APIA Blog

RSS Feed

Tenancy Q&A - One too many tenants

Tuesday, March 15, 2016

 

APIA Ask An ExpertI am a new landlord and I have a property currently rented out to a 3-member family.  The tenancy agreement sets the maximum occupancy to three people.  At my last inspection I was told that there is a 4th family relative lodging with the family.  How should I handle this?  Should I issue a 14-day notice or increase the rent to include and extra tenant?  This is a fixed one year rental, what if they can't fix the new agreement?  Can the fixed term rental be voided?

APIA Ask An Expert

There are several issues with respect to your enquiry.  Lets break them down one-by-one, in no particular order:

Issue 1: Whether you can increase rent during a fixed term tenancy?

It depends on the terms of the tenancy agreement.  Unlike a periodic tenancy where the mechanism of rent increase is statutory, a rent increase in a fixed term tenancy has to be in accordance with terms of the agreement.  If the agreement does not anticipate rent review/increase and provides no mechanism for the landlord to do so then you will not be in a position to increase rent during the fixed term.

Issue 2: Assuming there is no impediment within the fixed term tenancy to increase rent, whether rent can legitimately be increased to cover an extra tenant?

Market rent by and large is dictated by the location of the property and the amenities it provides such as the number of bedrooms, off-street car parks, and accessibility to schools, local transport routes and so on.  While there is no legal requirement for you to justify every quantifiable elements of your rent increase your tenant does have the right to appeal to the Tenancy Tribunal if it is considered that the increase puts the new rent substantially over that of the market's.  When you are increasing rent make sure you retain a copy of all the research documentation that backs up your increase in case the matter gets put in front of the Tribunal for adjudication.  

If you do increase rent for any reason then make sure that you execute a variation to the rental agreement 

Issue 3: Whether a 14-day notice is an appropriate response to an excessive number of occupants on the property? 

If your tenancy agreement puts a limit on the maximum number of occupants allowed to be live on the property then it would be a breach by your tenant to allow more than that number of live on the property.  Yes, in that instance a 14-day notice followed by an inspection to confirm the remedy would be an appropriate response.  

As an aside: For various reasons including maintenance, security, wear-and-tear and hot-bedding, many landlords do put a limit on the maximum number of occupants allowable on the property.  

Issue 4: Whether a fixed term tenancy can be voided? 

Neither you nor your tenant can give notice to end a fixed term tenancy.  However if both you and your tenant agree to end the fixed term agreement early then you can do so in writing, clearly state what has been agreed to (e.g. early termination of a fixed term tenancy on xxx date) and each party should keep a copy.  You may be able to charge a fee for the fixed term ending early but these fees should be actual and reasonable costs to you relating to early termination.  

In this particular instance, an early termination could potentially pave the way for a new agreement to make allowance for the fourth tenant. 

Disclaimer - The answer provided above is informational and should not be relied upon as legal advice.  For personalised legal advice, please feel free to contact your professional legal advisor directly.  

 

 

Recent Posts


Tags


Archive

Introducing Our Partners
Principal Sponsor - Kris Pedersen Mortgages & Insurance logo Gold Sponsor - Barfoot & Thompson logo Gold Sponsor - CoreLogic logo Keith Hay Homes logo Maintain To Profit 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