Childcare centre at rental

Question from Joanne updated on 1st April 2014:

Our expert Richard Evans responded:

Most tenancy agreements that we see will stipulate the number of occupants, and identify as adult and children, i.e. two adults and two children only. If they exceed that number then they would be in breach of their tenancy agreement.

Furthermore, the town planning rules for a child care centre are usually very strict, which would require resource consents. Automatically this will require structural changes to the property and the owner’s consent would be required for that anyway.

Section 40(1) (b) of The Residential Tenancies Act refers to “principally for residential purposes” and 40 (2) (c) refers to “peace comfort and privacy of any other person residing in the neighborhood”, so there seems to be plenty of reasons under the Act preventing the tenant opening a child care centre.

I would also suggest that the owner’s insurance company would have strong views on the subject and would probably declining insurance cover due to the commercial activity being undertaken.

From a practical point of view why would a tenant invest in creating the business on a residential tenancy agreement which might only be periodic, or a fixed term of only one or two years? The tenant would be much better off with a commercial lease

Richard and Pauline Evans own Rotorua Rentals and manage over 800 houses in Rotorua - www.rotoruarentals.co.nz They are also directors of The Leading Property Managers of New Zealand - www.lpmnz.com - so they have the knowledge and experience to offer an opinion on most matters of property management.

Search the Ask an Expert archive

Browse all questions in the Ask An Expert Archive »