Service tenancy agreements

All service tenancies need a written tenancy agreement. Even if the tenant does not pay rent, it is still a service tenancy. The tenancy agreement can sometimes be part of the employment contract, but it is better if they are separate.

The Residential Tenancies Act 1986 (the Act) applies to service tenancies. Landlords and tenants are responsible for meeting their obligations under tenancy law. For landlords, this includes ensuring the property is maintained to a reasonable standard, has appropriate working smoke alarms, meets health and safety requirements, and is compliant with the healthy homes standards.

Landlords must also provide the tenant with certain information and statements, including an insurance statement and a healthy homes standards compliance statement.

Healthy homes standards

Tenancy agreements

Required statements for tenancy agreements

Tenancy law changes

Rent can be deducted from the tenant’s wages

The landlord may deduct the rent directly from the tenant’s pay each week or fortnight. They can only do this if:

• the tenant agrees
• it is in the employment contract, or
• it complies with employment law.

If there is a longer pay period (eg due to a holiday), the landlord can deduct the rent for that same longer period.

Ending a service tenancy

A service tenancy normally ends when the tenant’s employment or engagement ends or is transferred. The notice period is different to other tenancies in these circumstances but otherwise the normal rules would apply.

If the tenant's employment is ending

The landlord or the tenant must give at least 14 days’ written notice to end the tenancy. This notice can only be given if the tenant's employment has ended or either party has given notice for it to end.

In some situations, if the tenant’s employment has ended the landlord can give less than 14 days' notice. This also applies if the tenant is transferred with less than 14 days’ notice. This can only happen if:

• the landlord has reason to believe the tenant will substantially damage the premises if they stay for the full 14 days
• the landlord’s business needs to have a new employee in place in less than 14 days. There must be no other accommodation available for that employee during the 14 days.

A notice to end the service tenancy in the above situations cannot take effect before the employment or engagement ends or before the transfer occurs.

If the tenant's employment is continuing

If the tenant wants to end their tenancy before their employment has ended, they must give 21 days' written notice.

If the landlord wants to end the tenancy before the employment agreement ends, they must give written notice as they would for a periodic tenancy.

Ending a periodic tenancy

A service tenancy can be ended through an application to the Tenancy Tribunal for rent arrears, anti-social behaviour or for physical assault by the tenant or any other lawful circumstance that applies.

Rent arrears and overdue rent

Dealing with anti-social behaviour

Ending a tenancy for physical assault by the tenant

Other legal obligations

Employee rights — Employment New Zealand(external link)

Safe working environments — WorkSafe(external link)

Worker accommodation — WorkSafe(external link)

Options for providing accommodation for your employees

As an employer, you may wish to provide accommodation for your employees while they are employed with you. To obtain a property to use for a service tenancy, you could enter a lease under the Property Law Act 2007 for a property with the property owner with the intention of providing that property for your employees to live in.

• This initial arrangement between the landlord (property owner) and the sub-landlord (the employer) is not covered by the Act. We recommend you seek legal advice before entering this type of arrangement to ensure it suits your circumstances.
• Once you have entered into a lease under the Property Law Act 2007 with the property owner that allows you to rent the property to your employees you will be able to enter into a residential tenancy agreement with your employee(s), signed and in writing. You become the landlord, your employee becomes the tenant, and the agreement is covered by the Act. Any bond collected must be lodged with Tenancy Services. Generally, this type of agreement will be a service tenancy.
• If your lease agreement with the property owner were to end (for example at the end of a fixed term agreement) you could give notice to end the tenancy with your tenant, even if they are still employed with you.

Ending a periodic tenancy

Other options for providing accommodation for employees

Other options for providing accommodation to your employees include:

• Purchasing a property to use as accommodation for your employees (and possibly others). This can be rented out as a service tenancy. Depending on the size of the property you could consider renting out the whole house, on a room-by-room basis or operate it as a boarding house.

Boarding houses

• Rent or lease cabins to provide accommodation (if appropriate). These can be rented out as a service tenancy
• If you are a large employer, you may wish to consider setting up barracks or a hostel to house your employees. This type of accommodation is excluded from the Act unless you choose to contract in
  • You can choose parts of the Act to contract into. If you choose this approach, you should seek legal advice about which parts or provisions you are choosing to contract into with your tenants
  • We also recommend talking to your local council about any local rules that may apply to this type of accommodation
• If you are a Recognised Seasonal Employer (RSE) then there are specific criteria that you need to adhere to.

Recognised Seasonal Employers list — New Zealand Immigration(external link)