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A warning to check properties has been issued to landlords, who own more than 600,000 residences throughout New Zealand.
The Property Investors Federation has issued advice to the investors after the District Court overturned a Tenancy Tribunal ruling on repaying rent at a Dunedin property.
Andrew King, federation executive officer, said today his organisation would meet new housing minister Phil Twyford next week to discuss the legal issue, with the hope of an amendment to the Residential Tenancies Act.
The federation is concerned about rental properties which are technically deemed illegal because they may have had work done to them which has not been signed off by a council.
In the Dunedin case, that meant the landlord had to pay more than $10,000 rent back to the tenant, although that decision has been overturned.
Because of its concern about the Dunedin case, the federation has just warned landlords they should:
1. Visit their local council to check their rental properties' consents. The property might be consented but the federation said unconsented work could have been performed on it before the landlord bought the property.
2. If unconsented work is discovered, landlords should see whether alterations or additions meet current building law requirements. If they do, landlords should apply for a certificate of acceptance.
3. If the property does not meet requirements, a building consultant should be employed to advise if the property can be made to comply and what that would cost.
4. If it is feasible to make the property comply, do the work and get a code compliance certificated, the federation said.
5."If it isn't feasible to remedy the property, then there is a risk that your tenant could make an application to the tenancy tribunal and you will have to pay them their rent back up to the tribunal's limit of $50,000," the federation said.
Twyford said today it would not be appropriate for him to comment on any specific court ruling but he has vowed to reform legislation in the sector.
"Over the next year, the Labour-led Government will update and improve tenancy law to reflect the fact that half of Kiwis now live in rentals," Twyford told the Herald today.
"We are keen to work with landlords, tenants and others in the industry to get the balance right so we ensure renting is a safe, healthy and stable option for families," he said.
"I look forward to meeting the federation on the issue of unconsented rentals. Landlords, tenants and other parties will have the opportunity to advocate for this and other law changes during the law reform process. I do not wish to prejudge the outcome of that consultation," Twyford said.
The issue of unconsented rental properties arose after the Dunedin case where a landlord was ordered by the tribunal to repay $10,940 his tenant had paid while she lived in the property. But the District Court overturned that.
King said despite the welcome ruling, he remained concerned about the issue and the federation would seek an amendment to the act.
"While the District Court ruling is excellent and better than we thought it would be, there are still legislative changes that need to be made to confirm how the Government wants to handle the situation," King said today.
Statistics NZ data as at September this year showed there are about 617,000 rental properties in New Zealand.
John Polkinghorne, a property specialist of consultants RCG, said the total national housing stock was valued at more than $1 trillion. About a third of that is rented so based on that, rental housing was valued at around $300b, he said.