Three months rent advance
Question from Timmy updated on 4th April 2014:
I have a question regarding advanced rent payments. If a prospect tenant offers to pay three months rent in advance and a landlord accepts then it appeares the landlord is breaking the law? What kind of penalty would the landlord receive?
Our expert Alan Bruce responded:
Under the Residential Tenancies Act 1986, landlords cannot require a tenant to pay more than two weeks’ rent in advance, and cannot require any further rent payments before the period for which rent has already been paid expires. The “requirement” of rent in contravention of this is considered unlawful, which may result in exemplary damages against the landlord up to a maximum of $1000. However, if the advance payment of rent is at the request of the tenant it is unlikely to be a contravention of the Act. Where a tenant requests to pay more than two weeks’ rent in advance, it is recommended that any such agreement is clearly recorded in writing and signed by both parties, preferably on the tenancy agreement. As a tenant cannot waive their rights under the Act, landlords in this situation should also be aware that a tenant may at any time choose if they would like the amount in excess of what a landlord can require, returned to them at any time. If you would like to discuss your situation further, or for information about landlord and tenant rights and obligations, you can visit the Ministry’s website (www.dbh.govt.nz), or call 0800 TENANCY (0800 836 262) between 8.00am-5.30pm Monday to Friday to speak with a member of our Tenancy Advice Team.
The Ministry of Business, Innovation and Employment provides information and guidance on building law and compliance, services including weathertight homes, and advice for tenants and landlords.