Some types of living arrangements aren’t covered by the Act.

The Act applies to every residential tenancy (renting a place to live in), except in certain cases. The Act doesn’t cover, for example:

  • flatmates
  • student accommodation
  • holiday homes
  • hotels and motels
  • hospitals and rest-homes
  • commercial tenancies.

Section 5 of the Residential Tenancies Act(external link) explains all the different situations the Act doesn’t apply to.

The Act doesn’t always cover properties which cannot lawfully be used for residential purposes

Rentals that can’t be lawfully used for residential purposes could include:

  • illegally converted garages
  • unconsented dwellings
  • commercial properties used for residential use.

Landlords should not rent these types of premises for people to live in.

The Act may or may not apply when the property being rented cannot lawfully be used for residential purposes.

There are two High Court decisions that do not have the same view about how the Act is interpreted.

High Court decisions

One High Court decision (Anderson v FM Custodians) found that for the Act to apply the residential use needed to be lawful. Therefore the rent paid for the premises was considered to be illegal. In this case, the Tribunal awarded a rent refund to the tenant and exemplary damages of up to $1,000 under section 137 (‘Prohibited Transactions’). The Tenancy Tribunal has been relying on this decision to order rent paid be returned to tenants where the premises is an ‘unlawful residential premises’.

Another High Court decision made after Anderson v FM Custodians (Parbhu v Want) found that the Act does apply to all premises used for residential tenancies including those that may not be lawfully be used for that purpose. This case has been referred back to the Tribunal.

This decision means that the Tribunal (if following this decision) could apply the full range of remedies provided in the Act, including:

  • exemplary damages
  • work orders
  • compensation
  • rent reductions or refunds.

However, both decisions reinforce that landlords should not be renting residential premises to tenants if they do not comply with building, health, and safety requirements.

If you’re unsure if the Act applies to your situation you can apply to the Tenancy Tribunal for a decision.

The Residential Tenancies Amendment Bill (No. 2), which is currently being considered by Parliament, would protect residential tenants whether or not their rental premises are lawful for residential use.

The Act doesn’t cover flatmates

If a homeowner finds someone to live in their house with them and rents a room to them, that person is a flatmate. Their living arrangement isn’t covered by the Act.

If a few people rent a house together but some of them don’t sign the tenancy agreement, those who don’t sign aren’t tenants. They’re considered flatmates and their living arrangement isn’t covered by the Act.

Flatting has more on the difference between tenants and flatmates.

The Act doesn’t cover holiday homes

The Act doesn’t apply when the house is being rented for the tenant’s holiday purposes. In other words, the tenant actually lives somewhere else and is just staying in the house for a holiday.

If someone’s letting a house for holiday purposes, the common law of contract applies. They should negotiate the terms and conditions in writing, and make sure both parties sign copies of the agreement. They should also make sure the person renting the holiday home pays a deposit.

Some homeowners use specialised holiday home agencies to manage the entire process of finding and contracting with holiday-making tenants. These agencies usually have standard-form letting contracts governing the relationship between the tenant and the letting agent that’s acting for the homeowner.

Typically, holiday houses are let for short periods. If the homeowner wants to let their home to someone who wants it for a lengthy sabbatical or holiday, they could elect to ‘contract into’ the Residential Tenancies Act to avoid any doubt about whether the Act applies to their arrangement.

Who is protected under the Act has more information about ‘contracting into’ tenancy law.

Who tenancy law does protect

If a residential tenancy isn’t one of types mentioned above or in section 5 of the Act, then it’s most likely covered by the Act.

Who tenancy law protects has information about who is covered by the Act.

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