APIA Blog

RSS Feed

Reasonable compensation for early termination

Wednesday, April 10, 2019

Concerning Hood, Angela Julie vs First National Marlborough Limited  [2019] NZTT Blenheim 4180394

 

The issue

What can a landlord reasonably recover from a tenant for terminating a fixed-term tenancy early? 

 
The facts

- The fixed-term tenancy between the two parties was reduced and terminated early at an earlier hearing by an interim order (presumably under s66(1) of the RTA). 

- The landlord submitted final rent arrears ($114.29) and actual costs incurred by the early termination including the following: 

- costs relating to vacating procedures 

- new tenancy costs covering advertising, open home and showing costs as well as costs relating to new tenant processing 

- administrative cost ($115)

- cost for keeping the landlord client informed ($57.50)

- methamphetamine testing 

 
The law

When the Tribunal exercises its s66(1) power by ordering a fixed-term tenancy to terminate early, it may also order the original applicant for the termination to pay a 'reasonable compensation' to the other party to make right 'any loss or damage' as a result of the reduction of the original tenancy term (see section 66(2)). 

 

Outcome
The adjudicator considers what is 'reasonable' under s66(2) and grants the following: 

- The full amount of rent arrears incurred (and properly documented) 

- The full amount claimed for vacating procedures, advertising, open home and showing costs and new tenant processing 

- Half of the claimed cost for administration given that the above compensation covers necessary administrative components 

and declines to award the following 'unreasonable' costs: 

- Cost for keeping the landlord client informed (That even if the claim is 'reasonable', the work would have been brief and not sufficient to justify the cost claimed.)

- Methamphetamine testing (The adjudicator is not satisfied that there are reasonable grounds for the landlord to assign the cost to the tenant. In any event, the test came back negative anyway.) 

 
Observation and take-homes for landlords 

- Claims for compensation must be well documented (invoices, receipts etc) and well-reasoned in the application. 

- Additional administrative costs should be clearly delineated from other standard procedures for tenancy turnover. 

- Use a task-based approach to itemising various costs and avoid breaking each task down into separate components. For example, claim for advertising as one cost rather than claiming advertising + photography + listing + administration. 

Recent Posts


Tags

productivity initio sale and purchase unitary plan property management wealth creation bond letting fee tenancy issues HSWA cash-flow buying twg report ocr speculator heater building warren buffett Sponsored post holiday house development tax skill shortage subdivision interest rates rta LIM Must knows Investment tip positive cash flow meth contamination Tribunal case study trespass property value reserve bank sale and purchas insulation anz Q&A banking auckland council cat Guest blog mortgage ring-fencing bond form education warm up new zealand CoreLogic DTI equity winz auckland inspection robert kiyosaki parry v inglis cgt Standards New Zealand housing affordability off the plan legal management capital gain Must know ask an expert first home buying scotney williams property maintenance rent increase principal and interest government trademe property cycle investment strategy short-term rental privacy Question and answer extractor fan partners watercare housing bubble negotiation sublease nzpif Holler p lab income buyer's agent Market report heating rent Property (Relationships) Act renovation Editor's Choice asbestos market rent airbnb buying rules water bill wins rental wof tenancy services How to trust return data security landlord Investor story fixed-term tenancy house prices property relationship gluckman report HHGA HHS ird rta reform business Kris Pedersen Mortgages and Insurance tenant bad tenant election 2017 structure Jeff Bezos beginner investor shower dome personal growth Landlording ventilation maintenance insurance rent arrears worksafe damage CCC letting boarding house clnz interest only debt enforcement advice tenancy tribunal investor financial advisers act smoke alarm minor dwelling television market TCIT lvr finance rental market

Archive

Introducing Our Partners
Principal Sponsor - Kris Pedersen Mortgages & Insurance logo Gold Sponsor - Barfoot & Thompson logo Gold Sponsor - CoreLogic logo Property Apprentice logo Keith Hay Homes logo The Insulation Warehouse logo The Renovation Team logo The New Zealand Property Investors' Federation logo
09 360 2376
info@apia.org.nz

The Tenancy Practice Service and TPS Credit Control work closely with the Auckland Property Investors' Association. Our vision of bringing helpful resources, documents and high quality services to Auckland Property Investors and Property Managers is shared by APIA, so its a partnership that works well. 

The Auckland Property Investors' Association is a great organisation for those who want access to advice and information from a range of industry experts and partners. 



Mathieu Holt- Managing Director, The Tenancy Practice Service & TPS Credit Control
Through the Association I found the channels and methods to fund the purchase of property I never dreamed about. Grant Brown

All round it has been one of those things Neil and I felt was really worthwhile belonging to. We have learned so much it has just built our confidence in what we are doing.

Janice Bieleski
I read two articles in the monthly magazine that saved me over $5,000. That is my membership fee for the next 26 years and I am sure I will learn a whole lot more! John Duncan
Fantastic organisation. The networking opportunities are brilliant and provide us with information and opportunities that cannot be obtained anywhere else. We learn something new at every meeting and we've been in this game for nearly 20 years. Pauline and Gyanen Kumar

I find the information obtained from various APIA meetings very useful in guiding my own property investment and rental management.  I also enjoy the networking opportunities with like-minded investors.  I am inspired by other investors’ success and find the more experiences and knowledge that I share with others, the more confident I become.  

Thanks to all APIA event organizers and administrators for your brilliant work. 

Stella Shao

I like talking to people and learning from their experience because it gives me the confidence to invest well. I think it is a knowledge thing. I now know I am doing things the right way.

Stephen Weatherall

My APIA membership has become a total success.

Every time I attend a monthly or regional meeting I come away with so many useful and positive tips that have added value to my property investments and management.

Not only that, the website is a great place for practical advice and useful information. It has now evolved into an important resource for my business.

Talk about value for money! The discounts I have been getting at Bunnings when I present my APIA membership card have more than paid for my annual subscription!

Tim Duffett, Plan A Investments Limited