HOT TOPICS:   Election 2014  |    NZ$   |  Double shot interviews                                         RESOURCES:    Economic calendar   |  Political party policies

The comment stream

Reader poll

Have rising residential property values left you better or worse off financially?

Choices

Join the Interest community to be a registered commenter so you can:
- Edit your comments
- Avoid the CAPTCHA
- Vote on comments
Register Here

Already registered? log back in here ..

Forgotten your password? No problem! Click here

Christchurch renters locked into leases in damaged but still habitable homes entitled to reductions

Posted in Property

By Amanda Morrall

Christchurch renters tied into fixed-term leases in 'partially destroyed' but still habitable property may be eligible to seek relief in the form of rent reductions.

Insurance law specialist Duncan Webb, with Lane Neave in Christchurch, said provisions of the Residential Tenancy Act (RTA) gave renters more rights than they may be aware of. A key entitlement is the ability to request a rent reduction on properties where damage, direct or indirect, had been sustained since the time of the intial signing of a lease.

While section 59 of the RTA was open to interpretation, Webb argued that going without power and water for a prolonged period of time were reasonable grounds on which to ask for a reduction in rent.

"Where there is damage to the property but it is still habitable, there has to be a rent reduction to reflect in a fair and equitable way, the loss of amenities."

The amount by which rent could be reduced was more uncertain, he added.

"Because you can't plan for these things, there is no evaluation. So it's up to the parties to agree, or if they can't agree go to the Tenancy Tribunal to sort out what a fair reduction is."

Under current circumstances, Webb argued it was a matter that could be dealt with retroactively, if there were no agreement between the parties on what constituted fair rent.

In the case of commercial leases, Webb said some renters occupying damaged but still habitable buildings were unilaterally dictating the terms.

"They're making up their own mind about what's fair, reducing the rent and then saying, 'Well, if you don't like it, we can talk about it later.'"

Meanwhile, Civil Defence in Christchurch issued a warning Monday that the city is at increased risk of disease and vermin, due in part to abandoned properties.

Rubbish left in vacant houses, broken food containers and the amount of wastewaste going into the Avon and Heathcote rivers was to blame, authorities said.

Remaining residents were requested to put their neighbours' rubbish bins out for collection if they have left their homes.

Dialogue important

The Department of Building and Housing is encouraging landlords and tenants to maintain good relationships through open communication.

The Tenants Protection Association (TPA) in Christchurch is advocating the same but said tensions between landlords and renters were mounting.

In light of what's shaping up to be a scarcity of habitable residential properties, Chrichurch landlords have started putting up rents. The Tenants Protection Association told interest.co.nz last week that it was calling for rental freeze to ease financial pressures Cantabrians affected by the earthquake. (See article here.)

It is estimated that more than 75,000 Christchurch residents have left the city since the Feb.22 earthquake. It remains unclear how many intend to return.

Some insurers, facing claims by earthquake affected businesses, have tried to excuse themselves from responsibility on the basis of a 'depopulation.' The concept was employed by some insurers in New Orleans to stem the volumes of payable claims arising from Hurricane Katrina. (For more see Andrew Hooker's colum in the subject.)

RTA Act Section 59

59 Destruction of premises
  • (1) Where, otherwise than as a result of a breach of the tenancy agreement (whether for a fixed-term tenancy or a periodic tenancy), the premises are destroyed, or are so seriously damaged as to be uninhabitable,—

    • (a) the rent shall abate accordingly; and

    • (b) either party may give notice to the other terminating the tenancy.

    (2) Where a landlord gives notice of termination under subsection (1), the period of notice shall be not less than 7 days.

    (3) Where a tenant gives notice of termination under subsection (1), the period of notice shall be not less than 2 days.

    (4) Where, otherwise than as a result of a breach of the tenancy agreement, the premises are partially destroyed, or part of the premises is so seriously damaged as to be uninhabitable,—

    • (a) the rent shall abate accordingly; and

    • (b) either party may apply to the Tribunal for an order terminating the tenancy, and the Tribunal may make such an order if it is satisfied that it would be unreasonable to require the landlord to reinstate the property or (as the case may require) to require the tenant to continue with the tenancy albeit at a reduced rent.

    Compare: Residential Tenancies Act, 1978-1981 (South Australia), s 71

    Section 59(1): amended, on 1 October 2010, by section 40 of the Residential Tenancies Amendment Act 2010 (2010 No 95).

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment in the box on the right or click on the "'Register" link at the bottom of the comments.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

8 Comments

"It is estimated that more

"It is estimated that more than 75,000 Christchurch residents have left the city since the Feb.22 earthquake."

These sort of dramatic statements need to be qualified.  75,000 is 1 in 5 ChCh residents.  A lot of people have gone away for a short break but the vast majority have or will be coming back.  

It is my experience that some

It is my experience that some tenants have little ability to put themselves in the shoes of a landlord, who is also trying to deal with damage to property/properties.  Those who have personally owned property have better understanding, but those who have never owned often have little idea.

Considering world events

Considering world events including food/ petrol prices the question of rent reduction isn't only in Christchurch, but nationally forced on landlords -  Olly, an upcoming war zone. 

Of course force majeure is

Of course force majeure is not an excuse for any body except the insurance companies.

Landlords who have hiked

Landlords who have hiked rents in the wake of the Christchurch earthquake have been branded looters

http://www.stuff.co.nz/national/christchurch-earthquake/4751325/Post-Christchurch-earthquake-rent-hikes-looting-by-another-name

Yeah and after all the money

Yeah and after all the money that the country has donated to them they still do it. Its absolutely unconsionable (pardon spelling). The agents are just as bad, they are actually telling people to hike their rents, absolute crooks. Really shows you the true face and nature of the business they are in. Greed in its truest form.

The tenancy law comments

The tenancy law comments attributed to Duncan Webb, an apparent insurance law expert, are muddled.

Section 59 of the RTA is open to little interpretation, as stated, because its meaning and intent is quite clear.

The lack of a power and/or water supply was likely to have accured due to damage to the mains supply network, not to damage to anything at the property. Section 59 does not therefore apply.

A tenant may request a reduction in rent due the the reduction in facilities but this is a different matter and not covered by s59.

A tenant requesting a reduction or rebate based on s59 will need to show that damage to the property has meant that they are unable to use part of the property that they originally signed up to. An example might be that the garden shed has collapsed. 

A more informed opinion of s59 would also note that a rent reduction in the above example is not open for negotion (the amount might be but not the necessity for a reduction).

"The rent shall abate accordingly".

A landlord who chooses to keep quiet and not to offer a rebate may therefore be in breach of s59.. That of course is opening a can of worms.

 

 

 

Hi, You stated that "A

Hi,

You stated that "A tenant may request a reduction in rent due the the reduction in facilities but this is a different matter and not covered by s59"

I was wondering what the relevant law is for a reduction in facilities? Under what section or general law could a tenant receive a reduction in rent due to interruption in facilities/utilities?

Thanks