t grant the landlord’s application for cleaning costs.

The landlord claimed the tenant did not return his key, and that a barbecue was missing, but provided no evidence, so the tribunal dismissed his claims.

The barbecue was not specified in the list of chattels in the tenancy agreement, the tribunal noted.

The landlord knew so little of his tenant, that he didn’t even know his age. It turned out the tenant had been a minor of just 17 when he signed the tenancy agreement.

The tribunal found the landlord had breached three sections of the Residential Tenancies Act, and ordered him to pay exemplary damages to the tenant.

Landlords can end up seriously out of pocket if they behave unprofessionally.