Published tribunal order
Tenancy Tribunal case 4432660 — Tenancy dispute at 16A St Matthews Place, Queenstown, Queenstown 9300
Decided 7 Nov 2023 · Published 7 Nov 2023 · Application 4432660
Party names are redacted in the official published order.
Order
- An application for suppression has been made in this case, and the Tribunal orders suppression of the Tenant’s name and identifying details.
- The weekly rent payable from 27 December 2022 is $1,350.00.
- Fisken & Associates Ltd is to pay $20.44 to the tenant immediately.
Reasons
- Both parties attended the rehearing of the tenant’s application for market rent on 19 October 2023.
- The tenancy of the subject property at 16A St Matthews Place, Queenstown commenced on 13 July 2020 and is current.
- On 28 October 2022, the landlord gave the tenant notice of a rent increase from $950.00 to $1,550.00, with the increase to take effect from 27 December 2022.
- The tenant on 3 November 2022 filed an application to the Tribunal challenging the proposed rent increase stating that “the amount they have proposed is excessive. We are currently pay(ing) $950 a week and they have increased it to $1550 which seems like a way to get us to move out so they can turn it into an AirBnB as previously planned”.
- At the initial hearing before adjudicator S Young on 22 December 2022, the Tribunal addressed the tenant’s application as an application for market rent pursuant to section 25 Residential Tenancies Act 1986 (‘RTA’).
- The Tribunal ordered a reduction in the rent payable for the premises to $1,200.00 per week.
- The landlord appealed against the Tribunal’s order of 22 December 2022 which appeal was heard by District Court Judge C N Tuohy on 22 August 2023.
- On 25 August 2023, DCJ Tuohy allowed the appeal, quashed the Tribunal’s order reducing the rent and ordered a rehearing in the Tribunal before a different adjudicator.
- The District Court judgment of 25 August 2023 set out the perimeters of the rehearing on these very instructional terms: [29] The first task for an Adjudicator at a rehearing will be to make a finding as to what the market rent is. That will require evidence. I recognise that truly independent evidence may not be available in a smaller district like Queenstown because the likely source of expertise is from real estate agents and property managers involved in the residential rental market who will generally act for landlords. However, rentals paid for comparative properties are objective facts which can be proven. It is only once a market rent is established that the Tribunal can decide whether the rent paid or payable exceeds it by a substantial amount. If it cannot be established an application under s 25 must fail.
- In the rehearing held in person before me on 19 October 2023, the tenant sought an adjournment of the hearing on grounds that they purportedly only knew about the rehearing two days ago and could not find anything relevant to submit and sought legal representation. I declined the tenant’s adjournment request as I consider that the tenant has had ample time since the District Court’s judgment of 25 August 2023 to gather sufficient evidence to adduce at the rehearing and to seek legal representation well ahead of the rehearing.
- Be that as it may, I allowed the tenant a further 7 days to submit documentation addressing the material issue of market rent vis-à-vis rent that, without regard to the personal circumstances of the landlord or the tenant, a willing landlord might reasonably expect to receive and a willing tenant might reasonably expect to pay for the tenancy, taking into consideration the general level of rents (other than income-related rents within the meaning of section 2(1) of the Public and Community Housing Management Act 1992) for comparable tenancies of comparable premises in the locality or in similar localities, prior to me determining this rehearing.
- The tenant on 26 October 2023 adduced written submission, survey data and a registered valuer’s rental appraisal containing data of rents paid in comparable premises in the locality or in similar localities.
- The tenant’s overall submission/complaint of the difficulty in getting “objective evidence” of market rent has already been addressed by DCJ Tuohy as follows: I recognise that truly independent evidence may not be available in a smaller district like Queenstown because the likely source of expertise is from real estate agents and property managers involved in the residential rental market who will generally act for landlords. However, rentals paid for comparative properties are objective facts which can be proven.
- The onus remains on the tenant as the applicant challenging the proposed rent increase and as the applicant for an order to reduce the proposed increase to an order that is in line with market rent to establish what that market rent is.
- It goes without saying that I am bound by those principles stated by the District Court, which articulation of the applicable law and procedure is clear and unambiguous.
- While I may have some sympathy for the tenant’s plight, I cannot be persuaded by the following tenant’s submission of “context” filed on 26 October 2023: The first point of call was to start calling agents to speak with see if they could help and a paid evaluation of market value. No one could give a rental appraisal unless I was the owner of the house. I have spoken with over 8 companies which is where I gave up. All the agents agreed it was well over market rent and that they were all very sympathetic and said they hated what is happening in Queenstown. They all agreed that it is well overpriced, however, they wouldn't go on the record or send me any of their rented properties to pass on. The justification as it goes against the whole business model and there is too much conflict of interest, they all know each other and work together, work for the landlords etc, etc. I get it but Totally immoral and unethical in my opinion.
- As DCJ Tuohy duly pointed out, “it is only once a market rent is established that the Tribunal can decide whether the rent paid or payable exceeds it by a substantial amount. If it cannot be established an application under s 25 must fail.”
- Consequently, the perceived difficulty by the parties in obtaining objective, relevant evidence is of little value to my ultimate determination of the tenant’s application for market rent before me. Simply put, if there is no or insufficient evidence of what market rent is, I will not be able to establish if rent payable exceeds by a substantial (or any) amount, and my only option is then to just dismiss the tenant’s application altogether.
- I also do not consider data from the Queenstown Housing Renewed Survey and other anecdotal information submitted by the tenant helpful nor relevant to my market rent assessment of the subject property.
- That said, there is ultimately sufficient evidence before me (adduced by both parties at and since the rehearing on 19 October 2023) which enables me to make a finding on what rent a willing landlord might reasonably expect to receive and a willing tenant might reasonably expect to pay for the tenancy at 16A St Matthews Place, Queenstown.
- In reaching my conclusion, I have taken into consideration the general level of rents (other than income-related rents) for these comparable tenancies of comparable premises in the locality and in similar localities: a. 4 bedroom, 3 bathroom unfurnished property at 5 Lancewood Lane rented out at $1,500 per week; b. 4 bedroom, 3 bathroom unfurnished property at 7 Woods Lane, Queenstown rented out at $1,550 per week; c. 4 bedroom, 2.5 bathroom unfurnished property at 32 Quill Street, Lake Hayes rented out at $1,400 per week; d. 4 bedroom, 3 bathroom property at 1 Whitbourn Place, Fernhill rented out at $1,800 per week; e. 4 bedroom, 3 bathroom furnished property at 574 Peninsula Road rented out at $1,500 per week; f. 4 bedroom, 3 bathroom semi-furnished property at C/11 Angelo Drive rented out at $1,600 per week; g. 4 bedroom, 3 bathroom semi-furnished property at B/9 Angelo Drive rented out at $1,550 per week; h. 4 bedroom, 4 bathroom furnished property at 22 Alpine Ave rented out at $1,800 per week; i. 3 bedroom, 2 bathroom furnished property at 15 Skye Lane, Jack’s Point rented out at $1,300 per week; j. 4 bedroom, 2 bathroom unfurnished property at 108 Jack Hanley Drive, Jack’s Point rented out at $1,150 per week; k. 4 bedroom, 3 bathroom furnished property at 389 Littles Road, Dalefield rented out at $1,500 per week; l. 4 bedroom, 4 bathroom furnished property at 10-30 Alpine Avenue, Lake Hayes Estate rented out at $1,600 per week; m. 4 bedroom, 3 bathroom furnished property at 13 Oliver’s Place, Queenstown Hill rented out at $1,600 per week; n. 4 bedroom, 2.5 bathroom unfurnished property at 6 Conifer Lane, Queenstown-Lakes rented out at $1,350 per week; o. 4 bedroom, 3 bathroom furnished property at 4 Suburb Street, Queenstown-Lakes rented out at $1,550 per week; p. 3 bedroom, 2 bathroom property at Essex Ave, Arrowtown , Queenstown-Lakes rented out at $1,350 per week; q. A 261m 2 4 bedroom, 3 bathroom property on Lancewood Lane rented at $1,650.00 per week considered by APL Property Queenstown Limited in their residential rental assessment report dated 26 October 2023 as “a far superior offering.” r. A 206m 2 4 bedroom, 3 bathroom property on Angelo Drive rented at $1,600.00 per week considered by APL Property as “overall, slightly superior due to quality and being a new build.” s. A 274m 2 4 bedroom, 3 bathroom property on Olivers Place rented at $1,600.00 per week considered by APL Property as “a far superior offering.” t. A 237m 2 4 bedroom, 3 bathroom property on Woods Lane rented at $1,450.00 per week considered by APL Property as “a far superior offering.” u. A 375m 2 4 bedroom, 3 bathroom property on Angelo Drive rented at $1,995.00 per week considered by APL Property as “overall, a far superior offering.” v. A 300m 2 4 bedroom, 2 bathroom property on Belfast Terrace rented at $1,100.00 per week considered by APL Property “to be in a superior location but overall, a superior if not slightly comparable property. Overall, the most compelling evidence” and a “modern dwelling in elevated Queenstown Hill position overlooking Queenstown CBD.”
- Against the above data, and as described by DCJ Tuohy at [2] of the District Court judgment, 16A St Matthews Place, Queenstown is a modern stand- alone home with a double garage and two off-street car parks situated on the hillside above the Frankton Arm of Lake Wakatipu with spectacular views over the lake and the Remarkables mountain range. The subject property is rented fully furnished and has 4 bedrooms, 2.5 bathrooms, a separate laundry, separate toilet, spa pool and open plan living areas spread over three floors.
- Section 25(3) RTA also requires me to consider these reports and appraisals in the context of “such other matters as the Tribunal considers relevant”: a. Rental appraisal of 16A St Matthews Place, Queenstown issued by the director of Divine Property Management of $1,400.00 in weekly rent as at December 2022. The appraisal noted the subject property as a “stunning property ideally located on Queenstown Hill within easy distance to schools, transport, shopping centres and recreational facilities...comes with an underground double garage, a spa pool and landscaped gardens” based on their data comprising of three comparable rental properties at 87 Hallenstein ($1,750), 21a Avalon Crescent ($1,500) and 14 Anglesea Street ($1,300); and b. Residential rental assessment of 16A St Matthews Place, Queenstown issued by a registered valuer of APL Property Queenstown Ltd of $1,200.00 in weekly rent as at 27 December 2022. The registered valuer’s appraisal was based on rental information from “house rental companies that rent properties in and around Queenstown as well as from reputable market data sources we have access to. They have suggested that rentals for four bedroom properties in this area are expected to rent from $1,000 to $1,300 per week. This can depend on the size and number of bedrooms, quality of the building and the number of people renting the property.”
- The residential rental assessment of 16A St Matthews Place, Queenstown issued by APL Property Queenstown Ltd on 26 October 2023 noted that they based their assessment on the assumption that there are basic furnishings included in the tenancy but noted that “these are of minimal value considering the condition”. APL Property have included the spa pool in their assessment although given its condition, APL Property Queenstown considers that “it offers little to no value”.
- The APL Property report noted the subject property as “an irregularly shaped residential site with narrow frontage to cul de sac street. The site has moderate to steep contour, sloping up and widening as it goes back to the rear of the site to the west. The site enjoys excellent southerly views, good easterly views with some westerly views. Queenstown Hill locations such as this have limited sunlight hours in winter with Queenstown Hill to the North. The site is exposed to dominant southerly winds also.” The report also describes in some detail the fixtures and fittings, layout and design on the subject property, as well as the property being “presented in good condition with reasonable fair wear and tear. There is a blocked stormwater drain.”
- APL Property noted the subject property as being built around 2017 with a total floor area of 231.5m2 plus a 27.5m2 deck and concluded that there would be minimal grounds for a substantial increase beyond the amount currently appraised at $1,200 per week.
- Taking the above data of comparable properties and rental appraisals into account, I consider that the market rent of the subject property as at 27 December 2022, ie., the date that the rent was due to increase, is $1,350.00.
- I consider that the landlord’s proposed rent increase of $1,550.00 exceeds the market rent of $1,350.00 by a substantial amount.
- Pursuant to s 25(1) RTA, I hereby make an order reducing the rent to $1,350.00, in line with the market rent.
- Section 25(4) RTA provides that an order made under this section shall take effect on and from a date to be specified in the order, which may be the date of the order or any earlier or later date, but being no earlier than the date of the application for the order and no later than 30 days after the date of the order.
- While the date of the tenant’s application is 3 November 2022, the rent was only due to be increased by the landlord’s 28 October 2022 notice on 27 December 2022. Accordingly, I order that the weekly rent payable from 27 December 2022 is $1,350.00.
- I also order the landlord to reimburse the tenant the Tribunal filing fee of $20.44 as the tenant has been largely successful on the market rent application which resulted in an order reducing the landlord’s quantum of rent increase. Section 102(4) RTA provides that if the applicant has been partly successful in his or her claim, the Tribunal may order that the respondent pay the applicant the filing fee paid for the application.
- Lastly, the tenant requested the Tribunal to order the landlord to pay costs of $2,280 which is based on the tenant having to take 6 days off work, calculated at 9.5 hours X 6 days at $40 an hour. The tenant also sought “compensation” of $747.50 being APL Property Queenstown Ltd’s valuation cost.
- However, nothing on the market rent provisions under section 25 RTA allows the Tribunal to order the landlord to pay a successful applicant on the market rent application the tenant’s costs or compensation.
- I do not consider that the landlord has necessarily breached the tenancy agreement or the RTA when it proposed to increase the rent to $1,550.00 with effect from 27 December 2022.
- What the market rent provisions under section 25 RTA provide is a mechanism by which the landlord’s proposed rent increase may be challenged by a tenant resulting in a Tribunal order reducing the rent to an amount that is in line with the market rent on the Tribunal being satisfied that the rent payable or to become payable for the tenancy exceeds the market rent by a substantial amount.
- Consequently, there is no basis for me to award the tenant compensation for incurring the valuer’s costs.
- The valuer’s costs of $747.50 along with the tenant’s own costs of $2,280.00 incurred in these proceedings are not claimable. Section 102(1) RTA provides that except in a case to which any of subsections (2), (4), or (5) apply, the Tribunal shall have no power to award costs to or against any party to proceedings before it.
- Neither subsections (2) nor (5) of s 102 apply to this case. The parties were not represented by counsel. The Tribunal is not giving effect under s 102(5) to a provision in a tenancy agreement requiring one party (the debtor) to reimburse the other party (the creditor) for any reasonable expenses or commissions paid or incurred by the creditor in recovering, or attempting to recover, any overdue payment that the debtor owes to the creditor under an order of the Tribunal.
- Ultimately, only section 102(4) RTA applies; I have accordingly ordered the reimbursement of the filing fee paid by the tenant.