Managing a rental property isn’t as simple as sitting back and collecting rent. There are certain rules for landlords that are in place to protect the rights of tenants. Failing to follow them can result in large fines and possibly prosecution. Ignorance of the law is no defence, so here are five easy mistakes to avoid when managing a rental property.
1. Discrimination
When screening for your ideal tenants you can not base your decision on gender, marital status, religious beliefs, race, ethnicity, age, political opinions, employment status, family status or sexual orientation. A landlord avoided prosecution but had his listing removed from TradeMe after he specified his ideal tenants as “European.”
If any potential tenants felt they had been turned down because of their race or ethnicity, they could have taken this landlord to the Human Rights Tribunal, which could have resulted in a $4,000 fine. When specifying your ideal tenants, focus on personal qualities like being responsible, reliable, with quality references. As a landlord you are within your rights to refuse a tenancy based on whether the person is a smoker or if they own pets.
2. Unlawful entry
When a tenant is living in your property it is their home. While you may understandably want to keep an eye on your investment, you should restrict this to regular inspections. You must give at least 48 hours notice and can only inspect once within a 4 week period.
Trying to enforce more regular inspections, or visiting the property without giving notice is interfering with a tenant’s privacy and can result in a $2,000 fine.
3. Cleanliness and maintenance
The Residential Tenancies Act 1986 requires landlords to “maintain the premises in a reasonable state of repair” while tenants are living at the property. This applies before the tenants move in, when repairing damage, and compensating tenants for damage that’s not caused by breach of the Act.
In 2013 the Tenancy Tribunal ordered a Wellington property owner to pay $3,757 to four tenants of a Cuba Street flat after it was found he “consciously misled” them about the state of the property’s earthquake damage. Sometimes making repairs or maintenance can be negotiated with tenants, who may be willing to move in for subsidised rent while work is made. Honesty is the best policy in any case.
Read more: New health and safety responsibilities for landlords
4. Supply of services
Section 45 (2) of Residential Tenancies Act 1986 says “The landlord shall not interfere with the supply of gas, electricity, water, telephone services, or other services to the premises.” The temptation is to believe that because it’s your property, you can do what you want to it. While your property is tenanted, that’s not the case.
If tenants are proving troublesome or are late with rent payments, you can’t disconnect their electricity or phone lines in order to make them pay, no matter how appealing this may be. Landlords found guilty of interfering with supply of services to a property can be fined $1,000 under the Act. The exception of course is when repairs need to be made. The water might need to be shut off to repair the plumbing. So long as all communication protocols are followed, this shouldn’t be an issue.
5. Harassment of tenants
You do have the same right as anyone else to knock on the door and speak to them. If you’re walking by and notice something is wrong, or you have forms for your tenants to sign, you should feel comfortable approaching them, just be aware of how often you do this. Don’t collect their mail or deliver baked goods as the pretext for snooping around the property.
Some property owners who want to sell their rental have run into difficulties when potential buyers discover tenants are in for a fixed term. Owners who contact their tenants with sob stories of financial hardship and encourage them to end their tenancy early, constitutes harassment and can result in a $2,000 fine.
When managing your own property, it pays to have a thorough understanding of the Residential Tenancies Act 1986 to avoid falling into these pitfalls and tenancy disputes. A reputable property manager can help you avoid these five easy mistakes, as well as the thousands of dollars in fines that come with it.
Download our free guide to learn how to avoid other risks associated with managing your rental property.
