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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.  



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