How a hamstrung Tenancy Tribunal and weak rental laws are leaving tenants at the mercy of landlords who won’t fix run-down rentals. Massey University journalism students Mary Argue, James Pocock and Lucy Revill report.
There has been a steady downpour in Wellington for the past three days. It is immediately obvious touching the windowsill in Cam’s* room that water is puddling along the entire length. Every time she wipes, the water returns.
Cam points to her bed. She says it took her a while to realise the dust collecting on the sheets was, in fact, mould. Regular heavy-duty washing managed to salvage them, but her shoes weren’t so lucky. Her bedroom is far from the mouldiest in the flat.
Cam first asked her landlord to fix the window at the start of winter. After her latest request to fix the windowsill, he came over unannounced later that day. The quick fix did nothing to stop the leaking and the putty soon washed away. She let him know, and while he acknowledged it would need fixing, Cam heard nothing more for several weeks. After a couple more reminders, and still no action, Cam has given up.
Cam pays $250 a week for her mouldy room with a cracked and leaking window. While she and her flatmates may be entitled to compensation at the Tenancy Tribunal for breaches of the Residential Tenancies Act, they do not want to damage their relationship with their landlord. It is already difficult to find an affordable property in Wellington.
“This place was already at the upper limit of my budget, so it was a last resort,” says Cam.
Stories like these are all too common in today’s high-demand rental market. For renters and for some landlords, weak tenant protection laws and an under-resourced and out-of-date dispute resolution system has left tenants at the mercy of landlords who refuse to fix unhealthy houses.
As another tenant in another flat told us: “When your rent is over $1000 a week, but your Dr Martens are outside to avoid mould, it’s pretty dire.”
Property investors say they’re also suffering from a weak system that doesn’t protect their interest against unscrupulous tenants. But from what we’ve found, it’s tenants who are hardest hit.
Living in the ditch
Cam’s landlord is one of Wellington’s bigger landlords. He owns, among others, a group of run-down old villas in a damp, south-facing gully in Devon Street, Aro Valley. It’s colloquially known as 'The Ditch'. They were originally built around 1900 to house the warders at the nearby Terrace Gaol.
The gaol has since become Te Aro School. It sits in the sun on the ridge above. In the steep-sided shady gully below, the villas remain, lichen-covered, often overgrown. Several sit only inches above the damp gully floor.
They’re bleak enough in summer. When winter comes, tenants in The Ditch find them so damp and cold they want out.
But they're locked in with one-year leases and risk being taken to the Tenancy Tribunal for unpaid rent if they try to vacate early. Many former tenants won’t speak on the record for fear of getting blacklisted by other landlords.
A search of the Tenancy Tribunal orders brings up multiple cases involving former tenants. What seems to emerge is a pattern of a weak and baffled tribunal, unable to enforce healthy homes standards.
In one case, the landlord took his tenants to the tribunal in late 2020 for unpaid rent. The tenants had taken exception to paying rent in a house they said was uninhabitable. They produced as evidence a Healthy Homes assessment that found three of its six rooms had windows stuck shut; an attic room that lacked linings; gaps and draughts throughout the house, a toilet window stuck open, and general lack of insulation, moisture barriers, and extractor fans. They claimed the damp house had a leaky roof, lacked smoke alarms, had mouldy carpets and rot.
The adjudicator ruled against the tenants, saying the Healthy Homes assessment didn’t apply as the Act hadn’t come into force yet. He said the onus was on the tenants to prove their case, which they had not, and said their “cleanliness and tidiness leave a lot to be desired”. The adjudicator agreed that photos produced by the landlord and tenants would not “lead to the conclusion that these are superior - or even average - premises, but unfortunately for the tenants, that is not the test”.
It ended in a disastrous ruling for the tenants, who were ordered to pay $22,580 in rent arrears to the landlord. The tenants were approached for comment but declined, saying they were scared they would be blacklisted by other landlords.
According to property records in September 2021, the current value of the landlord’s portfolio is around $25 million. One Devon Street property was purchased in 1999 for $210,000; its value has increased by more than $700,000 over the past two decades. Were only half of his properties tenanted at Wellington’s median rental price, the annual rental income would surpass $300,000.
In another case, the landlord applied to the Tenancy Tribunal to recoup rent arrears from his tenants of a Newtown property. The tenants hit back with a counterclaim, citing a breach of section 45 of the Residential Tenancies Act - “failure to provide a reasonable state of cleanliness and failure to provide and maintain the premises in a reasonable state of repair”.
In a nod to the condition of the premises, adjudicator found partially in favour of the tenants, dismissing the landlord’s claims that the state of the place was “normal wear and tear’. “The condition in this case reflects lack of maintenance,” he wrote. But he still awarded the landlord $2930. When asked for comment, the former tenants said they preferred to put the flat and the Tenancy Tribunal behind them.
The landlord was approached for comment but hung up before any questions could be put to him.
Encounters with the Tenancy Tribunal
Challenging a landlord under New Zealand law is neither a straightforward, nor enjoyable experience. “I have seen a lot of adults cry after hearings,” says Machrus Siregar, “they are terrified of it”. Until recently, Siregar was the housing lawyer at Community Law Wellington and Hutt Valley.
For many, the Tenancy Tribunal can be the first, and perhaps only, encounter with the justice system. Despite the intention to make it an informal hearing, a case heard in Wellington’s District Court can feel anything but.
Angie* is in her mid-40s, well-dressed. Finding herself in the rental market unexpectedly was a jarring experience, she says. When her neighbours became noisy, Angie appealed to both her landlord and the upstairs tenants, and when no resolution could be found, she was set on a path to the Tenancy Tribunal.
Her experience began with multiple calls to Tenancy Services. “You’re on hold until finally someone answers … you get a different person every time.”
The process was convoluted and the onus was on her to chase up advice, and prepare evidence.
“Going in there I had no idea what I was required to do, but then I’m expected to just stand up like some well-qualified seasoned lawyer, and act like some professional. It was extraordinary, truly absurd.
“I had to wait outside the courtroom, with the landlord in eyesight. It was a very scary thing to do.”
Despite this, Angie felt as though the adjudicator had heard her. The advice from Tenancy Services and the sheer amount of evidence made her feel confident in her case. When the adjudicator did not rule in her favour she was left shocked and disillusioned.
“I believed that the tribunal was set up to actually give tenants protection. That just all flew out the window. I realised it was an absolute sham. They [landlords] can do whatever the f*** they like, and they know it. They’ve got all the power, they can treat you with no respect, no regard, they can flout the law and get away with it. And the Tenancy Tribunal upholds that.”
The chasm that exists between interpretation of the law and expectations of it by the layperson is vast. Research conducted by Otago University law lecturer Bridgette Toy-Cronin has seen this clash play out in countless Tenancy Tribunal cases.
She has found that landlords, particularly ones with large portfolios, are generally more familiar with the system. “Tenants on the other hand are one-shot players, and that means that normally, but not always, they only have one interaction [with the tribunal], so they are much less expert.”
For an example of how random and bizarre the application of the law can be, you couldn’t do better than two recent cases. It is truly a tale of two cities, or in this case, two apartments, both in the same building.
Twenty-one Marion Street is a run-down old office block, earthquake-prone, set back from the street down an alleyway near trendy Cuba Street. It has now been closed and earmarked for demolition. But until a few months ago, it was popular with students. Trouble is, some of the bedrooms did not have windows.
The four tenants of one apartment applied to the Tenancy Tribunal in 2020. All university students, they paid a combined weekly rent of $835.
A judgment by the tribunal lists some of their complaints: “No windows or natural light in some bedrooms, glass sliding doors to some rooms, breaching Healthy Homes Standards and privacy requirements, broken smoke alarms, exposed wiring, notification that the building did not meet earthquake standards, broken stairs, breach of insulation regulations, leaking windows, lack of emergency egress, lack of ventilation, broken windows, the condition of carpet, a leaking shower, the condition of walls.”
They wanted the tribunal to declare the apartment unlawful residential premises, which would have allowed their claim for up to $30,000 in compensation.
The adjudicator found that converting an office space into residential premises required a 'change of use' certificate from the local council. Despite digging around in Wellington City Council records for four months, no certification could be found. In addition, any building converted after the year the Building Act 2004 came into force had to comply with Section 124 and have an adequate means of fire escape. Absent evidence, the adjudicator gave the landlord the benefit of the doubt. “The onus of proof lies with the applicants. Faced with no evidence that the second floor was not consented for residential use, I adopt the same approach as that in [and earlier case], namely that the use was lawful.”
Citing further legislation, the Home Improvement Regulations 1947, the tenants questioned the legality of windowless rooms. They claimed that three of the four bedrooms in the flat had no external facing windows. One provided natural light via a sliding glass door, two via a first-class view of the lounge. Here, the adjudicator merely noted the landlord’s response “that room one was never intended for use as a bedroom, although this does not explain why it was therefore provided with glass doors”.
The most perturbing part of the case however, came in the form of Darryl Cockburn, described by the adjudicator as “a well-known architect”. Cockburn was called as a witness for the landlord and property managers.
Pointing to clause G3.9 of the District Plan and clause G7 of the Building Code, Cockburn provided evidence that windows opening into an internal void were legal. However, no evidence was offered to show that the clauses’ minimum light levels had been met.
The adjudicator wrote in his judgment that “there appears to be a clear conflict between the Housing Improvement Regulations on the one hand and the Building Code and District Plan, on the other, which I am not able to reconcile.” He was not satisfied there had been a breach.
Despite being knocked back on these two arguments, the tenants were awarded $4000 in exemplary damages for their less-than-salubrious living conditions. The adjudicator said: “The evidence in the applicant’s photographs is damning”. He added: “The generally poor condition of walls and ceilings [including lack of cleanliness] are compelling evidence that the landlord is or was in breach of section 45 [of the Residential Tenancies Act].”
The partial victory was short-lived, with the landlords again attempting to appeal the decision and drag everyone back to the tribunal. An agreement was eventually reached to reduce the damages to $3000.
So far, so complicated. Now consider what happened to a tenant in the neighbouring apartment in the same building.
The case of the windowless room
This was Julian Balajadia’s first flat, his first ‘student experience’. He’s studying to be a teacher of English as a second language. He’d been living with family friends in Johnsonville, but transport to and from the city for university was too expensive and time-consuming.
Another tenant showed him his bedroom. It was up a narrow set of stairs, with space only for a computer desk and a single mattress on the ground. It had no window.
“I was so desperate to move into the city, I just disregarded that. And it was only $150 a week for the first room I lived in. People told me: ‘Uni is rough’ and being a first year I just accepted the stereotype of being poor and having shitty living standards. But I didn’t realise that it shouldn’t be that poor, you know?”
Buoyed by the outcome of his neighbours’ tribunal result, Balajadia also applied to it for compensation. On this occasion, we were able to sit with him, and see the process first-hand, in a wood-panelled courtroom at Wellington District Court.
In the waiting area, there is an awkward silence. Covid restrictions aren’t needed to create a distance between Balajadia and his former property manager sitting nearby.
Inside, Balajadia speaks quietly, sometimes sounding uncertain, but sticking to the core of his argument. He explains how his mental health was affected during the six months he was living in a windowless room. The room had little to no natural light, and he had just learned it was illegal.
In contrast to him are the two suited property managers, who are confident and articulate. They suggest Balajadia is motivated by greed, applying to the tribunal nearly two years after his tenancy ended, implying that he illegally sub-let the room when he tried to leave. It seems to be his word against theirs.
Sure enough, the adjudicator does not decide in his favour.
Although the property manager claims the apartment was only meant to be five bedrooms, neither party can produce conclusive evidence of the number that was intended. A tenant, rather than the company, first advertised the room to Balajadia. The company had merely accepted his application to live in the apartment, and his rent. The adjudicator asks Balajadia why, if the room had been so horrible, he felt comfortable seeking a replacement. Balajadia doesn’t have much of an answer. But at the time, there was no option to leave the room that didn’t penalise the other tenants.
After the hearing, Balajadia is disappointed. He says there is no way the property manager didn’t know his room was used as a bedroom. “I was in the room for six months and while I was in it, he came to look at a leaking crack in the ceiling. [The property manager] has my application showing I was paying a slightly smaller share towards the total rent than the other tenants, which was because I was in a cupboard. There was someone in that room before me and there was someone in that room after me...”
We can’t ask the property manager for his side of the story because the tribunal has suppressed the landlord’s name and identifying details. Anyone can apply to have a judgment about them suppressed. It’s meant to protect tenants from getting blacklisted, but few tenants request it so it mostly benefits landlords.
We asked the owner of the property whether he thought it reasonable to let properties in that condition. He replied: “Yes, the building was old, but the units were functional and [although] not everyone’s cup of tea what they had was size.
“Some units were between 200 and 300sq meters, really unheard of in modern times in Wellington.
“I imagine those in there thought they were in a New York style apartment of the older variety. There was never a shortage of potential tenants.
“The downside for us was the size led to constant parties with their guests often roaming the building doing countless damage.
“We had cameras naturally and were as hard on the tenant as a landlord could be but very often the tenant would claim they did not know the offender [even] though the party flat of the moment had gone downstairs and jammed open our security doors to allow general folks in. There was a solidarity about the flats and they would never 'inform' on each other.”
He says of Balajadia’s claim:
“The claimant really had months to prepare his case yet it just did not get over the line.
“He probably had the right to apply for a re-hearing but chose not to. It seems that once he has exhausted all his legal rights he should, with your help, try to muddy the waters. Surely this should be left to the courts.”
The property investors' view
It’s not only tenants who are unhappy with the tribunal. The New Zealand Property Investors Federation [NZPIF] also believes it fails to deliver balanced judgments, but conversely, sees the process stacked in favour of tenants. NZPIF has put forth numerous requests on behalf of landlords, including charging interest on unpaid rent equivalent to that of a mortgage, reinstating the 90-day rule which permits eviction without cause, and reducing the six-week wait time for a Tenancy Tribunal hearing.
“We would like to see this reduced and have the ability to terminate a tenancy without having to go through the Tenancy Tribunal process, especially for anti-social behaviour.
“Landlords are finding it harder to get tenants to pay for damage that has obviously been caused by the tenants, however it is ruled as normal wear and tear.”
So what can tenants and landlords do if they don’t like what happens at the tribunal?
Their first recourse is an appeal to the District and High Courts, but it is a risky process with little chance of success, and an expensive one - hiring a lawyer and risking all the legal costs if you lose. Unsurprisingly, it’s little used.
Information obtained under the Official Information Act revealed that in the two years to June 30, 2021, there were 24 appeals against Tenancy Tribunal decisions filed in the Wellington District Court and two appeals filed in the Wellington High Court. Of the 19 appeals that had been heard, two appeals were allowed, one by the Wellington District Court, and one by the Wellington High Court. So, in effect, only two tribunal decisions were overturned.
What about the repeat offenders, in particular landlords who refuse to keep their properties in a habitable state? Who monitors them?
Last year, in response to the deluge of bad publicity about rent-gouging and slumlords, the Government took belated action, and recognised that the market-led approach of letting tenants chase up bad landlords wasn’t working. But instead of making substantive changes to the rental laws, or giving the tribunal more resources and teeth, they chose to set up yet another agency - MBIE’s Tenancy Compliance and Investigations Team [TCIT]. It was given greater ability to monitor, enforce, and penalise tenancy breaches.
The Minister for Courts, Aupito William Sio, who oversees the tribunal, informed us by email that TCIT is part of a “broader tenancy system that provides tenants with effective, low cost and speedy dispute resolution methods”.
Sio says he is confident that the Healthy Home Standards will go a long way toward making rental homes warmer, drier, and more energy efficient for tenants.
He says in the 2021 Budget more than $5 million was allocated to support an information and education campaign aimed at landlords and tenants to help them understand rental requirements.
He says a further $16 million will be employed over four years to proactively investigate breaches of the standard. In the most serious cases MBIE will take action against a landlord at the Tenancy Tribunal. Sio says landlords with large portfolios [six or more rentals] are also subject to higher fines and can face pecuniary penalties up to $50,000 for serious, intentional breaches of the RTA.
MBIE Head of Tenancy Steve Watson added that TCIT focuses on areas where there are high hospitalisation rates for children associated with housing conditions. The three key areas that TCIT looks at are the presence of smoke alarms, installation and whether tenancy agreements provide “correct information” about insulation at the property.
That all seems positive, so we asked MBIE what the new Tenancy Compliance and Investigations Team had achieved in its first year. It said that between the law coming into effect in February and September 2021, MBIE issued one improvement notice to a landlord in Wellington. There have been no infringement notices, enforceable undertakings or pecuniary penalties. Instead, it “proactively engaged” with Wellington landlords on 58 matters.
Plenty of warnings but few prosecutions
Across New Zealand, 1267 insulation statements were investigated, and 357 were found to have false information. Of the owners audited, 301 were found to have breached tenancy law and 272 were warned. Five investigations ended at the Tenancy Tribunal. Of the property managers investigated 283 breaches were found and 220 warnings issued.
So, despite almost a third of the 1267 landlords or property managers investigated being found to have supplied false information about whether they insulate their properties, only five were taken to the tribunal. It seems more like a regulator that is happy to ‘engage’, but not so eager to come down hard on those breaking the law.
Many of those closely involved in the rental market say the underlying problem is not just weak enforcement, but the often conflicting and confusing laws that govern tenancy here. Teasing apart what is and isn’t legal in Aotearoa is difficult for tenants and landlords - and sometimes even for adjudicators. Duties are complex and split across multiple acts and by-laws; the Residential Tenancies Act 1986, Residential Tenancies Act 2019, Residential Tenancies (Healthy Homes Standards) Regulations 2019, The Residential Tenancies Amendment Act 2020, The Unit Titles Act 2010, The Building Act 2004, and the Housing Improvement Regulations 1947.
“Many tenants don’t even know that certain clauses are unenforceable or even illegal,” says Siregar, who has seen it all in his time at Community Law.
“My favourite example was with a landlord who said that the house was an ‘as is where is’ property, meaning basically he is not liable for any complaints and refused to do maintenance or repairs. Obviously, that’s illegal, and the tribunal agreed with me. We ended up getting a restraining order put on him preventing him from re-letting any property in an unreasonable state of repair.”
The definition of what constitutes a ‘reasonable’ property under section 40 of the Residential Tenancies Act is notoriously prone to interpretation because it isn’t in fact defined at all. The Tenancy Services website provides some colour for confused tenants and landlords, but nothing enforceable: “What’s considered ‘reasonable’ depends on the age and character of the property and how long it’s likely to remain habitable and available to be lived in ... The Act also requires landlords to provide properties in a reasonable state of cleanliness...The Act does not directly regulate the standard of rental properties,” it states.
The NZ Property Investors Federation agrees: “Although the word reasonable is used a lot, it is very subjective. Properties have to get a code of compliance once built so what was reasonable in 1930 would be completely different from what is reasonable in 2021.”
Unlike New Zealand, many countries have no trouble transparently setting legally enforceable standards for housing. In Ontario, Canada, for example, it is very clear what condition a house should be provided in, right down to the exact temperature: 20 degrees Celsius. New Zealand Tenancy Services suggests a minimum requirement of 18C, but there is no statutory requirement.
In Quebec, a standardised lease contract is a government form that you pick up from any magazine rack at a corner store. There’s no openness to creative demands from landlords. Both sides can only follow the rules as strictly set out by the government. In the UK and Scotland, it is mandatory for landlords to provide their tenant a standard booklet about their rights, duties and obligations. There is even a simplified version with pictures for people who aren’t confident readers of English.
In New Zealand, there is no obligation to provide information on moving into a new rental. A downloadable booklet on the Tenancy Services website focuses primarily on information for the landlord about how to claim rent.
In other jurisdictions, including Wales, Scotland and Ireland, landlords must register before they can let out a property (either voluntarily or by law) and in Wales landlords must do 10 hours' training. In Ireland, the Residential Tenancies Board also provides free training for landlords through its BetterLet: RTB Accredited Landlord training sessions to help landlords manage their tenancies and keep up to date with the policy and legislative changes in the sector.
In the UK, you can look up the energy certificate for any property you are thinking of renting - it tells you everything about the energy use it will cost you, insulation, heating, and even what could be improved, right down to the type of boiler. Landlords are not allowed to let properties that do not meet a minimum energy standard.
Here, there is no requirement for landlords to do anything to be accredited ‘fit’ to be in the rental business. And the New Zealand Property Investors Federation doesn’t think they need to.
“The Bond Centre has a register of landlords therefore we do not need another layer of cost added,” says a spokesperson.
“Any costs in having a register will ultimately be passed on to our customers, which are tenants. Unless there is a benefit for both parties we do not think this is necessary.”
It’s not only the laws around tenancy that are weak, complex and contradictory. The bodies tasked with enforcing it are too. There is the Ministry of Housing and Urban Development [which administers the Residential Tenancies Act], the Ministry of Business, Innovation and Employment [which looks after Tenancy Services] and the Ministry of Justice [which looks after the tribunal].
Associate Minister for Housing Poto Williams says the Government acknowledged more Kiwis were now renting for longer and action has been taken to protect tenants citing Healthy Homes Standards, removal of ‘no cause’ tenancy terminations and greater powers given to MBIE.
“We will also be regulating residential property managers which will protect the interests of property owners, tenants and other consumers.”
She says it is part of a “suite of initiatives” designed to improve the rental market and ensure access to secure, healthy and affordable housing. She didn’t elaborate on what that suite is, but has said “nothing is off the table”.
Renters United, the lobby group representing tenants, has strong ideas about what it should contain. It wants the Tenancy Tribunal to change to an investigative model focused on establishing the facts of the case and resolving the dispute, and wants the Government to fund the tribunal for this.
“The existing enforcement system is funded almost entirely by renters from the interest earned annually on lodged bonds [$20.6 million in the 2016/17 financial year]. It is reasonable to expect that renters get from this investment a fair and responsive enforcement system.”
It points out that the Crown holds $9.8 million in abandoned bonds which will go back to the Crown.
“It is unacceptable that abandoned bonds, which are renters’ money, are not reinvested in services that would benefit renters. They should be invested in providing renters’ advocacy services to address the inherent power imbalance between tenants and landlords.”
Renters United also wants to anonymise tenants in the Tribunal rulings so renters are not deterred from standing up for their rights, and to allow renters to appoint advocates to represent them in mediation and at the tribunal. Further, they want to require all property managers be licensed, establishing a professional regulatory body that creates a code of ethics, coordinates professional development and sets minimum standards for the industry such as non-discriminatory application processes. They say that the body should be governed by representatives of property management companies, renters and the public. For those who breach standards, Renters United thinks the professional body should be able to sanction or delist the property manager.
Spokesperson Geordie Rogers adds: “The Minister of Renting should strongly believe that everyone has the right to a decent home whether they’re renting, in transitional housing, in state housing or do own a home. Until we can hold the powers to account for that view, we’re going to continue to see a residential tenancies act that focuses on the private property of the people who own those homes, rather than the rights of people who live in them.”
None of that is likely to happen quickly, if at all. Tenants, like Cam, are left to make do. The window in her flat still leaks, but she is staying there in the meantime.
“To be fair I haven’t asked him since then. I don’t particularly want to move out, so I will be staying here.”
She says there haven’t been any further issues with the tenancy and her relationship with her landlord has remained cordial.
Julian Balajadia has moved to another flat on Boulcott Street. It’s not great, but better than where he was. Despite his experience, he’s cheerful, and just pleased to be out of Marion Street. He says he won’t be going for a retrial or to take his case higher to the district court because he felt the process was unfair the first time around.
“It was two versus one in the room, when it is supposed to be just a tenant against the landlord. My specialty isn’t laws and regulations, so how was I meant to win?”
Postcsript
By James Hollings Associate Professor, Massey University School of Communication, Journalism and Marketing
This piece about the Tenancy Tribunal does not name the landlords involved. It is not because of lazy or sloppy journalism. It is because of New Zealand’s archaic defamation laws. We were advised by our lawyer that to name those involved would defame them and thus they could sue us for potentially thousands or hundreds of thousands of dollars because of damage to their reputation.
We could defend that case, by showing the evidence we have that our claims are true (under New Zealand law, the onus is on the writer to prove it’s true) but we would risk losing (if a jury happened to favour the landlords) and could also be faced with ruinous legal costs. Thus we made the difficult decision to publish this version, without names.
These defamation laws are a relic of the 18th century English law, which treats reputation (particularly those of the rich and powerful) as property which must be protected. However, in practice, only those with deep pockets can afford to use them. So they exist to protect rich people against journalists. And they do. We have the bizarre situation in New Zealand where you can’t sue for physical injury (because ACC covers that) but you can sue for reputational injury.
Yes, we do need a way of ensuring people are protected against false claims by news media. But it should be available to all people, not just the rich. We should axe these ridiculous laws and replace it with a system where people who can show the news media have got it wrong can get a simple correction published. No one’s reputation is so important it needs more than that.
* Not their real names
