What was Tenancy Tribunal case 4679789 about?

The tribunal order states: An application for suppression has been made in this case, and the Tribunal

How much money was awarded in case 4679789?

Verified claim lines are listed on this page.

What type of tenancy dispute was case 4679789?

The dispute type was not classified.

Where can I read the official tribunal order for case 4679789?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/9664615-Tribunal_Order_Redacted.pdf.

What was Tenancy Tribunal case 4679789 about?

The tribunal order states: An application for suppression has been made in this case, and the Tribunal

How much money was awarded in case 4679789?

Verified claim lines are listed on this page.

What type of tenancy dispute was case 4679789?

The dispute type was not classified.

Where can I read the official tribunal order for case 4679789?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/9664615-Tribunal_Order_Redacted.pdf.

New Zealand Tenancy Tribunal Case 4679789 — Tenancy dispute

Order

An application for suppression has been made in this case, and the Tribunal orders suppression of the tenants’ names and identifying details.
The tenants’ application is dismissed.

Reasons

Both parties attended the hearing. Ms Bayliss from Max Property, the landlord’s property managers, represented the landlords.
The tenant has applied for a market rent assessment. Sections 25(1) and (3) Residential Tenancies Act 1986 (the Act) provide: (1) On an application made to it at any time by the tenant, the Tribunal may, in accordance with the succeeding provisions of this section, on being satisfied that the rent payable or to become payable for the tenancy exceeds the market rent by a substantial amount, make an order reducing the rent to an amount, to be specified in the order, that is in line with the market rent. (3) For the purposes of this Act, the market rent for any tenancy shall be the 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 and such other matters as the Tribunal considers relevant.
The tenant must prove on the balance of probabilities that the rent exceeds market rent by a substantial amount. The term 'substantial' is not defined in the Act, but it must mean more than minor. Some earlier Tribunal cases suggested a 'rule of thumb' of 10% over market rent. However, a rule of thumb based on a specific percentage has no legal status and as rents rise, often above the rate of inflation, any percentage also rises and becomes more significant.
The test for market rent is the amount “a willing landlord might reasonably expect to receive, and a willing tenant might reasonably expect to pay for the tenancy”.
The concept of the 'market' is constrained by the requirement that both parties be 'willing', and that the rent meets their 'reasonable' expectations.
The factors the Tribunal may have regard to are “the general level of rents ... for comparable tenancies of comparable premises in the locality or in similar localities and such other matters as the Tribunal considers relevant”.
The evidence for comparable rents is usually based on advertisements for similar premises in the locality. This evidence has its limitations. Although advertisements usually list the essential features of the property advertised, there is often limited qualitative information available for comparison. Also, advertisements only cover houses currently on the market and do not necessarily reflect the overall level of rents charged for existing similar tenancies in the area. As well, the rent advertised are not necessarily the rent that is agreed.
It is also common for parties to refer to the 'market rent' statistics published by Tenancy Services. These statistics cover the rents charged for tenancies where bonds have been lodged over the preceding 6 months (with a one - two-month delay). The statistics include median rent as well as upper and lower quartile and they are (usually) broken down by type of property – two-bedroom flat, three- bedroom house and so on.
Section 25(4) of the Act provides that a market rent order may not take effect any earlier than the date of the application or any later than 30 days after the date of the order. The order may last for up to 6 months in the case of a periodic tenancy, or for such shorter period the Tribunal specifies. In the case of a fixed term tenancy, the order remains in force for the period specified in the order. Evidence and Discussion
This tenancy began on 21 September 2020 at a weekly rent of $695. The rent was increased on 24 October 2022 to $765. The rent was increased again from 13 November 2023 to $780.
[Suburb 1], where the premises are situated, is one of the hill suburbs of [City]. There is not an abundance of rentals in the hill suburbs of [City] and so that makes finding comparable rentals problematic. The parties were not able to produce any comparable rentals in [Suburb 1], apart from the similar property next door, also owned by the landlord, which has just been rented at $760 per week. As well, the bond information available from Tenancy Services for [Suburb 1] is limited.
The tenants produced information for the period January to June 2023 for [Suburb 1] rentals which showed 105 bonds lodged and rents of $213 for the lower quartile, $520 for the median quartile and $683 for the upper quartile. But there is no breakdown by type of property.
That means that upper quartile includes properties from bedsits to five- bedroomed houses. Plainly that could include a wide range of properties. Judging by data relating to other hill suburbs, it is likely that it includes fewer large, family sized properties. Such properties tend not to be available to rent although there are some.
The tenants submitted that the premises, a three-bedroom, three-bathroom open plan living area property would be below average in terms of value for the area. There was no evidence for that although I accept that there are likely to be plenty of more substantial homes in the area. But we are dealing here with rentals which, as far as I can tell from the available data, are unlikely to include many substantial family homes.
The tenants point out that the premises has no garden area and outside decks are overlooked by the landlord’s property next door. The premises are finished to a high standard, and in that respect would certainly be near the top end of rental properties. I would describe them as a high-quality town house on the hill with a lovely view over the city to the hills.
The tenants were very critical of the Rental Appraisal produced by Max Property. Whilst I don’t agree with some of the more trenchant criticisms of the Appraisal, I did not find the Appraisal helpful. The rentals it refers to are not good comparable properties to the premises. They also produced an independent appraisal, but it contains no comparable or other supporting evidence and so that is not helpful either.
The tenants’ evidence was more relevant, although the three comparable properties referred to are all on the flat and not in [Suburb 1]. To my mind the most helpful comparable cited is [Address] advertised at $670 per week. It is a slightly more spacious and higher quality town house on the flat. That does beg the question, what is the value of a view over the city to the hills?
I note that the tenants use the relative rateable values of properties to calculate the likely market rent for the premises. In my view, that is not a reliable method. There are too many variations with rateable values, and they do not necessarily correlate to rents.
The market rent data from Tenancy Service for [Suburb 2], the adjoining suburb, is probably the best guide in my view. That put the median rent for the upper quartile for three bedroomed properties for the six months to 30 September 2023 at $683. Where the premises sits within the quartile is hard to say. There are obviously numerable variables including size, outside space and quality. It has three bathrooms and is a high-quality house. Arguably, it could be above average for the quartile.
I must also bear in mind that the Bond Centre data is historic and covers a period of six months ending nearly two months ago. I can take notice of the fact that rents in [City] have been increasing over the course of this year.
I must consider whether I have enough evidence to assess the market rent for the premises with a reasonable degree of confidence. The onus of proving that the current rent substantially exceeds the market rent rests on the tenants and unless I have enough evidence to base a finding of market rent, any decision would be more like a guess than a considered assessment.
After considering all the available evidence, I have concluded that I cannot say, with a reasonable degree of confidence, what the market rent is for the premises. The bond data for [Suburb 2] suggests that the current rent for the premises may not be substantially above the market rent. Allowing for some increase in rents generally and the quality of the premises, a mean rent of $683 per week could easily reach or come close to $780 per week.
It follows that I must dismiss the tenants’ application. Suppression
The tenants have not succeeded and so there is no presumption that their names should be suppressed. But this is not a typical application. Tenants are entitled to apply for a market rent and this application was not without some foundation. I don’t see that there is any public interest in the tenants being identified and doing so may adversely affect them. I have therefore granted them name suppression.

Reasons

Both parties attended the hearing. Ms Bayliss from Max Property, the landlord’s property managers, represented the landlords.

The tenant has applied for a market rent assessment. Sections 25(1) and (3) Residential Tenancies Act 1986 (the Act) provide: (1) On an application made to it at any time by the tenant, the Tribunal may, in accordance with the succeeding provisions of this section, on being satisfied that the rent payable or to become payable for the tenancy exceeds the market rent by a substantial amount, make an order reducing the rent to an amount, to be specified in the order, that is in line with the market rent. (3) For the purposes of this Act, the market rent for any tenancy shall be the 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 and such other matters as the Tribunal considers relevant.

The tenant must prove on the balance of probabilities that the rent exceeds market rent by a substantial amount. The term 'substantial' is not defined in the Act, but it must mean more than minor. Some earlier Tribunal cases suggested a 'rule of thumb' of 10% over market rent. However, a rule of thumb based on a specific percentage has no legal status and as rents rise, often above the rate of inflation, any percentage also rises and becomes more significant.

The test for market rent is the amount “a willing landlord might reasonably expect to receive, and a willing tenant might reasonably expect to pay for the tenancy”.

The concept of the 'market' is constrained by the requirement that both parties be 'willing', and that the rent meets their 'reasonable' expectations.

The factors the Tribunal may have regard to are “the general level of rents ... for comparable tenancies of comparable premises in the locality or in similar localities and such other matters as the Tribunal considers relevant”.

The evidence for comparable rents is usually based on advertisements for similar premises in the locality. This evidence has its limitations. Although advertisements usually list the essential features of the property advertised, there is often limited qualitative information available for comparison. Also, advertisements only cover houses currently on the market and do not necessarily reflect the overall level of rents charged for existing similar tenancies in the area. As well, the rent advertised are not necessarily the rent that is agreed.

It is also common for parties to refer to the 'market rent' statistics published by Tenancy Services. These statistics cover the rents charged for tenancies where bonds have been lodged over the preceding 6 months (with a one - two-month delay). The statistics include median rent as well as upper and lower quartile and they are (usually) broken down by type of property – two-bedroom flat, three- bedroom house and so on.

Section 25(4) of the Act provides that a market rent order may not take effect any earlier than the date of the application or any later than 30 days after the date of the order. The order may last for up to 6 months in the case of a periodic tenancy, or for such shorter period the Tribunal specifies. In the case of a fixed term tenancy, the order remains in force for the period specified in the order. Evidence and Discussion

This tenancy began on 21 September 2020 at a weekly rent of $695. The rent was increased on 24 October 2022 to $765. The rent was increased again from 13 November 2023 to $780.

[Suburb 1], where the premises are situated, is one of the hill suburbs of [City]. There is not an abundance of rentals in the hill suburbs of [City] and so that makes finding comparable rentals problematic. The parties were not able to produce any comparable rentals in [Suburb 1], apart from the similar property next door, also owned by the landlord, which has just been rented at $760 per week. As well, the bond information available from Tenancy Services for [Suburb 1] is limited.

The tenants produced information for the period January to June 2023 for [Suburb 1] rentals which showed 105 bonds lodged and rents of $213 for the lower quartile, $520 for the median quartile and $683 for the upper quartile. But there is no breakdown by type of property.

That means that upper quartile includes properties from bedsits to five- bedroomed houses. Plainly that could include a wide range of properties. Judging by data relating to other hill suburbs, it is likely that it includes fewer large, family sized properties. Such properties tend not to be available to rent although there are some.

The tenants submitted that the premises, a three-bedroom, three-bathroom open plan living area property would be below average in terms of value for the area. There was no evidence for that although I accept that there are likely to be plenty of more substantial homes in the area. But we are dealing here with rentals which, as far as I can tell from the available data, are unlikely to include many substantial family homes.

The tenants point out that the premises has no garden area and outside decks are overlooked by the landlord’s property next door. The premises are finished to a high standard, and in that respect would certainly be near the top end of rental properties. I would describe them as a high-quality town house on the hill with a lovely view over the city to the hills.

The tenants were very critical of the Rental Appraisal produced by Max Property. Whilst I don’t agree with some of the more trenchant criticisms of the Appraisal, I did not find the Appraisal helpful. The rentals it refers to are not good comparable properties to the premises. They also produced an independent appraisal, but it contains no comparable or other supporting evidence and so that is not helpful either.

The tenants’ evidence was more relevant, although the three comparable properties referred to are all on the flat and not in [Suburb 1]. To my mind the most helpful comparable cited is [Address] advertised at $670 per week. It is a slightly more spacious and higher quality town house on the flat. That does beg the question, what is the value of a view over the city to the hills?

I note that the tenants use the relative rateable values of properties to calculate the likely market rent for the premises. In my view, that is not a reliable method. There are too many variations with rateable values, and they do not necessarily correlate to rents.

The market rent data from Tenancy Service for [Suburb 2], the adjoining suburb, is probably the best guide in my view. That put the median rent for the upper quartile for three bedroomed properties for the six months to 30 September 2023 at $683. Where the premises sits within the quartile is hard to say. There are obviously numerable variables including size, outside space and quality. It has three bathrooms and is a high-quality house. Arguably, it could be above average for the quartile.

I must also bear in mind that the Bond Centre data is historic and covers a period of six months ending nearly two months ago. I can take notice of the fact that rents in [City] have been increasing over the course of this year.

I must consider whether I have enough evidence to assess the market rent for the premises with a reasonable degree of confidence. The onus of proving that the current rent substantially exceeds the market rent rests on the tenants and unless I have enough evidence to base a finding of market rent, any decision would be more like a guess than a considered assessment.

After considering all the available evidence, I have concluded that I cannot say, with a reasonable degree of confidence, what the market rent is for the premises. The bond data for [Suburb 2] suggests that the current rent for the premises may not be substantially above the market rent. Allowing for some increase in rents generally and the quality of the premises, a mean rent of $683 per week could easily reach or come close to $780 per week.

It follows that I must dismiss the tenants’ application. Suppression

The tenants have not succeeded and so there is no presumption that their names should be suppressed. But this is not a typical application. Tenants are entitled to apply for a market rent and this application was not without some foundation. I don’t see that there is any public interest in the tenants being identified and doing so may adversely affect them. I have therefore granted them name suppression.

Tenancy Tribunal case 4679789 — Tenancy dispute

At a glance

Claims & awards

Tenancy Tribunal case 4679789 — Tenancy dispute

At a glance

Claims & awards

Order

Reasons

Topics & place

Residential Tenancies Act sections

Frequently asked questions

Order

Reasons

Topics & place

Residential Tenancies Act sections

Frequently asked questions