To preserve the value of a rental property, many landlords choose to insert certain clauses into the tenancy agreement relating to things which could cause damage or unnecessary wear and tear to the property. This flexibility to add clauses to a tenancy agreement exists to give landlords security in their investment, however, there are limitations.
Adding a clause to an agreement that breaches the Residential Tenancies Act, will not only result in the clause being ineffective but could also be considered an unlawful act.
To keep yourself from facing expensive fines, tribunal hearings, and frustrated tenants, you must understand what an unenforceable tenancy clause is and how you can protect your property without them.
Residential Tenancies Act - Section 137
The Residential Tenancies Act is designed to protect both landlords and tenants so that both parties can get what they need out of the lease. Section 137 was introduced to safeguard tenants against late changes to their tenancies, especially those that conflict with the Act.
In a nutshell, Section 137 states that anything contradicting the Residential Tenancies Act is null and void, even if both parties have agreed to it. The landlord risks a hefty fine and complicated tribunal hearing, and the protective measure they were expecting to enforce will be completely ineffective. This helps to prevent fraudulent activities and assures that every tenancy in New Zealand is compliant with legal and ethical standards.
What are unenforceable tenancy agreement clauses?
If you want to incorporate specific additional terms into your residential tenancy agreement, you can, but you need to be cautious.
Landlords cannot impose rules that are outside the law, and tenants cannot sign away their rights. In other words, unenforceable clauses include anything that is:
- Evasive of requirements under the Residential Tenancies Act.
- Unfair or against public policy.
- Confusing or unclear.
- Trying to remove or reduce the tenant’s rights.
- Trying to grant more rights to the landlord.
- Requiring the tenant to do more than is legally required.
Not only will the addition of unlawful clauses be instantly invalid, but the issue will also be taken very seriously by the tenancy tribunal. To avoid an expensive fine or problematic order, it is wise to seek expert advice before editing your tenancy agreement.
At McDonald Real Estate, our friendly team has all the industry experience you need. This includes which clauses are lawful, which to avoid, and how to protect your rental property from risks.
What clauses can I add to my tenancy agreement?
When preparing to rent a property out, it’s only fair to have concerns about wear and tear, damage, and other common problems. To minimise these, there are some restrictions you can incorporate into your tenancy agreement that are within reason and enforceable, including:
- Smoking bans inside the house.
- Limits on the number of occupants living in the house.
- Designated no-parking zones.
- A statement about pets, including how many and what types are allowed, if any.
- Methamphetamine testing.
While these stipulations are permissible, you will need to seek expert help to be certain they are executed correctly. Both the landlord and tenants must initial all pages of the tenancy agreement to show they have read it and agree to the lawful clauses that have been added. All affected parties must sign it before it can be legally binding.
Before adding anything to your tenancy agreement, discuss them with your legal and property management professionals.
What can't I add to my tenancy agreement?
Unenforceable clauses include anything unlawful, unreasonable, or ambiguous. Before setting any new conditions, you must first check that it is aligned with the Residential Tenancies Act.
Given the legal jargon and complexities involved, we recommend seeking help from your property manager or lawyers. You can also contact Tenancy Services for advice.
Examples of unenforceable clauses
To give you an idea of what unenforceable clauses look like, here are some common examples:
Example one: Requiring the tenant to have the carpets cleaned
According to the Act, tenants are responsible for leaving the house in a reasonably clean and tidy condition at the end of the tenancy. A clause that requires them to pay for professional carpet cleaning services is in contradiction to this because it does not factor in the state of the house.
The landlord must first inspect the house and if there are no major issues with the cleanliness, it is illegal to charge them for this extra service. The carpets only have to be cleaned if they are not clean at the end of the tenancy. You would have to prove that they were not clean in order to expect them to be cleaned — in this case, taking photos of them to compare to the photos taken when the tenant moved in would be helpful.
Example two: Requiring a tenant to replace fixtures and fittings
The Act clearly states that the landlord is responsible for maintaining the premises to a reasonable state of repair. Expecting the tenant to pay for and complete replacements or repairs is in direct opposition to that.
If the occupant damages the house through negligence or reckless behaviour, you will have more of a case. However, you cannot enforce any charges before the event.
Example three: Requiring more than 28 days’ notice for a periodic tenancy
To end a periodic tenancy, tenants must give the landlord a minimum of 28 days' written notice. If you ask for more than that, you are breaching the Act and the clause will be invalid.
Example four: Banning visitors from staying in the house without the landlord's consent.
It is illegal for landlords to harass the tenant or interfere with their quiet enjoyment of the property while they are renting it. Any clause that disrupts their reasonable peace, comfort, and privacy is automatically ineffective. Provided occupants are respectful of neighbours, there is no legal reason they cannot have guests over or have guests stay.
Example five: Requiring the tenant to install smoke alarms
A clause stating that the tenant will be responsible for installing any smoke alarms is in flagrant violation of the Act. The landlord must ensure that smoke alarms are installed and working at the start of each new tenancy and that they remain in working order during the tenancy.
The tenants must not damage or disconnect a smoke alarm. The tenant must let the landlord know if there are any problems with the smoke alarm. As the owner only sees the smoke alarms at inspections, it is extremely important for the tenant to notify the owner if the smoke alarm stops working.
How to protect your rental property
While some clauses are unenforceable, there are other ways to protect your real estate investment while renting it out without resorting to unenforceable clauses. A good place to start is with:
- Landlord insurance.
- Vetting your potential renters.
- Installing security measures.
- Documenting everything.
- Conducting regular, legal inspections.
Managing a property involves many responsibilities, from vetting tenants and organising inspections to processing paperwork and handling conflicts.
With the threat of legal complications added in, enlisting the help of a skilled property manager will save you time, money, and a considerable amount of stress. This way, you can be secure in knowing that your tenancy agreement is totally legitimate.
With a McDonald Real Estate property manager, you can rest assured that your rental property is in the best hands. Our team is well-versed in tenancy law and knows what it takes to protect your investment without the need for an unenforceable clause.
Why not reach out for a free, no-obligation appraisal of your property before you decide?
How to avoid the tenancy tribunal
If you hope to avoid the expensive fallout and legal hassle of a hearing due to unenforceable or illegal tenancy clauses, your residential tenancy agreement must be fully compliant with the Act. If not, the tribunal can give you an order to pay compensation and complete any relevant tasks as required by tenancy law.
For your protection, seek expert advice about your rental property and any clauses you wish to add from a licensed property management provider. At McDonald Real Estate, we have years of experience handling these cases and know all the best industry practices to ensure things go smoothly.
We can help you to understand how and when to edit your tenancy agreement, as well as the most effective ways to protect your investment.
