PHOTO: Property Management. FILE

A prominent property management company, known as one of the largest landlords in the country with 600 rental properties under its management, has been fined for deceiving its tenants into believing they had fewer rights than they actually did.

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The company included several clauses in its tenancy agreements that violated the Residential Tenancies Act (RTA). These clauses covered unlawful rent increases, extensions of the notice period required for tenants to vacate their properties, and demanding only four hours’ notice for the landlord to access the property.

The Tenancy Tribunal has recently ruled that these clauses did not align with the RTA and imposed a fine on Property Management Wellington Ltd, which also failed to provide evidence that its properties complied with Healthy Homes standards. In his findings, tribunal adjudicator Rex Woodhouse stated, “My impression is that the landlord deliberately evaded its obligations under the RTA and misled its tenants into thinking they had fewer rights than they did.”

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Woodhouse noted that the company claimed to have 600 tenancies, making it one of the largest landlords in New Zealand. He also pointed out that the number of affected tenancies could be as high as 600, which is a significant number by any measure. He emphasized that a landlord of this size should be well aware of its legal obligations.

Interestingly, it was not a tenant but the Ministry of Business Innovation and Employment that brought the company to the tribunal. The ministry’s tenancy compliance and investigations team examined the company’s five most recent tenancy agreements and found breaches of the law. They issued an improvement notice, requiring the company to rectify these agreements and any other non-compliant properties.

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The company failed to make the necessary improvements, leading the ministry to take the case to the tribunal, resulting in a $2,000 fine. Geordie Rogers, the president of Renter’s United, described this fine as “insufficient” for a company the size of Property Management Wellington, expressing a need for landlords to comply with the law.

This marks the first prosecution of this kind of offense since the legislation came into effect in 2021. During the hearing, the company’s director, Craig Relph, stated that the necessary changes to the tenancy agreements were made by February of the previous year but acknowledged that the 600-odd tenancies with problematic clauses were not backdated. Relph also claimed that some conditions were verbally explained to tenants and that updating all existing agreements would be near impossible. He stated he was unaware of the improvement notice issued by MBIE.

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Woodhouse dismissed these claims, citing email evidence that showed Relph was aware of the notice and instructed an employee to provide the requested information to MBIE. He also emphasized that the company’s size did not exempt it from following the rules and clarified that having the unlawful clauses in the agreement itself constituted an offense.

A spokesperson for Property Management Wellington Ltd, which claimed not to own any of the managed properties, expressed disappointment in the tribunal’s decision. The spokesperson acknowledged that there was no intention to mislead tenants and stated that the issue related to only five out of the 600 agreements they managed. The company accepted responsibility for the error and should have notified tenants affected by the unlawful agreements.

The company has since implemented industry-standard leases provided by a third-party. In response to the tribunal’s ruling, MBIE’s national manager for compliance and investigation, Brett Wilson, expressed disappointment that a large company failed to comply with the law and stressed the importance of property managers being aware of their obligations under the RTA.

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Rogers suggested that an improvement notice could serve as a means for third parties like MBIE to intervene in breaches of renters’ rights, potentially paving the way for individual tenants to take similar action against the company if they had unlawful clauses in their own agreements.